welcome to presentation on taxability of house property 1prepared by: ca. v.k. saini (9999772095)

Welcome to presentation on Welcome to presentation on Taxability of House PropertyTaxability of House Property

11Prepared by: CA. V.K. SAINI Prepared by: CA. V.K. SAINI (9999772095)(9999772095)

Taxability of House Property

Income Tax Act,1961 Wealth Tax Act,1957


Income Tax Act,1961

Income From House Property Income from the head Capital Gain


Income from House PropertyIncome from House Property


What consist of House Property?What consist of House Property?

Property must be consist of any building or Property must be consist of any building or land appurtenant thereto.land appurtenant thereto.


Conditions for TaxabilityConditions for Taxability

Property must be in the ownership of the Property must be in the ownership of the AssesseeAssessee

Property should not be use in the business of Property should not be use in the business of AssesseeAssessee


Is location of property relevant?Is location of property relevant?

No, it does not matter that Property is situated in No, it does not matter that Property is situated in India or outside India.India or outside India.

In both of the cases Property shall be taxable in the In both of the cases Property shall be taxable in the head of “Income from House Property.”head of “Income from House Property.”


Deemed OwnerDeemed Owner

Transfer to spouse or Transfer to spouse or to a minor child who is to a minor child who is not a married daughternot a married daughter

Holder of impartible Holder of impartible estateestate

Member of co-Member of co-operative societyoperative society


Deemed OwnerDeemed Owner

Person in possession of property.Person in possession of property.(Sec 53A)(Sec 53A)

In case of HUF which have not been In case of HUF which have not been partitioned to members, the Karta of HUFpartitioned to members, the Karta of HUF

Person having right in a property forPerson having right in a property fora period not less than 12 years.a period not less than 12 years.


Computation of Taxable Income from Computation of Taxable Income from House PropertyHouse Property

Gross Annual ValueGross Annual Value xxxxxxxxxx

LessLess: Municipal Tax: Municipal Tax xxxxxxxxxx

Net Annual ValueNet Annual Value xxxxxxxxxx

LessLess: Deduction u/s 24: Deduction u/s 24

(i) S.D. of 30% of Annual Value (i) S.D. of 30% of Annual Value xxxxxxxxxx

(ii) Interest on Loan(ii) Interest on Loan xxxxxxxxxx

Taxable Income from H.P.Taxable Income from H.P. xxxxxxxxxx


What is Gross Annual Value?What is Gross Annual Value?

Sec 23(1)(a)Sec 23(1)(a)

Sum for which Property might reasonably be Sum for which Property might reasonably be expected to be let from year to year.expected to be let from year to year.

It is something like notional rent which could It is something like notional rent which could have been derived, had the property been let.have been derived, had the property been let.


Calculation of Annual Value

Where Rent Control Act apply. Where Rent Control Act does not apply


Types of House Property

Let out House Propertys Self occupied House Property Partly let out House Property


Let out House PropertyLet out House Property

Where Rent Control Act Where Rent Control Act ApplyApplyStep-AStep-AHigher of the Fair Value Higher of the Fair Value and Municipal Valueand Municipal ValueIn any case above amount In any case above amount can not exceed the Standard can not exceed the Standard RentRentStep-BStep-BHigher of the actual rent Higher of the actual rent received or receivable and received or receivable and Annual value calculated in Annual value calculated in step-Astep-A

Where Rent Control Act Where Rent Control Act does not applydoes not applyStep-AStep-AHigher of the Fair Value Higher of the Fair Value and Municipal Valueand Municipal Value

Step-BStep-BHigher of the actual rent Higher of the actual rent received or receivable and received or receivable and Annual value calculated in Annual value calculated in step-Astep-A


Self occupied House PropertySelf occupied House Property

If assessee have a single If assessee have a single house then Annual house then Annual value of such house value of such house shall be NILshall be NIL

If assessee have more If assessee have more than one house then than one house then valuation of one of them valuation of one of them shall be at NIL and shall be at NIL and valuation of other valuation of other houses shall be as they houses shall be as they are let out.are let out.


Partly let out House PropertyPartly let out House Property

Valuation of self occupied portion shall be at Valuation of self occupied portion shall be at NIL.NIL.

Valuation of let out portion as fully let outValuation of let out portion as fully let out

But if assessee let out the property for some But if assessee let out the property for some period in the year and occupied for the period in the year and occupied for the remaining period then there is no deduction for remaining period then there is no deduction for the occupied period.the occupied period.


Rules for the unrealized rentRules for the unrealized rent

If owner of Property cannot If owner of Property cannot realize the rent from the realize the rent from the tenant then such rent tenant then such rent received rent shall be received rent shall be deemed the GAV.deemed the GAV.

