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CA Intermediate · Taxation · Income from House Property

Sunita owns a house in Indore let out for Rs 30,000 per month. It was vacant for 3 months of the tax year 2026-27 and let for 9 months. Municipal value is Rs 2,40,000, fair rent is Rs 3,00,000 and standard rent under rent control law is Rs 3,60,000. Actual rent received is Rs 2,70,000. Municipal tax paid by her is Rs 24,000. Compute NAV, assuming that the vacancy is genuine.

The net annual value is Rs 2,46,000. Expected rent is Rs 3,00,000, but because of genuine vacancy the actual rent of Rs 2,70,000 is lower, so it becomes the gross annual value. Deducting municipal tax of Rs 24,000 gives Rs 2,46,000.

  1. ARs 2,46,000Correct
  2. BRs 2,76,000
  3. CRs 2,70,000
  4. DRs 3,36,000

Explanation

Expected rent is the higher of municipal value and fair rent = Rs 3,00,000, but limited to standard rent of Rs 3,60,000, so Rs 3,00,000. Actual rent for the year is 3,60,000 as actual rent receivable for a full year, but vacancy reduces it to 2,70,000. Because of vacancy, actual rent received is lower than expected rent, so GAV = 2,70,000. NAV = 2,70,000 - 24,000 = Rs 2,46,000. Rs 2,76,000 adds the tax, and Rs 3,36,000 uses the expected rent less tax.

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