Income
tax act in India allows citizens to declare only one house property to be
self-occupied which will be exempted from the house tax liability. All the
other property will be declared as rented property which will be taxable. The let out properties will be considered
with the concept of deemed annual value. To calculate the deemed annual value, first, the municipal value and fair rental
value will be calculated. These two values will be compared to determine the highest
value between them and that highest value will be compared with the standard
value. The value determined
and the lowest of standard rent will be considered as deemed annual value. The
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If the rental income received
from the house property lower than deemed
annual value, then the deemed annual value will be use to calculate the income from house
property. But, if the rental income is higher than that will be used to
calculate house property income under the
House Property head. However, there is relief prescribed under income tax law to
help the house owners with excess tax payment. If the property remains vacant
for a period of the year than the actual rent received will be considered to
calculate income from house property. This was provisioned to make sure that no
taxpayer feel a burden in the situation
when no rent has been generated from a property for a longer period.
The
first interpretation of section 23(1)(‘c) depicts the describes that
if the property is vacant for a whole year, the
property value will be considered as NIL and house tax exemption can be claimed
in that situation. In other interpretation, if
the property will not be considered as a
let out property and no exemption can be claimed mentioned under section 23(1)(‘c). The Income Tax
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The
first interpretation cannot be correct as in such case, there will be no difference
left between a self-occupied house and a deemed to be let-out property. So, to
claim the benefit mentioned under section 23(1)(‘c), one need to let the
property for at least 1 month in a year and have to show that income from house
property while filing ITR. The annual value of that property will be considered
as the amount received for that one month rent and exemption can be claimed by
showing a loss in house property.
In
the case of having more than one house
property, it is advisable that one must take expert opinion before filing the house tax liability
details on the income
tax form.
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