This is the only head where Income is taxed on Notional Basis. The taxability may not necessarily be of actual rent or i

1. This is the only head where Income is taxed on Notional Basis. The taxability may not necessarily be of actual rent or income received but the potential income, which the property is capable of yielding. 

3. PROPERTY INCOME EXEMPT Income from farmhouse Annual value of any one palace of an ex-ruler PROPERTY INCOME of a local authority PROPERTY INCOME of an approved Scientific Res Asso PROPERTY INCOME of a univ or edu insti PROPERTY INCOME of a hospital or med inst PROPERTY INCOME of a trade union House PROPERTY for charitable purpose PROPERTY INCOME of a pol party PROPERTY used for own bus or prof One self occupied property

4. COMPOSITE RENT

5. HOW COMPUTATION IS MADE?

6. GROSS ANNUAL VALUE 1) Gross Annual Value � Computation I: Calculation of Reasonable expected rent of the property, which equals Municipal value or fair rent whichever is higher, subject to limit of Standard rent as per Rent Control Act.� Computation II: Calculation of Actual Rent received or receivable after deducting Unrealized Rent & Rent of the period for which Property remained vacant.� Computation III: This step becomes applicable only on satisfaction of following conditions: The property is vacant for any part in the previous year. Actual Rent received/ receivable as calculated in Step 2 is lower than the Reasonable expected rent. Such lowering of rent receivable compared to reasonable expected rent is only because of property remaining vacant during the year.� The above computations give rise to Four situations summarized below

8. PLEASE NOTE:  Unrealized rent deductible in Step II calculation of G.A.V has to satisfy the Conditions vis-�-vis: Tenancy is bonafide; Defaulting tenant has vacated/ adequate steps have been taken to vacate him; such tenant is not in occupation of any other property of the assessee; adequate legal steps have been taken to recover such unrealized rent.

12. MUNICIPAL TAXES  Municipal Taxes levied by Local Authorities on House Property are allowed on PAYMENT basis only if they are paid by the owner only, not by the tenant in any case.

13. Ded U/s 24 Section 24(b): �INTEREST ON BORROWED CAPITAL Pre Construction period Interest: Interest payable by an assessee in respect of funds borrowed for property, deductible in FIVE annual Installments starting from the year in which the Construction of such property is completed or in which property is acquired. Pre Construction period means the period commencing on the date of borrowing and ending March 31 prior to the date of Repayment of loan or date of completion of constuction/acquistion, whichever is earlier. � � Post Construction period Interest: This is the Interest paid by the assessee from the previous year onwards in which Construction/ Acquisition of the property is completed.

14. Section 24(a): STANDARD DEDUCTION� allowable @ 30% of Net Annual Value.

15. Income Tax Act allows an Individual to claim negative(loss) House Property income to be set off against other heads of income. This is possible only in case of a self occupied property, basic factors affecting it being: Interest on Borrowed Capital: If Capital is borrowed by an assessee for funds utilization towards Self Occupied Property then following situations come into picture: SELF OCCUPIED PROPERTY

17. A House Property owned by the assessee which is neither actually occupied by the assessee nor any benefit is derived from such property owing to employment or Business/ Profession carried on at any other place, wherein the assessee during the previous year stays at any other leased accommodation elsewhere, then in that case the assessee is allowed to claim such property as Self Occupied. � Even if assessee is the owner of two or more House properties, he can claim only one of them as Self Occupied, at his discretion and the rest will be treated as DEEMED TO BE LET OUT PROPERTIES and calculation of Income from House property will be done accordingly. Any House Property if it is to be claimed as Self Occupied in a Previous year is Let Out for even One day of a year it will be taken as Let Out for the whole of the year and computation will be done accordingly. Interest on borrowed Capital is deductible on ACCRUAL basis; however Interest on unpaid Interest is not deductible. Other than the two deductions specified u/s 24 no other deduction of expenses is claimable by the assessee. The Clause of Maximum Ceiling on Interest on Borrowed Capital is applicable only for SELF OCCUPIED Properties & not to any LET OUT Property.

18. �ARREARS OF RENT RECEIVED SUBSEQUENTLY (Sec. 25B) Where any arrears of rent is received which was not taxed earlier, such rent shall be assessed under the head "Income from house property" in the year of Receipt. The arrears would be taxable under this head irrespective of the fact whether the assessee is the owner of the buildings in the year in which such arrears are received A deduction of 30% on account of repairs on the arrears of rent received would be allowed in the year in which such arrears are taxable.