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CA Intermediate · Taxation · Income from House Property

Ms. Kavya Reddy let out a house in Hyderabad. Expected rent is ₹6,00,000 per annum. The house was vacant for 3 months during tax year 2026-27 and actual rent received for the remaining 9 months was ₹3,60,000 (₹40,000 per month). Assume that, because of the vacancy, the actual rent is lower than expected rent and that the rent received is not due to any reason other than vacancy. What is the GAV?

The GAV is ₹3,60,000. When a let-out property is vacant for part of the year and, because of that vacancy, the actual rent received is less than the expected rent, the actual rent received or receivable is taken as the Gross Annual Value instead of the expected rent.

  1. A₹6,00,000
  2. B₹4,50,000
  3. C₹3,60,000Correct
  4. D₹4,80,000

Explanation

Expected rent is 6,00,000. Because of vacancy, actual rent received (3,60,000) is less than expected rent, so the actual rent received or receivable is the GAV: 3,60,000. Option 6,00,000 ignores the vacancy; 4,50,000 simply pro-rates expected rent for 9 months, which is not the rule when actual rent is lower owing to vacancy.

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