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CA Intermediate · Taxation · Income from House Property

Mr. Arjun Nair owns a flat in Pune that was let out throughout tax year 2026-27. Municipal value is Rs 3,00,000, fair rent is Rs 3,30,000, standard rent under the Rent Control Act is Rs 3,12,000, and actual rent received is Rs 3,60,000. Municipal taxes of Rs 20,000 were paid by him during the year. What is the Gross Annual Value (GAV) of the property?

The Gross Annual Value is Rs 3,60,000. Expected rent works out to Rs 3,12,000 after applying the standard rent cap, but because the actual rent received of Rs 3,60,000 is higher than expected rent, the actual rent becomes the GAV for a let-out property.

  1. ARs 3,00,000
  2. BRs 3,12,000
  3. CRs 3,30,000
  4. DRs 3,60,000Correct

Explanation

Expected rent is the higher of municipal value (3,00,000) and fair rent (3,30,000) = 3,30,000, but capped at standard rent 3,12,000, so expected rent = 3,12,000. Actual rent received is 3,60,000, which exceeds expected rent, so GAV = 3,60,000. Choosing 3,12,000 ignores that actual rent is higher.

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