Description
tax
For GONSALO GARCIA TY B.COM STUDENTS
2011-12 BATCH
From Jose George
HEADS OF INCOME INCOME FROM HOUSE PROPERTY
INCOME FROM HOUSE PROPERTY
?
, Annual Value of any property consisting of any building or land appurtenant thereto of which, the assessee is the owner is chargeable to tax under the head “Income from House Property”
Charging Section S. 22
INCOME FROM HOUSE PROPERTY
?
following three conditions:
property consists of buildings or lands appurtenant thereto ? the assessee should be the owner of the property ? the property should not be used by th owner for his own business
?
INCOME FROM HOUSE PROPERTY
?
Owner includes legal as well as deemed owner
?
Deemed owner as per section 27 includes:
? Transfer to spouse without
an agreement to live apart or to a minor, not a married daughter ? Holder of an impartible estate ? Property held by a member of a co-operative society / company / AOP ? A person who has acquired a property under power of attorney ? Person acquired a right on a property under lease
INCOME FROM HOUSE PROPERTY
?
Owner includes legal as well as deemed owner
?
Deemed owner as per section 27 includes:
? Transfer to spouse without
an agreement to live apart or to a minor, not a married daughter ? Holder of an impartible estate ? Property held by a member of a co-operative society / company / AOP ? A person who has acquired a property under power of attorney ? Person acquired a right on a property under lease
?
Exempted property
?
INCOME FROM HOUSE PROPERTY
income from farm house (u/s 2(1A) (10(1)) ? annual value of any one palace of an ex-ruler Se. 10(19A) ? property income of a local authority (10( 20) ? property income of an approved scientific research association (10(21) ? property income of an educational institution (10(20C)
INCOME FROM HOUSE PROPERTY
?
Exempted property
? property income of a trade union (10(24)
house property held for charitable purpose (11) ? property income of a political party (13A) ? property used for own business or profession (22) ? one self-occupied property Sec 23(2)
?
Computation of Annual Value
? computation of income from house property depends on the
type of property
? let out House property self -occupied property ? let out property remain vacant ? partly let out and partly self occupied ? deemed to be let out ? property owned by co-owners
?
Computation of Income from House property
? let out House property
?
Annual Value XXX xxx XXX
XXX
? Less Muncipal Tax ? Adj. Annual Value
?
less Deduction u/s 24
? Income from House Property
?
XXX
Tax under the head income from House property is not a tax upon rent of a property. It is tax on the capacity of a building to yield income. The measure of such income is called Annual Value
Computation of Annual Value of Let –out
Annual value is the estimated value of Income expected if the property is rented. ? Annual value is the
?
? reasonable letting Value
or ? Actual Rent of the property which ever is higher.
? Reasonable letting value is the Municipal value or Fair rent which ever is higher restricted to Standard rent a per Rent Control Act
?
reasonable letting value is:
? Municipal value ? Fair rent
?Which ever greater
Computation of Annual Value of Let –out
or
restricted to Standard rent
? Municipal Valuation is the ratable value fixed by the
municipality for charging municipal tax . ? Fair rent is the rent fetched by a similar accommodation in the same or similar locality ? Standard rent is the maximum rent which a person can legally recover from his tenant under the Rent Control Act.
COMPUTATION OF ACTUAL RENT
?ACTUAL RENT
Actual rent is applicable only to let out houses. Actual rent is rent received or receivable. Actual rent is the rent of the previous year for which the property was available for letting out. The unrealised rent, if it fulfills the conditions, is allowed to deduct from actual rent receivable ? Actual Rent = Actual rent received or receivable – allowable unrealised rent
?
