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INCOMEFROMHOUSEPROPERTY
Course
Material
MBA II YRSEM -1
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CHARGEABILITY
Any income from the house property & land apparent there
to. However the dueling house adjacent to the firm will be
exempted as the agricultural income.
Who is taxable-
Real owner
Deemed Owner
Transfer of House to spouse (except with an agreement to live
appart)/ minor child except a married daughter without properconsideration- the transferor.
Holder of an Inpartiable Property of HUF- Karta will be Taxable
Members of Co-operative Society.
Tenant having tenancy right more than 12 years
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CHARGEABILITY
Residential Property is not taxable. Only one property can be exemptedin case of ownership of more than one Property.
Rent from vacant land and from hiring of building along with themachinery will be taxable under Other source.
The rent from business of renting of House property will be taxable
under house Property.
House partly self occupied & partly rented needed to considered asseparate premises.
House kept as mortgage in the money laundering business will also betaxable under H.P.
Residents having Income from Foreign Estates are taxable .
Non Residents having Income from Foreign Estates are taxable onlywhen received in India.
Composite rent when not separable for benefits provided will be taxable
under H.P. (Separable- facilities- Other Sources, house- H.P.)
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PROPERTY INCOMES EXEMPT
FROM TAX
Income from a farm house [section 2(1A) (c) and section 10(1)].
Property of an ex-ruler [section 10(19A)].
Property income of a local authority [section 10(20)].
Property income of an approved scientific research association[section 10(21)].
Property income of an educational institution and hospital [section10(23C)].
Property income of a registered trade union [section 10(24)].
Income from property held for charitable purposes [section 11].
Property income of a political party [section 13A].
Income from property used for own business or profession [section
22].
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COMPUTATIONOFINCOMEUNDERH.P.
A. Fair Market Value (FMV) XXXB. Municipal Value XXX
C. Take the Higher XXX
D. Standard Rent XXX
E. Take the Lower (ERV)(Expected Rental Value XXX
F. Actual Rent- Unrealized rent XXX
G. Take the Higher (Gross Annual Value) XXX
Less: Municipal Taxes XXX
Net Annual Value XXX
Less: Deductions under Section 24 XXX
Statutory Deduction (30% of NAV) XXX
Interest on Borrowed Capital XXX
Income From House Property XXX
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DEDUCTIONS UNDER SEC 24
Statutory deduction: 30 % of NAV irrespective of therepair & maintenance Expenses.
INTEREST ON HOUSING LOAN
In case the property is let out, the entire amount ofinterest accrued during the year is deductible. The
borrowals may be for construction/acquisition or
repairs/renewals.
A fresh loan may be raised exclusively to repay theoriginal loan taken for purchase/ construction etc., of
the property. In such a case also, the interest on the
fresh loan will be allowable.
Interest payable on interest will not be allowed.
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INTEREST ON HOUSING LOAN
Brokerage or commission paid to arrange a loan for houseconstruction will not be allowed.
When interest is payable outside India, no deduction will be
allowed unless tax is deducted at source or someone in India istreated as agent of the non-resident
Should be taken from Banks
The Deduction is only available to the borrower not to hissuccessors.
Non refundable loan from Provident fund will be allowed only onthe portion of owners contribution.
Purchase of house Property on Installments- The Interest can bedeductable only.
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DEDUCTIONINCASEOFSELF
OCCUPIEDHOUSEPROPERTY
The Property purchased Before 1999-2000
Pre Construction Interest(PCI)/5 < Rs30,000/-
Current year Interest < Rs30,000/-
The Property purchased After 1999-2000
{Pre Construction Interest(PCI) + Current year Interest }/5