Anirudh has a property whose municipal valuation is ` 1,30,000 p.a. The fair rent is ` 1,10,000 p.a…
Anirudh has a property whose municipal valuation is ` 1,30,000 p.a. The fair rent is ` 1,10,000 p.a. and the standard rent fixed by the Rent Control Act is ` 1,20,000 p.a. The property was let out for a rent of ` 11,000 p.m. throughout the previous year. Unrealised rent was ` 11,000 and all conditions prescribed by Rule 4 are satisfied. He paid municipal taxes @10% of municipal valuation. Interest on borrowed capital was ` 40,000 for the year. Compute the income from house property of Anirudh for A.Y. 2018-19.
Calculation of income from house property
Step 1: Calculation of Expected Rent
Expected Rent is higher of MV and FR but restricted to SR
MV is 130000, FR 110000, SR is 120000
Therefore ER will be 12000
Step 2: Calculation of GAV:
GAV is higher of ER or AR
ER is 120000
If an owner of house property could not realise rent from the tenant, it will not be considered as income. So unrealised rent of 11000 shall be deducted from the actual
So Actual rent 11000*12-11000= 121000
Unrealized rent of 11000 will be taxed when you received from a tenant and a standard deduction of 30% will be allowed in the year of receipt.
Therefore GAV is 121000
Step 3: NAV=GAV-Municipal Taxes Paid
121000-13000=108000
Step 4: NAV less Deductions under Section 24....
NAV= 108000
Less: Deduction @30%= 32400
Less; Interest= 40000
Less; pre-construction interest=0
Therefore income from house property is 121000-32400-40000=35600