Loss due to vacancy
? If the let out property remain vacant for a
period, the loss due to vacancy is allowed to be deducted from the highest value, arrived after comparing reasonable letting value with Annual Rent. The balance after the deduction of loss due to vacancy , if any, is the Annual Value
? Find out the annual Value
H1 Municipal Value Fair rent Standard rent Actual Rent Unrealised rent (condition fulfills) 105 107 NA 103 1 H2 105 107 88 112 2 12 Nil H3 105 107 88 86 1 12 Nil H4 105 107 135 114 2 12 Nil H5 105 107 135 97 1 12 Nil
Period of the previous year (in 12 months) Period for which property remain vacant Nil
Answer
? Reasonable letting value
107
(fair rent -107, MV- 105 St Rent nil) ? Actual Rent (103-1) 102 AR -103; allowable unrealised rent 1 The Highest RLV or AR 107 Less loss due to vacancy Nil Annual Value 107
Answer
? Reasonable letting value
88
(fair rent -107, MV- 105 St Rent 88) ? Actual Rent (112-2) 110 AR -112; allowable unrealised rent 2 The Highest RLV or AR 110 Less loss due to vacancy Nil Annual Value 110
Answer
? Reasonable letting value
88
(fair rent -107, MV- 105 St Rent 88) ? Actual Rent (86-1) 85 AR -86; allowable unrealised rent 1 The Highest RLV or AR 88 Less loss due to vacancy Nil Annual Value 88
Answer
? Reasonable letting value
107 (fair rent -107, MV- 105, St Rent 135) ? Actual Rent (97-1) 96 AR -97; allowable unrealised rent 1 The Highest RLV or AR 107 Less loss due to vacancy Nil Annual Value 107
Question
? X owns a house property (municipal Valuation .
1,45,000, fair rent1,36,000 standard rent Rs. 1,24,000 it is let out throughout the previous year(rent being 8000 per month upto November 15, 2010 and Rs. 14000 per month thereafter) X transfer the property to Y on Jan 31 2011, Find out the annual Value of the property in the hands of Mr. X for the assessment year 2011 - 12
Answer
? Reasonable letting value
1,03,333 (fair rent -1,36,000/12X10=113,333, MV145000/12X 10=120,833, St Rent 124000/12X10=1,03,333) ? Actual Rent (8,000X7 1/2 +14000X2 1/2) 95000 The Highest RLV or AR 1,03,333 Less loss due to vacancy Nil Annual Value 1,03,333
Loss due to vacancy
?If the Annual Rent is less than the
Reasonable letting Value only because of the loss due to vacancy , then the Annual Rent is to be taken as Annual Value
Loss due to vacancy
?Fair Rent Rs. 24000, Municipal
Valuation Rs 28000, Actual Rent Rs. 36,000 (for 12 month) property remain vacant for 1 month) calculate the annual Value
Answer
? Reasonable letting value
28000
(fair rent –25000, MV- 28000, ? Actual Rent 36000 The Highest RLV or AR 36000 Less loss due to vacancy 3000 Annual Value 33000
Answer
? Fair rent Rs. 26,000, Municipal Valuation
Rs. 30000, Rent Rs. 2000 pr month, 1 month the property remain vacant and rs. 2000 unrealised rnt ulfils conitions.
Answer
? Reasonable letting value
30000
(fair rent –26000, MV- 30000, ? Actual Rent (2000 X 12) 24000 ? Less Unrealised 2000 22000 The Highest RLV or AR 30000 Less loss due to vacancy(2000X1) 2000 Annual Value 28000
Deduct Municipal Taxes
?From
the annual Value deduct Municipal Taxes levied by any local authority in respect of the house property. This tax is deductible only if it is actually paid by the owner and only to the extent it is paid during the year
Deduction u/s 24
?Standard deduction ? Interest on borrowed
Deduction u/s 24
?Standard deduction ? Interest on borrowed
Standard deduction
? No deduction can be claimed by an assessee
other than mentioned in section 24. Standard deduction is allowed irrespective of expenses incurred by the assessee
?
