Explore More


           
Blog : Elevate Your Life Email Linked In | 5000+ Connections Whats App | 800+ Subscribers Facebook Fan Page | 600+ fans Google+ | 500+ followers YouTube | 100+ subscribers | 4,000+ hits Twitter | 200+ followers | 2,000+ tweets GoodReads | 300+ reviews | 4.2 avg rating Quora | 1400+ followers | 600+ answers Pinterest | 40+ followers | 250+ pins
From the Rat Race to Financial Freedom... A common man's journey
  Read Reviews > Amazon Flipkart GoodReads Google PlayStore

  Buy a copy > Amazon India Kindle Flipkart Google PlayStore
Happiness Unlimited...How to be happy..always !!
  Read Reviews > Amazon Flipkart GoodReads

  Buy a copy > Flipkart Amazon India URead Kindle Google PlayStore
Dream On...Every setback is a little nudge from HIM to Dream On
  Read Reviews > Flipkart Amazon GoodReads

  Buy a copy > Flipkart Amazon India NotionPress Kindle Google PlayStore
The Autobiography Of A Stock
  Read Reviews > Amazon Flipkart GoodReads

  Buy a copy > Flipkart Amazon India Kindle Google PlayStore
Manoj Arora    About Me
Author Mission    My Mission
Credentials & Awards   Awards & Credentials

Corporate & Family Gifts   Corporate & Family Gifts [NEW]

Amazon Author Page   Visit Author's Page at Amazon
Flipkart Author Page   Visit Author's Page at Flipkart

Tuesday, January 01, 2013

Income from House Property Part-3 (Sec 22 and 24 IT Act)

In this series of posts, we have been covering the tax awareness on Income from House property (Sec-22 and Sec-24 of IT Act). We have covered 2 parts till now and we are covering the 3rd and final part today. So, lets read on the Computation of Income from a self-occupied Property.
Part-3 : Sec-24 : Income from Self Occupied Property (current post)

In the last two posts, we essentially studied the following:
Part-1 : Sec -22 of Income Tax Act which talks about what is considered a house property and what kind of taxes are applicable on the same.
Part-2 : Sec-24 of Income Tax Act. Once you have a taxable house property which is worthy of generating income for you, we must understand the applicability of Sec-24 for a rented out property.

The applicability of Sec-24 is covered under two sections (and hence Part-2 and Part-3 of this series of posts)

So, lets read on the Computation of Income from a self-occupied Property. It is important to understand in detail about Part-2 of this series before reading about Part-3.

The 'annual value' (We studied about Annual Value in Part 2) of one self-occupied house property, which has not been actually let out at any time during the previous year, is taken as ‘Nil’. This is very obvious since you are occupying the property, therefore it cannot generate any rental income for you.

From the annual value (which will be zero for a self occupied property), only the interest on borrowed capital is allowed as a deduction under section 24.

The amount of deduction will be:
• Either the actual amount accrued towards taxes and other expenses towards maintaining the household (as defined for a let out property in Part-2 of this series of posts) or INR 30,000 (as a standard deduction) whichever is less.
• When borrowing of money or acquisition of the property is after 31.3.1999 - the upper limit of deduction is INR 2,00,000 applicable to A.Y 2002-03 and onward.

Note that there is a upper limit of INR 2,00,000 for loan interest paid that can be deducted for Income Tax calculation in the case of self occupied property. At the same time, there is no such upper limit in the case of loan interest deduction for a let out property. The simple reason for the same is that in case of let out property, there is actual income generation as well.

What if you own more than 1 property
There may be cases where you own more than one property. In a normal scenario, one of those would be self occupied and the others would be let out. The tax calculation for each such property would be calculated separately based on their applicability as per Part-2 or Part-3 of this series of posts.

There may also be a scenario where more than one property is occupied for self occupancy. If a person owns more than one house property, and using all of them for self occupation, he is entitled to exercise an option in terms of which, the annual value of one house property as specified by him will be taken at Nil and the tax calculation would be done as per Part-3 of this series of Posts. The other self occupied house property/is will be deemed to be let out and their annual value will be determined on notional basis as if they had been let out, as per Part-2 of this series of posts.

Like the article? 
Do not hesitate to share. It can make a positive impact on someone's life.

The book "From the Rat Race to Financial Freedom" has many such investment concepts explained in a very simple and uncomplicated manner, especially in the Indian context.

Cheers

Manoj Arora
elevate your life...

More on "From the Rat Race to Financial Freedom"

Books to elevate your life
From the Rat Race to Financial Freedom | Happiness Unlimited | Dream On

No comments:

Post a Comment