INCOME FROM HOUSE PROPERTY 3.

155

(Ill) SELF-OCCUPIED PROPERTIES OR UNOCCUPIED PROPERTIES

Particulars Amount
Annual value under section 23(2) Nil
Less: Deduction under section 24
Interest on borrowed capital [Allowable only in case the
assessee exercises the option of shifting out of the
default tax regime provided under section 115BAC(1A)J
(i) Interest on loan taken for acquisition or construction of
house on or after 1.4.99 and same was completed
within 5 years from the end of the financial year in
which capital was borrowed, interest paid or payable in
toto for one or two self-occupied properties subject to
a maximum of (including apportioned pre-
construction interest).
(ii) Interest on loan taken for repair, renovation or
reconstruction on or after 1.4.99, interest paid or
payable in toto for one or two self-occupied properties
subject to a maximumof 30,000.
Income from house property -E
However, aggregate interest on borrowed capital allowable under
(i) and (ii) cannot exceed

LLLUSTRATION 6
Poorna has one house property at Indira Nagar in Bangalore. She stays with her
family in the house. The rent of similar property in the neighbourhood is e 25,000
p.m The municipal valuation is e p.a.. Municipal taxes paid is e 8,000. The
house construction began in April 2077 with a loan of taken from SBI
Housing Finance Ltd. @9% p.a. on 7.4.2077.The construction was completed on
30.71.2079. The accumulated interest up to 37.3.2079 is e on 37.3.2024,
Poorna paid which included as interest. There was no
principal repayment prior to this date. Compute Poorna's income from
house
property for A. Y. 2024-25 assuming that she has exercisedthe option of shifting
out
of the default tax regime provided under section 775BAC(7A).

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 3.156 INCOME TAX LAW

SOLUTION
Computation of income from house property
of Smt. Poorna for A.Y.2024-25
Particulars Amount
Annual Value of house used for self-occupation under section Nil
23(2)
Less: Deduction under section 24
Interest on borrowed capital
Interest on loan was taken for construction of house on or
after 1.4.99 and same was completed within the prescribed
time - interestpaid or payable subject to a maximumof
(including apportioned pre-construction
interest) will be allowed as deduction.
In this case the total interestis + 72,000
(Being 115th of = 2/52,000. However, the
interest deduction is restricted to
Loss from house property
(IV) HOUSE PROPERTY LET-OUT FOR PART OF THE YEAR AND SELF-
OCCUPIED FOR PART OF THE YEAR
Particulars Amount
Computation of GAV
step 1 Compute ER for the whole year
ER = Higher of MV and FRI but restrictedto SR
Step 2 Compute Actual rent received/receivable
Actual rent received/receivablefor the period let out less
unrealized rent as _perRule 4 [See Note below for
alternate view]
Step 3 Compare ER for the whole year with the actual rent
received/receivable for the let out period
Step 4 GAV is the higher of ER computedfor the whole year
and Actual rent received/receivablecomputed for the
let-out period
Gross Annual Value (GAV)

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 INCOME FROM HOUSE PROPERTY 3.157

Less: Municipaltaxes (paid by the owner during the previous

year)
Net Annual Value (NAV) = (A-B) c
Less: Deductions under section 24
(a) of NAV
(b) Interest on borrowed capital (actual without
any ceiling limit) F
Income from house property (C-F)
Note - The income-tax returns, however,permit deduction of unrealized rent from
gross annual value. If this view is taken, the unrealized rent should be deducted
only after computing gross annual value.
jLLUSTRAVlON 7
Smt. Rajalakshmi owns a house property at Adyar in Chennai. The municipal value
of the property is fair rent is and standard rent is
The property was let-out for 50,000 p.m. up to December 2023.
Thereafter, the tenant vacated the property and Smt. Rajalakshmi used the house
for self-occupation.Rent for the months of Novemberand December2023 could
not be realisedin spite of the owner's efforts.All the conditionsprescribed under
Rule 4 are satisfied. She paid municipal taxes @72%during the year. She had paid
interest of e 25,000 during the year for amount borrowedfor repairs for the house
property. Compute her income from house property for the A. Y. 2024-25.
OLUTION
Computation of income from house property
of Smt. Rajalakshmi for A.Y.2024-25
Particulars Amount in
Computation of GAV
Stepl Compute ER for the whole year
ER = Higher of MV of and FR of
4/20,000,but restrictedto SR of 480,000
Step 2 Compute Actual rent received/receivable
Actual rent received/receivablefor the period let 350,000
out less unrealized rent as per Rule 4
50,000x 9) - (e 50,000x 2) = 450,000

