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CA Intermediate · Taxation · Income from House Property

Mr. Arjun Nair owns a house in Kochi let out for the whole of tax year 2026-27. Municipal value is ₹2,40,000, fair rent is ₹2,70,000, standard rent under the Rent Control Act is ₹2,50,000 and actual rent received is ₹2,60,000. Ignoring other factors, what is the Gross Annual Value (GAV) of the house?

The Gross Annual Value is ₹2,60,000. Expected rent is the higher of municipal and fair value, limited to standard rent, giving ₹2,50,000. Since actual rent received of ₹2,60,000 exceeds this expected rent, the actual rent becomes the GAV for the let-out property.

  1. A₹2,40,000
  2. B₹2,50,000
  3. C₹2,60,000Correct
  4. D₹2,70,000

Explanation

Expected rent = higher of municipal value (2,40,000) and fair rent (2,70,000) = 2,70,000, but capped at standard rent of 2,50,000, so expected rent = 2,50,000. Actual rent received is 2,60,000, which is higher than expected rent, so GAV = 2,60,000. Choosing 2,50,000 ignores that actual rent exceeds expected rent.

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