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modi kamal (business)     07 July 2013

Rebate in income from house rent

I have given my flat on rent as I am staying in Co's Flat where I am working.I am getting around rent income of about Rs.3 Lac per annum.What are deductions allowed from this rent income to arrive net taxable income.


 4 Replies

amaresh (imv)     07 July 2013

the rental income is taxable but 30% towards maintainance and original tax paid can be claimed

1 Like


Dear Mr. Kamal,

from the rental income you can claim following deductions;

1. 30% of the rental value towards maintenance/ repairs whether incurred or not.

2. Municipal taxes paid by you

3. Intt. if the loan has been taken on it.

Vishnu Promod Srivastava, ADV. & Tax Consultant

1 Like

Ms.Usha Kapoor (CEO)     31 August 2016


MUnicipal  taxes paid repairs, renovation etc andinterest on borrowed loanunder Section 80C up to Rs.2 lakhs.The  foloowing points should be kept in mind while computing income from house property.

et Annual Value (NAV): NAV = GAV – Municipal Taxes Paid

  • Deductions: To arrive at the actual taxable income from house property, two deductions are allowed, under Section 24 of the Income Tax Act :
  • Statutory Deduction: 30% of the NAV is allowed as a deduction towards repairs, rent collection, etc. irrespective of the actual expenditure incurred. This deduction is not allowed if the Annual Value is nil.
  • Interest on borrowed capital: is allowed as a deduction on accrual basis if the money was borrowed to buy/construct the house. Deduction is allowed on whichever is lesser between Rs.1,50,000 or the actual interest amount (in case the construction was completed within 3 years of taking the loan, on or after 1-April-1999.) In other cases, it’s between Rs.30,000, and the actual interest, whichever is less.
  • Annual Value: Annual Value = NAV – Deductions.
  • Owner/deemed owner: Income from house property is taxable to the owner of the property. The owner is the person who is entitled to receive income from property. This means that income is chargeable to the person who receives financial benefit from the property, even if the property is not registered to him, i.e. deemed owner. A deemed owner is an owner by implication and not necessarily documented registration.

How to compute your income from house property.

Income from house property contains the income generated by the owned property of an individual.

Let’s assume you have a property and are charging Rs. 15,000 per month as rent. Let’s also assume that you have paid Rs. 10,000 in municipal taxes for that year, and have Rs. 50,000 as interest on borrowed capital.

Income of House Property Amounts (in Rs.)
Total annual rental income value 15,000 x 12 = 1,80,000
Less: Municipal Taxes 10,000
Net Annual Value (NAV) 1,70,000
Deductions under Section 24  
Standard deduction (30% of NAV) 1,70,000 – 51,000 = 1,19,000
Interest on borrowed capital (if applicable) 50,000
Income from House Property 69,000

When is Annual Value “NIL”?

The annual value can be considered to be nil if the owner is residing in his property (Self-occupied property or SOP) and does not derive financial benefit from the same. It will be nil if the owner of the property has to move out of the city his property is in to another city for work and resides in a rented property not owned by him.

Example: Mr. Babu, who bought a house in Bangalore has to move into a rented place in Pune for his job. The annual value on Mr. Babu’s Bangalore property will be nil, and he will get a tax deduction for interest paid on borrowed capital.

How do I Save Tax on Income from House Property?

Careful planning can enable you to save a sizeable amount from taxation. Some of the things you can do to save tax are as follows:

  • Joint Home Loan – If you jointly own a property with someone and also apply for a joint home loan with your partner, you will both be eligible for tax deductions on interest up to Rs. 1,50,000 each.
  • Planning a second home? If you already have one self-occupied property registered to your name and wish to avoid paying taxes on a second home, register the second property on your spouse/relatives name to avoid excess taxation.
  • Joint ownership – Taxation on income from house property can be divided between co-owners, and hence lessen the load.
  • Ownership of more than one property – If you own multiple properties, only one of these can be registered as your residence and fall under self-occupied property (SOP). It is important to evaluate the tax liability on all your properties and choose the one with the highest tax liability to call home, and let out the remaining. You can also change the SOP every year.
  • Empty houses – that you own will still be taxed based on the fair rental value, so it’s advisable to let any and all empty properties out, enabling income and no loss because of taxation.

News About Income from House Property

  • Telangana May Hike Property Value By 30%

    The Telangana government is likely to increase its land and house values with an eye on higher revenues from stamp duty and registration fees.

    The registration department revises land and property rates once a year in urban areas and once in 2 years in rural areas. Property value revision in Telangana region was last done in 2013. In the past 2 years, the government has been rejecting proposals to hike prices to offer reprieve to property buyers in the new state.

    Currently, the actual market prices and government valuations are seeing a huge gap, which makes a revision imminent.

    10th June 2016

  • First -Time Home Buyers now to enjoy additional Tax Benefit

    First time home buyers will have additional tax benefit from April 1 onwards, when purchasing residential properties of that are up to Rs 50 lakh.The government's proposal will be implemented from April 1 and has been initiated with the intention to promote 'housing for all' scheme and boost the the real estate sector which is facing a huge slowdown for last 3 to 4r years.

    20th April 2016

  • Interest can be claimed as Deduction when Calculating Income from House Property

    The Union Budget 2016 saw the implementation and alteration of several different laws, and one such case was Section 24b of the Income Tax Act relating to income from house property. Existing provisions had stated that the deduction of interest paid on capital borrowed to purchase the property would be allowed provided the property is constructed within three years from the end of the financial year in which the capital was borrowed. But starting 01.04.2017, the period is proposed to extend from three to five years. Customers who have taken out housing loans can claim the interest payments as deductions if the interest is paid for three years from the date on which the loan was borrowed.




M.R.K.PRASAD-Advocate (SELF)     11 September 2016

Caliculate Annual Value that is Annual rent received or receivable. Deduct Property Tax. then deduct  deductions U/s 24 @ 30% and  total interest paid for Housing oan if any, 

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