30 % of the adjusted annual value is
deductible irrespective of expenses incurred by the taxpayer
Interest on Borrowed Capital
Interest on Borrowed capital is allowed as deduction if capital is borrowed for the purpose of purchase, construction, repair, renewal or reconstruction of the property ? It is deductible on accrual basis. It can be deductible as yearly, it is deductible even if it is not actually paid during the previous year ? No deduction for any brokerage or any expenses for arranging the loan is allowed
?
? interest of a fresh loan taken for the repayment of the earlier loan is allowed as deduction
Interest Payable for pre-construction period
?
If interest on Borrowed capital is paid prior to the acquisition or completion of construction, the interest paid during that period is allowed as deduction in five equal installments . But if such amount is allowed as deduction under any other provision earlier the amt. so deducted is not allowed as deduction under this provision
Question
?
Mr. Jeevan has a house in Mumbai, which he used for his residence in the previous year 2009-10. Due to to his transfer to Nagpur he could not occupy this house in the previous year 2010-11. he stays in a rented house in Nagpur, He has let out his mumbai house property @ Rs. 12000 per month. He spend Rs. 2000 for insuring the property and 2000 for repairs. Fair rent of the house property comes Rs. 13000 per month. The property remain vacant for 2 months and the unrelised which fulfills conditions Rs. 10000 calculate the income from HP of Mr. JEEVAN for the assessment year 2011-12
Answer
Let-out House ? Annual Value
?
30000
(Fair rent- 13000 X 12=156000 or MV
Nil, thus RLV =156000, Actual Rent Rs. 12000 X 12 =1,44000 – Unrealised rent Rs. 10, 000 Actual Rent = 144000-10000=134000) RLV or Actual rent which ever is higher = 156000 Less Loss due to Vacancy (12000 X 2) 24000 Annual Value 132000
Answer
Let-out House ? Annual Value ? Less Municipal Tax ? Adjusted Annual Value ? Less deduction U/S 24 ? 1. Standard deduction
?
30% of Adjusted Annual Value 39600
132000 Nil 132000
2.Interest on Borrowed Capital
Income From House Property
2000
41600
90400
doc_960075620.ppt
tax
For GONSALO GARCIA TY B.COM STUDENTS
2011-12 BATCH
From Jose George
HEADS OF INCOME INCOME FROM HOUSE PROPERTY
INCOME FROM HOUSE PROPERTY
?
, Annual Value of any property consisting of any building or land appurtenant thereto of which, the assessee is the owner is chargeable to tax under the head “Income from House Property”
Charging Section S. 22
INCOME FROM HOUSE PROPERTY
?
following three conditions:
property consists of buildings or lands appurtenant thereto ? the assessee should be the owner of the property ? the property should not be used by th owner for his own business
?
INCOME FROM HOUSE PROPERTY
?
Owner includes legal as well as deemed owner
?
Deemed owner as per section 27 includes:
? Transfer to spouse without
an agreement to live apart or to a minor, not a married daughter ? Holder of an impartible estate ? Property held by a member of a co-operative society / company / AOP ? A person who has acquired a property under power of attorney ? Person acquired a right on a property under lease
INCOME FROM HOUSE PROPERTY
?
Owner includes legal as well as deemed owner
?
Deemed owner as per section 27 includes:
? Transfer to spouse without
an agreement to live apart or to a minor, not a married daughter ? Holder of an impartible estate ? Property held by a member of a co-operative society / company / AOP ? A person who has acquired a property under power of attorney ? Person acquired a right on a property under lease
?
Exempted property
?
INCOME FROM HOUSE PROPERTY
income from farm house (u/s 2(1A) (10(1)) ? annual value of any one palace of an ex-ruler Se. 10(19A) ? property income of a local authority (10( 20) ? property income of an approved scientific research association (10(21) ? property income of an educational institution (10(20C)
INCOME FROM HOUSE PROPERTY
?
Exempted property
? property income of a trade union (10(24)
house property held for charitable purpose (11) ? property income of a political party (13A) ? property used for own business or profession (22) ? one self-occupied property Sec 23(2)
?
