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CA Intermediate · Taxation · Income from House Property

Mr Arvind Menon owns a house in Pune that is let out for the whole of tax year 2026-27 at Rs 30,000 per month. Its municipal value is Rs 3,00,000 and its fair rent is Rs 3,30,000. It is not covered by any rent control law. He paid municipal taxes of Rs 20,000 during the year and interest of Rs 1,00,000 on a loan taken to buy the house. What is his income from house property for the tax year?

Income from house property is Rs 1,38,000. GAV is the actual rent of Rs 3,60,000, since it exceeds the expected rent of Rs 3,30,000. After deducting municipal tax of Rs 20,000, NAV is Rs 3,40,000. Deducting 30% of NAV (Rs 1,02,000) and interest of Rs 1,00,000 leaves Rs 1,38,000.

  1. ARs 1,38,000Correct
  2. BRs 1,52,000
  3. CRs 2,38,000
  4. DRs 1,32,000

Explanation

Expected rent is the higher of municipal value and fair rent, which is Rs 3,30,000. Actual rent is Rs 3,60,000, and GAV is the higher of the two, so GAV is Rs 3,60,000. Less municipal tax of Rs 20,000, NAV is Rs 3,40,000. The 30% deduction is Rs 1,02,000 and interest is Rs 1,00,000, so income is Rs 1,38,000. Rs 1,52,000 wrongly ignores the municipal tax deduction.

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