Answer

1. F

   Facts

   If you own more than two houses not let out, the extra ones are deemed let out. You pay tax on the rent the property could reasonably fetch, less municipal tax, 30% standard deduction and interest. This applies even though no rent was received.

2. P

   Provisions and law

   • Sec 23, Income-tax Act 1961Annual value rules: up to two self-occupied houses have nil annual value; others are treated as let out at expected rent
   • 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
3. A

   Analysis

   Suppose the empty flat could fetch ₹2,40,000 a year and you paid ₹10,000 municipal tax. Net annual value is ₹2,30,000, less 30% (₹69,000) under Sec 24(a), leaving ₹1,61,000, and any home loan interest further reduces it under Sec 24(b). If the flat is one of only two you hold, it can instead be treated as self-occupied with nil value. Keep evidence of the expected rent level, such as nearby rents or municipal valuation.

4. C

   Conclusion

   1. 1Count houses not let out.
   2. 2If more than two, estimate fair rent for the extra ones.
   3. 3Deduct municipal tax, 30% and interest.
   4. 4Report the result in Schedule HP.

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