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

Under the Income-tax Act, 2025, the annual value of a let house property is deemed to be which of the following?

The annual value of a let property is the higher of the rent it might reasonably be expected to fetch from year to year and the actual rent received or receivable. The Act compares the two figures and takes the greater one, subject to the vacancy rule.

  1. AThe lower of the reasonably expected rent and the actual rent received or receivable
  2. BThe higher of the sum for which the property might reasonably be expected to let from year to year and the actual rent received or receivableCorrect
  3. COnly the actual rent received, whatever the market rent
  4. DOnly the municipal valuation of the property

Explanation

Section 21(1) makes the annual value the higher of the reasonably expected rent and the actual rent received or receivable where the property is let. The option stating the lower figure reverses the rule. Rent actually received alone is relevant only through this comparison, and the municipal valuation is not the sole test.

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