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CA Intermediate · Taxation · Income from House Property

Mr. Sharma owns a house property in Pune, let out for the whole of the tax year 2026-27. Municipal value is Rs 2,40,000, fair rent is Rs 2,80,000, standard rent under the Rent Control Act is Rs 2,60,000 and actual rent received is Rs 3,00,000. Property is not vacant at any time. What is the Gross Annual Value (GAV)?

The Gross Annual Value is Rs 3,00,000. Expected rent works out to Rs 2,60,000 after capping the higher of municipal and fair value at standard rent, and since the actual rent received of Rs 3,00,000 exceeds it, the actual rent becomes the GAV.

  1. ARs 2,40,000
  2. BRs 2,60,000
  3. CRs 2,80,000
  4. DRs 3,00,000Correct

Explanation

Expected rent = higher of municipal value (2,40,000) and fair rent (2,80,000) = 2,80,000, but capped at standard rent 2,60,000. So expected rent = 2,60,000. Actual rent is 3,00,000, which is higher, so GAV = 3,00,000. Choosing 2,60,000 ignores the comparison with actual rent.

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