But after fulfilling some But after fulfilling some conditions.conditions.

Tenancy is bona fideTenancy is bona fide

Tenant has vacated, or steps Tenant has vacated, or steps have been taken to compel have been taken to compel himhim

Tenant is not occupation of Tenant is not occupation of any other property of the any other property of the assesseeassessee

All reasonable steps have All reasonable steps have been taken to institute legal been taken to institute legal proceedings for the recovery proceedings for the recovery of the unpaid rentof the unpaid rent


Subsequent recovery of unrealized Subsequent recovery of unrealized rentrent

Such recovery shall be taxable in the previous Such recovery shall be taxable in the previous year of receipt of unrealized rent irrespective year of receipt of unrealized rent irrespective of the ownership if:of the ownership if:

a deduction has been claimed and allowed in a deduction has been claimed and allowed in respect of such unrealized rentrespect of such unrealized rent

and no deduction u/s 24 shall be given on this and no deduction u/s 24 shall be given on this recoveryrecovery


Special provisions for arrears of rent Special provisions for arrears of rent receivedreceived

Where the assessee is the owner of House Property Where the assessee is the owner of House Property

and received arrears of rent from such property, not and received arrears of rent from such property, not charged to income tax in any previous yearcharged to income tax in any previous year

then such amount, after deducting 30% of such then such amount, after deducting 30% of such amount, shall be deemed to be income from House amount, shall be deemed to be income from House PropertyProperty

irrespective of the ownership of the House Propertyirrespective of the ownership of the House Property


Deductions from Net Annual ValueDeductions from Net Annual Value

Deduction u/s24

Standard Deduction u/s24(i) Interest on Loan u/s24(ii)


Standard deduction u/s 24(i)Standard deduction u/s 24(i)

In case of let out House In case of let out House PropertyProperty

30% of the NAV30% of the NAV

This deduction is This deduction is notional deduction notional deduction irrespective of actual irrespective of actual expenditure for expenditure for realization of rentrealization of rent

In case of self In case of self occupied House occupied House PropertyProperty

There will no deduction There will no deduction as NAV is NILas NAV is NIL


Deduction of interest on loanDeduction of interest on loan

In case of let out House In case of let out House PropertyProperty

All the interest paid or All the interest paid or duedue

In case of self In case of self occupied House occupied House PropertyProperty

Deduction is limited to Deduction is limited to Rs.30,000/- for each co-Rs.30,000/- for each co-owner separatelyowner separately


Maximum Deduction of interestMaximum Deduction of interest

In case of self occupied House Property In case of self occupied House Property Maximum amount of deduction of interest is Maximum amount of deduction of interest is Rs. 1,50,000/- if the following conditions are Rs. 1,50,000/- if the following conditions are satisfied:satisfied:

1.1. Loan is taken on or after 01.04.1999Loan is taken on or after 01.04.1999

2.2. House Property was acquired/constructed House Property was acquired/constructed within three years from the end of Financial within three years from the end of Financial Year in which loan was takenYear in which loan was taken


Interest attributable to prior Interest attributable to prior construction/acquisition periodconstruction/acquisition period

Interest from the date of borrowing –Interest from the date of borrowing –

Till the end of the previous year prior to the Till the end of the previous year prior to the previous year in which the house is completedprevious year in which the house is completed

Interest of the previous year in which Interest of the previous year in which construction was completed will be deducted construction was completed will be deducted as normal interestas normal interest


Interest on loan taken for repayment Interest on loan taken for repayment of loanof loan

Such interest shall be allowed as deductionSuch interest shall be allowed as deduction

But interest on interest shall not be allowedBut interest on interest shall not be allowed


Income from the head Capital GainIncome from the head Capital Gain


Capital AssetCapital Asset

House Property is a Capital Asset if it is House Property is a Capital Asset if it is Owned by the assesseeOwned by the assessee

If holding period of house property is more If holding period of house property is more than 36 months then it is Long Term Capital than 36 months then it is Long Term Capital Asset otherwise Short Term Capital AssetAsset otherwise Short Term Capital Asset


Chargeability of capital gainChargeability of capital gain

On the transfer of Capital asset in the previous On the transfer of Capital asset in the previous year being house property owned by the year being house property owned by the assesseeassessee

If the sale consideration is more than the If the sale consideration is more than the acquisition value of the house propertyacquisition value of the house property


What is transfer?What is transfer?

