ITR
Computing income from a rented flat
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Facts
Taxable income from a let out house is rent less municipal tax paid, then 30% standard deduction, then home loan interest. There is no deduction for actual repairs or maintenance. The result can be income or loss.
Provisions and law
- Sec 22 (now Sec 20)Annual value of property you own is taxed under house property
- Sec 24(a) (now Sec 22(1)(a))Standard deduction of 30% of the net annual value
- Sec 24(b) (now Sec 22(1)(b))Deduction for interest on a home loan; ₹2,00,000 cap for self-occupied houses under the old regime
Analysis
Annual rent is ₹3,00,000; minus ₹12,000 property tax gives net annual value of ₹2,88,000. The 30% deduction under Sec 24(a) is ₹86,400 and interest under Sec 24(b) is ₹1,80,000, so income is ₹21,600. Society maintenance and repairs are already covered by the 30%. Show tenant details in Schedule HP.
Conclusion
- Total the rent received for the year.
- Deduct municipal tax actually paid.
- Take 30% of the balance and the year's loan interest.
- Enter the result in Schedule HP.
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Return with rent from two or more properties and home loan interest, Sec 24(b)
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