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

Under the Income-tax Act, 2025, which statement about self-occupied houses whose annual value is taken as nil is correct?

Nil annual value applies to at most two houses specified by the assessee, which the owner occupies for residence or cannot occupy. It does not apply if the house or any part is actually let at any time in the tax year or the owner derives any other benefit from it.

  1. ANil annual value applies to any number of houses the owner occupies for his residence
  2. BNil annual value applies to only two houses specified by the assessee, and not if any part is actually let during the tax year or another benefit is derivedCorrect
  3. CNil annual value applies to two houses even if one of them is let for a few months
  4. DNil annual value applies only to one house, and the other must be taxed at the expected rent

Explanation

Section 21(6) gives a nil annual value to a house the owner occupies for residence or cannot occupy for any reason. Section 21(7) limits this to two houses specified by the assessee and excludes any house actually let at any time during the year or from which the owner derives another benefit. The option allowing any number ignores the limit of two, and the option on a few months of letting ignores the exclusion.

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