Transfer includes-Transfer includes-

Sale, exchange or relinquishmentSale, exchange or relinquishment

The extinguishment of any right in the assetThe extinguishment of any right in the asset

Compulsory acquisition thereof under any lawCompulsory acquisition thereof under any law

Conversion into stock in tradeConversion into stock in trade


Computation of Capital GainComputation of Capital Gain

Sale proceedsSale proceeds xxxxxxxxxx

LessLess: transfer expenses: transfer expenses xxxxxxxxxx

LessLess: indexed cost of acquisition : indexed cost of acquisition xxxxxxxxxx

LessLess: indexed cost of improvement: indexed cost of improvement xxxxxxxxxx

Capital Gain/LossCapital Gain/Loss xxxxxxxxxx


Special provision for full value of Special provision for full value of Consideration Sec. 50 CConsideration Sec. 50 C

Where consideration received as a result of the Where consideration received as a result of the Transfer of a land or building or both,Transfer of a land or building or both,

-is less than the value adopted by “stamp valuation -is less than the value adopted by “stamp valuation authority “ of State Governmentauthority “ of State Government

-for the purpose of payment of stamp duty-for the purpose of payment of stamp duty

-then such value adopted shall be deemed to be full -then such value adopted shall be deemed to be full value of the consideration received.value of the consideration received.


Special provision for full value of Special provision for full value of Consideration Sec. 50 CConsideration Sec. 50 C

Assessee may claim before any Assessing Officer that such Assessee may claim before any Assessing Officer that such value adopted exceeds the fair market value of the property on value adopted exceeds the fair market value of the property on the date of transfer.the date of transfer.

The Assessing Officer may refer the valuation of property to The Assessing Officer may refer the valuation of property to valuation officervaluation officer

and if such value is less than value adopted by the A.O. then and if such value is less than value adopted by the A.O. then such value shall be taken for the computation of Capital Gainsuch value shall be taken for the computation of Capital Gain


Exemption from capital gain

Section 54 Section 54F


Section 54Section 54

Exemption of capital gain on transfer of Exemption of capital gain on transfer of residential house propertyresidential house property

Conditions for avail exemption-Conditions for avail exemption-1.1. Owner must be an individual or HUFOwner must be an individual or HUF2.2. There should be transfer of a House Property There should be transfer of a House Property

which is Long Term Capital Assetwhich is Long Term Capital Asset3.3. Income from such house should be taxable in Income from such house should be taxable in

the head “Income from house property”the head “Income from house property”3434Prepared by: CA. V.K. SAINI Prepared by: CA. V.K. SAINI

(9999772095)(9999772095)

Section 54Section 54

4.4. Assessee has purchase another residential Assessee has purchase another residential House Property one year before or two years House Property one year before or two years

after the date on which transfer took placeafter the date on which transfer took place

5.5. Or has within three years after that date Or has within three years after that date constructedconstructed


What will be the amount of What will be the amount of exemption?exemption?

Exemption will be provide to the maximum Exemption will be provide to the maximum

amount invested into another house propertyamount invested into another house property


If assessee fails to invest the amountIf assessee fails to invest the amount

If assessee fails to invest the amount of capital gain If assessee fails to invest the amount of capital gain into another residential house property before the due into another residential house property before the due date of filling the return of incomedate of filling the return of income

Then he may deposit the amount into Capital Gain Then he may deposit the amount into Capital Gain account scheme 1988account scheme 1988

The amount deposited shall be deemed to be cost of The amount deposited shall be deemed to be cost of another house propertyanother house property


Withdrawal of exemptionWithdrawal of exemption

Exemption granted on the capital gain shall be Exemption granted on the capital gain shall be withdrawn if-withdrawn if-

the new house property purchased/constructed is the new house property purchased/constructed is transferred within three years of transferred within three years of purchase/constructionpurchase/construction

Amount deposited in the capital gain scheme 1988 is Amount deposited in the capital gain scheme 1988 is not utilized for purchase/construction in the stipulated not utilized for purchase/construction in the stipulated time periodtime period


Can amount deposited be used for any Can amount deposited be used for any purposepurpose

No, the amount deposited can’t be used other No, the amount deposited can’t be used other than for purchase/construction of house than for purchase/construction of house propertyproperty

If amount is used for any other purpose then If amount is used for any other purpose then such amount shall be treated Short Term such amount shall be treated Short Term Capital Gain for that previous year and liable Capital Gain for that previous year and liable to taxto tax


Section 54FSection 54F

Exemption of capital gain on transfer of Exemption of capital gain on transfer of capital asset other than house propertycapital asset other than house property

If an assess transfer a Long Term Capital asset If an assess transfer a Long Term Capital asset other than house propertyother than house property

and purchase house property then he can avail and purchase house property then he can avail exemption of this sectionexemption of this section


