FAQ's

No.Rental income received by a tenant from sub-letting is taxable under the head “Income from other sources” or profits and gains from business or profession.

The rental income from a shop will be charged to tax under the head “Income from house property”.

Composite rent means the rent of building and rent towards other assets or facilities. It is the rent charged in cases where the person does not merely let out a property, but also provides other facilities.

Municipal Value is the value determined by the municipal authorities by making a periodical survey of all buildings in their jurisdiction

It is the reasonable expected rent which the property can fetch

It is the maximum rent which a person can legally recover from his tenant.

Municipal value or Fair rental value whichever is higher is taken as the expected rent, but it should not be more than the standard rent.

Actual rent means the rent for which the property is let out during the year.

While computing actual rent, rent pertaining to vacancy period is not to be deducted. However, unrealised rent is to be deducted from actual rent.

Unrealised rent is the rent of the property which the owner of the property could not recover from the tenant, i.e., rent not paid by the tenant.

Where the property or any part of the property is let and was vacant during the whole or any part of the previous year and owing to such vacancy the actual rent received or receivable by the owner in respect thereof is less than the reasonable expected rent than the actual rent so received or receivable (as reduced by the vacant allowance) shall be considered to be the Gross Annual Value of the property.

The expenses to be deducted includes Municipal tax paid, Standard deduction @ 30% of Net Annual Value and Interest on capital borrowed for the purpose of purchase, construction, repair, renewal or reconstruction of the property.

There is no limit on the quantum of interest which can be claimed as deduction under the head Income from house property.

Pre-construction period is the period commencing from the date of borrowing of loan until the completion of the construction or acquisition of the property.

It is the interest pertaining to the relevant year, i.e., the year for which the income is being computed

Yes, interest pertaining to pre-construction period is allowed as deduction in five equal instalments commencing from the year in which the house property is acquired or constructed.

Can the rental income received be split and taxed in the individual hands?

A self-occupied property means a property which is occupied throughout the year by the owner for his residence

No. However, there is one exception to this rule.

Rental income from a property being building or land appurtenant thereto of which the taxpayer is owner is charged to tax under the head “Income from house property”. 

If a person occupies more than one property for his residence, then the self-occupied benefit will be granted only in respect of any one property as selected by him and other property/properties will be treated as “Deemed to be let-out”. However, w.e.f. A.Y 2020-21 a person can claim two properties as self-occupied house property.

A person can claim two house properties as self-occupied w.e.f. A.Y 2020-21. Any two of them shall be treated as self-occupied and the remaining as deemed let-out and will be taxed accordingly.