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 3.158 INCOME TAX LAW

Step 3 Compare ER for the whole year with the actual

for the let out period
rent received/receivable
i.e. and
Step 4 GAV is the higher of ER computed for the whole 4/80,000
year and Actual rent received/receivable
computed for the let-out period
Gross Annual Value (GAV)
Less: Municipal taxes (paid by the owner during the
previous year) = 12% of 60,000
Net Annual Value (NAV)
Less: Deductions under section 24
(a) of NAV = of
(b) Interest on borrowed capital 25,000 1151,000
Income from house property
Note —Alternatively,if as per income-tax returns, unrealized rent is deducted from
GAV then, GAV would be e being higher of expectedrent of e
and actual rent of Thereafter,unrealized rent of and
municipal taxes of "60,000 would be deductedfrom GAV of t to arrive at
the NAVof e The deduction u/s 24(a) would be e 96,000, being 30% of
e The income from house property would, therefore, be e ///
In this case, it may be noted that GAV is the higher of Expectedrent and
Actual rent, since the Actual rent is lower than the Expectedrent due to
self-occupation and not vacancy.

(V) DEEMED TO BE LET OUT PROPERTY

Particulars Amount
Gross Annual Value (GAV)
ER is the GAV of house property
ER = Higher of MV and FR, but restrictedto SR
Less: Municipal taxes (paid by the owner during the previous year)
Net Annual Value (NAV) = (A-B) c
Less: Deductions under section 24
(a) of NAV

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 INCOME FROM HOUSE PROPERTY 3.159

(b) Interest on borrowed capital (actual without

any ceiling limit)
Income from house property (C-F) G
ILLUSTRATION 8
Ganesh has three houses, all of which are self-occupied.Theparticulars of the houses
for the P.Y.2023-24 are as under:

Particulars House I House Il House Ill

Municipal valuation p.a.
Fair rent p.a. o, 75,000
Standard rent p.a. 0/50,000
Date of completion/purchase 37.3.2000 37.3.2002 07.4.2076
Municipal taxes paid during the year 8% 6%
Interest on money borrowed for repair of e55,ooo
property during the current year
Interest for current year on money
borrowed in April, 2076 for purchase of
property
Compute Ganesh's income from house property for A.Y.2024-25and suggest which
houses should be opted by Ganesh to be assessedas self-occupiedso that his tax
liability is minimum.

Let us first calculate the income from each house property assuming that they are
deemed to be let out.
Computation of income from house property of Ganesh for the A.Y. 2024-25
Particulars Amount in
House I House Il House Ill
Gross Annual Value (GAV)
ER is the GAV of house property
Higher of MV and FR, but
restricted to SR

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 3.160 INCOME TAX LAW

Less: Municipal taxes (paid by the

36,000 28,800 19,800
owner during the previous year)
Net Annual Value (NAV) 3,14,000
Less: Deductions under section 24
(a) 30% of NAV 94,200 99,360 1106,560
(b) Interest on borrowed capital
55,000
Income from house property
73,640
Ganesh can opt to treat any two of the above house properties
as self-occupied.
Under default tax regime under section 115BAC
OPTION 1 (House I and Il—self-occupied and House Ill —deemed to be
let out)
If House I and Il are opted to be self-occupied,the incomefrom house
property
shall be —