Computation of Annual Value
? computation of income from house property depends on the
type of property
? let out House property self -occupied property ? let out property remain vacant ? partly let out and partly self occupied ? deemed to be let out ? property owned by co-owners
?
Computation of Income from House property
? let out House property
?
Annual Value XXX xxx XXX
XXX
? Less Muncipal Tax ? Adj. Annual Value
?
less Deduction u/s 24
? Income from House Property
?
XXX
Tax under the head income from House property is not a tax upon rent of a property. It is tax on the capacity of a building to yield income. The measure of such income is called Annual Value
Computation of Annual Value of Let –out
Annual value is the estimated value of Income expected if the property is rented. ? Annual value is the
?
? reasonable letting Value
or ? Actual Rent of the property which ever is higher.
? Reasonable letting value is the Municipal value or Fair rent which ever is higher restricted to Standard rent a per Rent Control Act
?
reasonable letting value is:
? Municipal value ? Fair rent
?Which ever greater
Computation of Annual Value of Let –out
or
restricted to Standard rent
? Municipal Valuation is the ratable value fixed by the
municipality for charging municipal tax . ? Fair rent is the rent fetched by a similar accommodation in the same or similar locality ? Standard rent is the maximum rent which a person can legally recover from his tenant under the Rent Control Act.
COMPUTATION OF ACTUAL RENT
?ACTUAL RENT
Actual rent is applicable only to let out houses. Actual rent is rent received or receivable. Actual rent is the rent of the previous year for which the property was available for letting out. The unrealised rent, if it fulfills the conditions, is allowed to deduct from actual rent receivable ? Actual Rent = Actual rent received or receivable – allowable unrealised rent
?
Loss due to vacancy
? If the let out property remain vacant for a
period, the loss due to vacancy is allowed to be deducted from the highest value, arrived after comparing reasonable letting value with Annual Rent. The balance after the deduction of loss due to vacancy , if any, is the Annual Value
? Find out the annual Value
H1 Municipal Value Fair rent Standard rent Actual Rent Unrealised rent (condition fulfills) 105 107 NA 103 1 H2 105 107 88 112 2 12 Nil H3 105 107 88 86 1 12 Nil H4 105 107 135 114 2 12 Nil H5 105 107 135 97 1 12 Nil
Period of the previous year (in 12 months) Period for which property remain vacant Nil
Answer
? Reasonable letting value
107
(fair rent -107, MV- 105 St Rent nil) ? Actual Rent (103-1) 102 AR -103; allowable unrealised rent 1 The Highest RLV or AR 107 Less loss due to vacancy Nil Annual Value 107
Answer
? Reasonable letting value
88
(fair rent -107, MV- 105 St Rent 88) ? Actual Rent (112-2) 110 AR -112; allowable unrealised rent 2 The Highest RLV or AR 110 Less loss due to vacancy Nil Annual Value 110
Answer
? Reasonable letting value
88
(fair rent -107, MV- 105 St Rent 88) ? Actual Rent (86-1) 85 AR -86; allowable unrealised rent 1 The Highest RLV or AR 88 Less loss due to vacancy Nil Annual Value 88
Answer
? Reasonable letting value
107 (fair rent -107, MV- 105, St Rent 135) ? Actual Rent (97-1) 96 AR -97; allowable unrealised rent 1 The Highest RLV or AR 107 Less loss due to vacancy Nil Annual Value 107
Question
? X owns a house property (municipal Valuation .
