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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.
ITR
Tax on an empty flat that is deemed let out
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Provisions
Sec 23, Income-tax Act 1961; Sec 24(a) (now Sec 22(1)(a)); Sec 24(b) (now Sec 22(1)(b))
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.
Close
- Count houses not let out.
- If more than two, estimate fair rent for the extra ones.
- Deduct municipal tax, 30% and interest.
- Report the result in Schedule HP.
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