Particulars Amount in
House I (Self-occupied) Nil
House Il (Self-occupied) (No interest deduction) Nil
House Ill (Deemed to be let-out) 73,640
Income from house property 73,640
OPTION 2 (House I and Ill self-occupied and House Il —deemed to be let out)
If House I and Ill are opted to be self-occupied,the incomefrom house property
shall be —
Particulars Amount in
Housel (Self-occupied) Nil
House Il (Deemedto be let-out)
House Ill (Self-occupied) (No interest deduction) Nil
Income from house property
OPTION 3 (House Il and Ill —self-occupiedand House I —deemed to be let out)
If House Il and Ill are opted to be self-occupied,the incomefrom house property
shall be —

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 INCOME FROM HOUSE PROPERTY 3.161

Particulars Amount In
House I (Deemed to be let-out) 2, 19,800
House Il (Self-occupied) (No interestdeduction)
House Ill (Self-occupied) (No interestdeduction)
Income from house property
Since Option 1 is most beneficial,Ganesh should opt to treat House I and Il as
self-occupied and House Ill as deemed to be let out. His income from house
property would be 73,640 for the A.Y. 2024-25 under default tax regime under
section 115BAC.
If Mr. Ganesh has exercised the option of shiftina out of the default tax regime
provided under section 115BAC(1A)
OPTION 1 (House I and Il—self-occupied and House Ill —deemed to be let out)
If House I and Il are opted to be self-occupied,the income from house property
shall be —
Particulars Amount in
House I (Self-occupied) Nil
House Il (Self-occupied) (Interest deduction restricted to 30,000) (30,000)
House Ill (Deemed to be let-out) 73,640
Income from house property 43,640
OPTION 2 (House I and Ill —self-occupied and House Il —deemed to be let out)
If House I and Ill are opted to be self-occupied,the income from house property
shall be —
Particulars Amount in
Housel (Self-occupied) Nil
House Il (Deemedto be let-out)
House Ill (Self-occupied) (1175,000)
Income from house property 1,840
OPTION 3 (House Il and Ill —self-occupiedand House I —deemed to be let out)
If House Il and Ill are opted to be self-occupied, the income from house property
shall be —

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 3.162 INCOME TAX LAW

Particulars Amount in
House I (Deemed to be let-out) 2,19,800
House Il (Self-occupied) (Interest deduction (30,000)
restricted to 30,000)
House Ill (Self-occupied) (No interest deduction)
(Total interest deduction restricted to
Income from house property 19,800
Since Option 2 is most beneficial in this case, Ganesh should opt to treat House I
and Ill as self-occupiedand House Il as deemedto be let out. His incomefrom
house property would be 1,840 for the A.Y. 2024-25 under the optional tax
regime i.e., the normal provisions of the Act.
(VI) HOUSE PROPERTY, A PORTION LET OUT AND A PORTION SELF-
OCCUPIED
LLUSTRATION 9
Prem owns a house in Madras. During the previousyear 2023-24, 2/9 portion of
the house was self-occupied and 7/3rdportion was let out for residential purposes at
a rent of e 8,000 p.m. Municipal value of the property is e p.a., fair rent is
e 2, 70,000 p.a. and standard rent is e p.a. He paid municipal taxes @70%
of municipal value during the year. A loan of e was taken by him during
the year 2079 for acquiring the property. Interest on loan paid during the previous
year 2023-24 was Compute Prem's income from house property for the
A. Y.2024-25 assuming that he has exercised the option of shifting out of the default
tax regime provided under section 775BAC(7A).
What would be Prem's income from house property under the default tax regime?
OLUTION
There are two units of the house. Unit I with 2/3rdarea is used by Prem for self-
occupation throughout the year and no other benefit is derived from that unit,
hence it will be treated as self-occupiedand its annual value will be Nil. Unit 2
with 1/3Tdarea is let-out throughout the previous year and its annual value has to
be determined as per section 23(1).