1,45,000, fair rent1,36,000 standard rent Rs. 1,24,000 it is let out throughout the previous year(rent being 8000 per month upto November 15, 2010 and Rs. 14000 per month thereafter) X transfer the property to Y on Jan 31 2011, Find out the annual Value of the property in the hands of Mr. X for the assessment year 2011 - 12
Answer
? Reasonable letting value
1,03,333 (fair rent -1,36,000/12X10=113,333, MV145000/12X 10=120,833, St Rent 124000/12X10=1,03,333) ? Actual Rent (8,000X7 1/2 +14000X2 1/2) 95000 The Highest RLV or AR 1,03,333 Less loss due to vacancy Nil Annual Value 1,03,333
Loss due to vacancy
?If the Annual Rent is less than the
Reasonable letting Value only because of the loss due to vacancy , then the Annual Rent is to be taken as Annual Value
Loss due to vacancy
?Fair Rent Rs. 24000, Municipal
Valuation Rs 28000, Actual Rent Rs. 36,000 (for 12 month) property remain vacant for 1 month) calculate the annual Value
Answer
? Reasonable letting value
28000
(fair rent –25000, MV- 28000, ? Actual Rent 36000 The Highest RLV or AR 36000 Less loss due to vacancy 3000 Annual Value 33000
Answer
? Fair rent Rs. 26,000, Municipal Valuation
Rs. 30000, Rent Rs. 2000 pr month, 1 month the property remain vacant and rs. 2000 unrealised rnt ulfils conitions.
Answer
? Reasonable letting value
30000
(fair rent –26000, MV- 30000, ? Actual Rent (2000 X 12) 24000 ? Less Unrealised 2000 22000 The Highest RLV or AR 30000 Less loss due to vacancy(2000X1) 2000 Annual Value 28000
Deduct Municipal Taxes
?From
the annual Value deduct Municipal Taxes levied by any local authority in respect of the house property. This tax is deductible only if it is actually paid by the owner and only to the extent it is paid during the year
Deduction u/s 24
?Standard deduction ? Interest on borrowed
Deduction u/s 24
?Standard deduction ? Interest on borrowed
Standard deduction
? No deduction can be claimed by an assessee
other than mentioned in section 24. Standard deduction is allowed irrespective of expenses incurred by the assessee
?
30 % of the adjusted annual value is
deductible irrespective of expenses incurred by the taxpayer
Interest on Borrowed Capital
Interest on Borrowed capital is allowed as deduction if capital is borrowed for the purpose of purchase, construction, repair, renewal or reconstruction of the property ? It is deductible on accrual basis. It can be deductible as yearly, it is deductible even if it is not actually paid during the previous year ? No deduction for any brokerage or any expenses for arranging the loan is allowed
?
? interest of a fresh loan taken for the repayment of the earlier loan is allowed as deduction
Interest Payable for pre-construction period
?
If interest on Borrowed capital is paid prior to the acquisition or completion of construction, the interest paid during that period is allowed as deduction in five equal installments . But if such amount is allowed as deduction under any other provision earlier the amt. so deducted is not allowed as deduction under this provision
Question
?
Mr. Jeevan has a house in Mumbai, which he used for his residence in the previous year 2009-10. Due to to his transfer to Nagpur he could not occupy this house in the previous year 2010-11. he stays in a rented house in Nagpur, He has let out his mumbai house property @ Rs. 12000 per month. He spend Rs. 2000 for insuring the property and 2000 for repairs. Fair rent of the house property comes Rs. 13000 per month. The property remain vacant for 2 months and the unrelised which fulfills conditions Rs. 10000 calculate the income from HP of Mr. JEEVAN for the assessment year 2011-12
Answer
Let-out House ? Annual Value
?
30000
(Fair rent- 13000 X 12=156000 or MV
Nil, thus RLV =156000, Actual Rent Rs. 12000 X 12 =1,44000 – Unrealised rent Rs. 10, 000 Actual Rent = 144000-10000=134000) RLV or Actual rent which ever is higher = 156000 Less Loss due to Vacancy (12000 X 2) 24000 Annual Value 132000
Answer
Let-out House ? Annual Value ? Less Municipal Tax ? Adjusted Annual Value ? Less deduction U/S 24 ? 1. Standard deduction
?
30% of Adjusted Annual Value 39600
132000 Nil 132000
2.Interest on Borrowed Capital
Income From House Property
2000
41600
90400
doc_960075620.ppt