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CS Executive · Tax Laws and Practice · Income under the Head House Property

Rohan owns a shop in Pune let to a tenant. Its reasonably expected annual rent is Rs. 2,40,000, and the actual rent received or receivable for the year is Rs. 2,70,000. There was no vacancy and no municipal tax. Under the Income-tax Act, 2025, what is the annual value of the property?

The annual value is Rs. 2,70,000. For a let property, the annual value is the higher of the reasonably expected rent of Rs. 2,40,000 and the actual rent received or receivable of Rs. 2,70,000. No vacancy or municipal tax adjusts it, so the actual rent applies.

  1. ARs. 2,40,000
  2. BRs. 2,70,000Correct
  3. CRs. 2,55,000
  4. DRs. 1,89,000

Explanation

Under section 21(1), the annual value is the higher of the reasonably expected rent (Rs. 2,40,000) and the actual rent (Rs. 2,70,000) for a let property. With no vacancy or municipal tax, it is Rs. 2,70,000. Rs. 2,40,000 wrongly takes the lower figure, and Rs. 1,89,000 is the 30% standard deduction already applied to the expected rent: 2,70,000 less 30% would be Rs. 1,89,000, which is the income, not the annual value.

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