@The Institute of Chartered Accountantsof India

 INCOME FROM HOUSE PROPERTY 3.163
Computation of income from house property of Mr. Prem for A.Y.2024-25
under the optional tax regime (i.e., the normal provisions of the Act)
Particulars Amount in
Unit I (2/3rdarea —self-occupied)
Annual Value Nil
Less: Deduction under section 24(b)
2/3 td of 80,000
Income from Unit I (self-occupied) (80,000)
Unit Il (1/3rdarea —let out)
Computation of GAV
Step I Compute ER
ER = Higher of MV and FR, restrictedto SR
However, in this case, SR of 1,10,000 (1/3rdof
is more than the higher of MV of
(1/3rd of and FR of
90,000 (1/3rdof Hence the higher
of MV and FR is the ER. In this case, it is the MV.
Step 2 Compute actual rent received/ receivable 96,000
= 96,000
Step 3 Compare ER and Actual rent received/receivable
Step 4 GAV is the higher of ER and actual rent
received/receivablei.e. higher of and
96,000
Gross Annual Value(GAV) l,oo,ooo
Less: Municipal taxes paid by the owner during the
previous year relating to let-out portion
1/3rdof (10% of = 30,000/3 = 10,000 10,000
Net Annual Value(NAV) 90,000
Less: Deductions under section 24
(a) of NAV = of < 90,000 27,000
(b) Interest paid on borrowed capital (relating
to let out portion) 1/3rdof« 40,000 67,000
Income from Unit Il (let-out) 23,000
Loss under the head "Income from house property" = (C 80,000) +
23,000 = (e 57,000)

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 3.164 INCOME TAX LAW

Under the default tax regime, Prem would not be entitled to interest deduction of
80,000 under section 24(b) in respect of self-occupied portion (Unit 1). Hence,
income from house property would be 23,000, being income from Unit Il, which
is let out.

&2.8 INADMISSIBLE DEDUCTIONS [SECTION 25]

Interest chargeable under this Act which is payable outside India shall not be
deducted if —
(a) tax has not been paid or deducted from such interest and
3
(b) in respect of which there is no person in India who may be treated as an agent .

&2.9 PROVISION FOR ARREARS OF RENT AND

UNREALIZED RENT RECEIVED
SUBSEQUENTLY [SECTION 25A]
As per section 25A(1), the amount of rent received in arrears from a tenant or
the amount of unrealisedrent realised subsequentlyfrom a tenant by an
assessee shall be deemed to be income from house property in the financial
year in which such rent is received or realised, and shall be included in the total
income of the assessee under the head "Income from house property", whether
the assessee is the owner of the proper-Wor not in that financial year.
(ii) Section 25A(2) provides a deduction of 30% of arrears of rent or unrealised
rent realised subsequently by the assessee.
(iii) Summary:
Section 25A
Arrears of Rent / Unrealised Rent
Taxable in the year of receipt/realisation
(ii) Deduction@30% of rent received/realised
(iii) Taxable even if assessee is not the owner of the property in the
financial year of receipt/realisation.

3under section 163

India
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 INCOME FROM HOUSE PROPERTY 3.175

TEST YOUR KNOWLEDGE

7 Mr. Raman is a co-owner of a house property along with his brother holding
equal share in the property.
Particulars
Municipal value of the property
Fair rent
Standard rent under the Rent Control Act
Rent received 75,000 p.m.

The loan for the construction of this property is jointly taken and the interest
charged by the bank is e25,000, out of which "27,000 has been paid. Interest
on the unpaid interest is e 450. To repay this loan, Raman and his brother
have taken a fresh loan and interest charged on this loan is e 5,000.
The municipal taxes of "5, 700 have been paid by the tenant.
Compute the income from this property chargeable in the hands of
Mr. Raman for the A. Y. 2024-25.
2. Mr. X owns one residential house in Mumbai. The house is having two identical
units. First unit of the house is self-occupied by Mr.X and another unit is rented
for "8,000 p.m. The rented unit was vacant for 2 months during the year. The
particulars of the house for the previous year 2023-24 are as under:

Standardrent e p.a.
Municipal valuation p.a.
Fair rent
Municipal tax (Paid by Mr. X) 5% of municipal valuation
Light and water charges p.m.
Interest on borrowed capital 7,500 p.m.
Lease money 7,200p.a.
Insurance charges t3,ooo p.a.
Repairs e 72,000p.a.

