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CA Intermediate · Taxation · Income from House Property

Mr. Arvind Nair owns a house in Kochi that was let out for the whole of the tax year 2026-27. Annual rent as per the lease is Rs 3,60,000. Municipal value is Rs 3,00,000, fair rent is Rs 3,30,000 and standard rent under the Rent Control Act is Rs 3,20,000. The property was vacant for no period. Municipal taxes of Rs 20,000 were paid by the owner 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 3,20,000, being the higher of municipal and fair value capped at standard rent. Since the actual rent of Rs 3,60,000 exceeds expected rent and there was no vacancy, the actual rent becomes the GAV.

  1. ARs 3,20,000
  2. BRs 3,30,000
  3. CRs 3,60,000Correct
  4. DRs 3,40,000

Explanation

Expected rent is the higher of municipal value (3,00,000) and fair rent (3,30,000), limited to standard rent (3,20,000), so it is 3,20,000. Actual rent received is 3,60,000. GAV is the higher of expected rent and actual rent, so Rs 3,60,000. Choosing 3,20,000 ignores that actual rent is higher.

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