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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Taxation of Other Products

Mr. Shah let out a house for Rs 50,000 per month for the full year, with no vacancy. He paid municipal taxes of Rs 30,000 during the year and paid interest of Rs 2,00,000 on a home loan taken to buy the property. Ignoring any other provisions, what is his taxable income from house property?

Taxable income from house property is Rs 1,99,000. Rent of Rs 6,00,000 less municipal taxes gives net annual value of Rs 5,70,000. A 30% standard deduction of Rs 1,71,000 leaves Rs 3,99,000, and the Rs 2,00,000 loan interest deduction reduces it to Rs 1,99,000.

  1. ARs 1,99,000Correct
  2. BRs 2,20,000
  3. CRs 3,70,000
  4. DRs 3,99,000

Explanation

Annual rent is Rs 6,00,000; less municipal taxes of Rs 30,000 gives net annual value Rs 5,70,000. Standard deduction at 30% is Rs 1,71,000, leaving Rs 3,99,000. Deducting interest of Rs 2,00,000 gives Rs 1,99,000. Rs 2,20,000 ignores municipal taxes, Rs 3,70,000 omits the standard deduction, and Rs 3,99,000 omits interest.

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