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 3.176 INCOME TAX LAW

Compute income from house property of Mr. X for the A Y.2024-25 if he

exercises the option of shifting out of the default tax regime provided under
section 775BÆ(7A).
3. Mr. Vikas owns a house property whose Municipal Value, Fair Rent and
Standard Rent are 96,000, 1,26,000and (per annum),
respectively.During the F.Y.2023-24, one-third of the portion of the house
was let out for residential purpose at a monthly rent of 5,000. The
remaining two-thirdportion was self-occupiedby him. Municipal tax @11%
of municipal value was paid during the year.
The constructionof the house began in June, 2016 and was completedon
37-5-2019.Vikastook a loan of on 1-7-2016for the constructionof
building. He paid interest on loan @ 72%per annum and every month such
interest was paid.
Compute income from house property of Mr. IAas for A Y.2024-25 if he has
exercised the option of shifting out of the default tax regime provided under section
715BÆ(7A).

4. Mrs. Rohini Ravi, a citizen of the U.SA, is a resident and ordinarily resident in
India during the financial year 2023-24. She owns a house property at Los
Angeles, U.S.A.,which is used as her residence. The annual value of the house
is $20,000. The value of one USD (S) may be taken as e 75.
She took ownership and possession of a flat in Chennai on 7.7.2023,which is
used for self-occupation,while she is in India. The fiat was used by her for 7
months only during the year ended 31.3.2024. The municipal valuation is
e p.a. and the fair rent is e 420,000 p.a. She paid the followingto
Corporation of Chennai:
Property Tax 76,200

Sewerage Tax e 1,800

She had taken a loan from Standard Chartered Bank in June, 2027 for
purchasing this flat Interest on loan was as under:
Particulars
Periodprior to 1.4.2023 49,200
7.4.2023to 306.2023 50,800
1.7.2023 to 31.3.2024 187,300

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 INCOME FROM HOUSE PROPERTY 3.177

She had a house property in Bangalore, which was sold in March, 2020. In
respect of this house, she received arrears of rent of e 60,000 in March, 2024.
This amount has not been charged to tax earlier.
Compute the income chargeable from house property of Mrs. Rohini Ravi for
the A. Y. 2024-25 if she has exercisedthe option of shifting out of the default
tax regime provided under section 775BAC(7A).
Would your answer change if she pays tax under the default tax regime under
section 775BAC?
Two brothers Arun and Bimal are co-owners of a house property with equal
share. The property was constructedduring the financial year 2015-2076. The
property consists of eight identical units and is situated at Cochin.
During the financial year 2023-24, each co-owner occupied one unit for
residence and the balance of six units were let out at a rent of 72,000per
month per unit. Themunicipal value of the house property is e and
the municipal taxes are 20% of municipal value, which were paid during the
year. The other expenses were as follows:

(i) Repairs 40,000

(ii) Insurance premium (paid) 75,000

(iii) Interest payable on loan taken for construction of house
One of the let out units remained vacant for four months during the year.
Arun could not occupy his unit for six months as he was transferredto
Chennai. He does not own any other house.
The other income of Mr. Arun and Mr. Bimal are e and
respectively, for the financial year 2023-24.
Compute the income under the head 'Income from House Property' and the
total income of two brothersfor the A.Y. 2024-25 if they pay tax under the
default tax regime under section 775BAC.
Also, show the computation of income under this head, if they both exercised
the option of shifting out of the default tax regime provided under section
7 75BAC(7A).

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 3.178 INCOME TAX LAW

ANSWERS
I. Computation of income from house property of Mr. Raman for A.M.2024-25
Particulars
Gross Annual Value (See Note 1 below) 11801000
Less: Municipal taxes —paid by the tenant, hence not Nil
deductible
Net Annual Value (NAV) 1180,000
Less: Deductions under section 24
(i) of NAV 54,000
(ii) Interest on housing loan (See Note 2 below)
Interest on loan taken from bank 25,000
Interest on fresh loan to repay old loan for 5,000 841000
this property
Income from house property 96,000
50% share taxable in the hands of Mr. Raman
(See Note 3 below) 48,000
Notes:
Computation of Gross Annual Value (GAV)
GAV is the higher of Expected rent and actual rent received. Expected
rent is the higher of municipalvalue and fair rent, but restricted to
standard rent.
Particulars
(a) Municipal value 1160,000
(b) Fair rent
(c) Higher of (a) and (b) 1160,000
(d) Standard rent
Expected rent [lower of
(c) and
(f) Actual rent [t 15,000 x 12]
(g) Gross Annual Value
[higher of (e) and (f)]

