Ganesh has a property whose municipal valuation is ` 2,50,000 p.a. The fair rent is ` 2,00,000 p.a.…
Ganesh has a property whose municipal valuation is ` 2,50,000 p.a. The fair rent is ` 2,00,000 p.a. and the standard rent fixed by the Rent Control Act is ` 2,10,000 p.a. The property was let out for a rent of ` 20,000 p.m. However, the tenant vacated the property on 31.1.2018. Unrealised rent was ` 20,000 and all conditions prescribed by Rule 4 are satisfied. He paid municipal taxes @8% of municipal valuation. Interest on borrowed capital was` 65,000 for the year. Compute the income from house property of Ganesh 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 250000, FR 200000, SR is 210000
Therefore ER will be 210000
Step 2: Calculation of GAV:
GAV is higher of ER or AR
ER is 210000
If an owner of house property could not realise rent from the tenant, it will not be considered as income. So unrealised rent of 20000 shall be deducted from the actual
So Actual rent 20000*10-20000= 180000
Further if actual rent is less than expected rent beacuse of vacancy then GAV will be actual rent.
Therefore GAV is 180000.
Step 3: NAV=GAV-Municipal Taxes Paid
180000-20000= 160000
Step 4: NAV less Deductions under Section 24....
NAV= 160000
Less: Deduction @30%= 48000
Less; Interest= 65000
Less; preconstruction interest=0
Therefore income from house property is 160000-48000-65000= 47000
