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CA Intermediate · Taxation · Income from House Property

Mr. Arvind Nair owns a residential house in Kochi, which he let out for the entire tax year 2026-27. Municipal value is ₹3,00,000, fair rent is ₹3,60,000, standard rent under the Rent Control Act is ₹3,30,000 and actual rent received is ₹4,20,000. There was no vacancy. Municipal taxes of ₹30,000 were paid by the owner during the year. What is the Gross Annual Value (GAV) of the house?

The Gross Annual Value is ₹4,20,000. Expected rent works out to ₹3,30,000 after capping at standard rent, but since the actual rent received for the full year, ₹4,20,000, is higher than the expected rent and there was no vacancy, the actual rent becomes the GAV.

  1. A₹3,30,000
  2. B₹3,60,000
  3. C₹4,20,000Correct
  4. D₹3,00,000

Explanation

Expected rent = higher of municipal value (3,00,000) and fair rent (3,60,000) = 3,60,000, but restricted to standard rent 3,30,000. Actual rent is 4,20,000, which exceeds expected rent, and there was no vacancy, so GAV = 4,20,000. Option 3,30,000 is wrong because it ignores that actual rent is higher than expected rent.

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