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 INCOME FROM HOUSE PROPERTY 3.179
2. Interest on housing loan is allowable as a deduction under section 24
on accrual basis. Further, interest on fresh loan taken to repay old loan
is also allowable as deduction. However, interest on unpaid interest is
not allowable as deduction under section 24.
3. Section 26 provides that where a house property is owned by two or
more persons whose shares are definite and ascertainable, the share
of each such person in the income of house property, as computed in
accordance with sections 22 to 25, shall be included in his respective
total income. Therefore, 50% of the total income from the house
property is taxable in the hands of Mr. Raman since he is an equal
owner of the property.
2. Computation of Income from house property for A.Y. 2024-25
Particulars
(A) Rented unit (50% of total area — See Note
below)
Step I - Computation of Expected Rent
Municipal valuation x 1/2) 95,000
Fair rent x 1/2) 92,500
Standard rent (t x 1/2) 81 ,ooo
Expected Rent is higher of municipal valuation 81,000
and fair rent, but restricted to standard rent
Step Il - Actual Rent
Rent received/receivablefor the let out period 80,000
(t 8,000x 10)
Step Ill —Computation of Gross Annual Value
The actual rent of 80,000 is lower than ER of 80,000
81,000 owing to vacancy, since, had the
property not been vacant the actual rent would
have been 96,000 80,000 + 16,000, being
notional rent for two months. Therefore, actual
rent is the GAV.
Gross Annual Value 80,000
Less: Municipal taxes (5% of 95,000) 4,750
Net Annual value 75,250

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 3.180 INCOME TAX LAW

Less : Deductions under section 24

(i) 30% of net annual value 22,575
(ii) Interest on borrowed capital (e 750 x 12) 9,000 31,575
Taxable income from let out portion 43,675
(B) Self occupied unit (50% of total area —See
Note below)
Annual value Nil
Less : Deduction under section 24 -
Interest on borrowed capital 750 x 12) 9,000 9,000
Loss from self occupied portion (9,000)
Income from house property 34,675
Note: No deduction will be allowed separatelyfor light and water charges,
lease money paid, insurance charges and repairs.
3. Computation of income from house property of
Mr. Vikas for the A.M.2024-25
Particulars
Income from house property
I. Self-occupied portion (Two third)
Net Annual value Nil
Less: Deduction under section 24(b)
Intereston loan (See Note below) 18,600x
2/3) [Allowable since he has exercised the
option of shifting out of the default tax regime 12,400
provided under section 115BAC(1A)]
Loss from self occupied property (12,400)
Il. Let-out portion (One third)
Gross Annual Value
(a) Actual rent received 5,000 x 12) 60,000
(b) Expected rent 36,000
[higher of municipal valuation (i.e.,
96,000) and fair rent (i.e.,
but restricted to standard rent (i.e.,
= x 1/3

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 INCOME FROM HOUSE PROPERTY 3.181

Higher of (a) or (b) 60,000

Less: Municipal taxes 3,520
96,000x x 1/3)
Net Annual Value 56,480
Less: Deductions under section 24
(a) of NAV 16,944
(b) Interest on loan (See Note
below) 18,600x 1/3) 6,200 33,336
Income from house property 20,936
Note: Interest on loan taken for construction of building
Interest for the year (1.4.2023to 31.3.2024)= 12% of = 12,000
Pre-construction period interest = 12% of 1100,000for 33 months (from
1.07.2016 to 31.3.2019) = 33,000
Pre-construction period interest to be allowed in 5 equal annual
installments of 6,600 from the year of completion of construction i.e., from
F.Y. 2019-20 till F.Y. 2023-24.
Therefore, total interest deduction under section 24 = 12,000 + 6,600 =
18,600.
4. (i) Since the assessee is a resident and ordinarily resident in India, her
global income would form part of her total income i.e„ income earned
in India as well as outside India will form part of her total income.
She possesses a self-occupied house at Los Angeles as well as at
Chennai. She can take the benefit of "Nil" Annual Value in respect of
both the house properties.
As regards the Bangalore house, arrears of rent will be chargeable to
tax as income from house property in the year of receipt under section
25A. It is not essential that the assessee should continue to be the
owner. 30% of the arrears of rent shall be allowed as deduction.
Accordingly, the income from house property of Mrs. Rohini Ravi for
A.Y.2024-25 will be calculated as under:

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 3.182 INCOME TAX LAW

Particulars
1. Self-occupied house at Los Angeles
Annual value Nil
Less: Deduction under section 24 Nil
Chargeable income from this house Nil
property
2. Self-occupied house property at
Chennai
Annual value Nil
Less: Deduction under section 24
Interest on borrowed capital
(See Note below)

3. Arrears in respect of Bangalore

property (Section 25A)
Arrears of rent received 60,000
Less: Deduction @ 30% u/s 25A(2) 18,000 42,000
Loss under the head "Income from house
property"
Note: Interest on borrowed capital
Particulars
Interest for the current year 50,800 + 1/31,300)
Add: 1/5th of pre-construction interest (t 49,200 x 1/5) 9,840
Interest deduction allowable under section 24
Interest deduction under section 24(b) is allowable since she has
exercised the option of shifting out of the default tax regime provided
under section 115BAC(1A).
(ii) Yes, the answer would change if she pays tax under the default tax
regime under section 115BAC. Under the default tax regime, deduction
not available. Hence, she cannot claim
under section 24(b) for interest is
deduction of 1,91,940in respect of the Chennai house. Accordingly,
be 42,000.
income from house propertywould

@The Institute of Chartered Accountants of India

 INCOME FROM HOUSE PROPERTY 3.183

If Arun and Bimal pay tax under the default tax regime under
section 115BAC
Computation of total income for the A.Y. 2024-25
Particulars Arun (V) Bimal(R)
Income from house property
l. Self-occupied portion (25%)
Annual value Nil Nil
Less: Deduction under section 24(b) Nil Nil
Loss from self occupied property Nil Nil
Il. Let-out portion (75%) —See Working Note
below
Income from house property 1/25,850
Other Income
Total Income 4,15,850
Working Note —Computation of Income from Let-Out Portion of House
Property
Particulars
Let-out portion (75%)
Gross Annual Value
675,000
(a) Municipal value (75% oft 9 lakh)
(b) Actual rent 12000 x1 8, 16,000

= 48,000
16,000
whichever is higher
Less: Municipal taxes 75% of 1/80,000(20% of 9

lakh)
6,81tooo
Net Annual Value (NAV)
24
Less: Deduction under section
(a) of NAV
for the house [75% of 3
(b) Interest on loan taken 2/25,000 4, 29,300
lakh]
from let-out portion of house property
Income
(50%)
Share of each co-owner

Accountants of India
@The Institute of Chartered
 3.184 INCOME TAX LAW
default
(ii) If Arun and Bimal have exercised the option of shifting out of the
tax regime provided under section 115BAC(1A)
Computation of total income for the A.M.2024-25
Particulars Arun (C) Bimal(?)
Income from house property
I. Self-occupied portion (25%)
Nil Nil
Annual value
Less: Deduction under section 24(b)
Interest on t en for construction
37,500 (being .16] lakh)
[Allowable the
option of shifting tax
manoe
regime provi߀ 0S-øunder section 37,500 37,500
115BAC(1 A)]
Loss from self occupied property
Il. Let-out portion (75%) —See Working Note
above
88,350 88,350
Income from
16qonnq 2/90,000 1,80tooo
Other Income to
Total Income

@The Institute of Chartered Accountants of India