Conditions for availing exemptionConditions for availing exemption

Assessee must be an individual or HUFAssessee must be an individual or HUFTransferred capital asset is not a residential Transferred capital asset is not a residential house propertyhouse propertyCapital asset is a Long Term Capital AssetCapital asset is a Long Term Capital AssetOn the date of transfer assessee has not more On the date of transfer assessee has not more than one housethan one houseAssessee has purchase another House Property Assessee has purchase another House Property one year before or two years after the date on one year before or two years after the date on which transfer took placewhich transfer took place


Amount of exemptionAmount of exemption

Exemption from Capital Gain shall be avail in Exemption from Capital Gain shall be avail in the proportion of amount of sale consideration the proportion of amount of sale consideration invested in the new House Propertyinvested in the new House Property

In other words amount of exemption shall beIn other words amount of exemption shall be

Capital gain* Capital gain* amount investedamount invested

sale considerationsale consideration


Other conditions are sameOther conditions are same

All other conditions of section 54 are applied All other conditions of section 54 are applied to this section as they applied in section 54to this section as they applied in section 54


Some cases related to House PropertySome cases related to House Property

1.1. Incase of sale of land and building, capital gain is Incase of sale of land and building, capital gain is bifurcated between long term capital gain and short bifurcated between long term capital gain and short term capital gainterm capital gain

2.2. Construction of new floor in the same building shall Construction of new floor in the same building shall be entitled to exemption under section 54be entitled to exemption under section 54

3.3. Release of share by one co-owner in the favor of Release of share by one co-owner in the favor of another co-owner shall be deemed purchase by another co-owner shall be deemed purchase by another co-owneranother co-owner

4.4. Amount of capital gain partly invested in purchase Amount of capital gain partly invested in purchase of new house property and partly amount used in of new house property and partly amount used in construction of new floor is allowedconstruction of new floor is allowed


Wealth Tax Act,1957Wealth Tax Act,1957


Charge of Wealth Tax (Sec.3)Charge of Wealth Tax (Sec.3)

Wealth Tax shall be charged on the net wealth Wealth Tax shall be charged on the net wealth on the corresponding valuation dateon the corresponding valuation date

of every Individual, HUF and companyof every Individual, HUF and company

at the rate of 1% of the amount by which net at the rate of 1% of the amount by which net wealth exceeds Rs.15 lakhswealth exceeds Rs.15 lakhs


What is Asset?What is Asset?

Section 2(ea)(i)Section 2(ea)(i)

Asset means-Asset means-

Any building or land appurtenant thereto, whether Any building or land appurtenant thereto, whether used for used for

- residential purpose or- residential purpose or

- commercial purpose (if it is vacant or let out) or- commercial purpose (if it is vacant or let out) or

- for the purpose of maintaining of guest house- for the purpose of maintaining of guest house


Not to be includedNot to be included

A House meant exclusive for residential A House meant exclusive for residential purposepurpose

A house which is allotted by a company to an A house which is allotted by a company to an employee or officer or whole time director, employee or officer or whole time director, having a gross salary of less than Rs.5 lakhshaving a gross salary of less than Rs.5 lakhs

Any house for residential or commercial Any house for residential or commercial purpose which form part of stock in tradepurpose which form part of stock in trade


Not to be includedNot to be included

Any house used for the purpose of any Any house used for the purpose of any business or profession carried on by himbusiness or profession carried on by him

Any residential property that has been let out Any residential property that has been let out for a minimum period of 300 days in the for a minimum period of 300 days in the previous yearsprevious years

Any property in the nature of commercial Any property in the nature of commercial establishment or complexes establishment or complexes


Taxability of farm houseTaxability of farm house

Farm house shall be included in Asset if it is Farm house shall be included in Asset if it is

situated within 25 km from the local limit of situated within 25 km from the local limit of

any municipality or a cantonment boardany municipality or a cantonment board


Computation of Net WealthComputation of Net Wealth

Aggregate value of all assets wherever located Aggregate value of all assets wherever located belonging to the assesseebelonging to the assessee

Aggregate value of all asset required to be included in Aggregate value of all asset required to be included in the net wealth of the assessee the net wealth of the assessee

Less: Exemption u/s 5 of Wealth Tax ActLess: Exemption u/s 5 of Wealth Tax Act

Less: Debts owed by the assessee on the valuation Less: Debts owed by the assessee on the valuation date relating to asset included in his wealthdate relating to asset included in his wealth


Exemption u/s 5 of Wealth Tax ActExemption u/s 5 of Wealth Tax Act

Wealth Tax shall not be payable on the Wealth Tax shall not be payable on the following:following:

1.1. Any property held under trust or other legal Any property held under trust or other legal obligation for any public purpose of a obligation for any public purpose of a charitable or religious nature in India charitable or religious nature in India [sec.5(i)][sec.5(i)]

2.2. The interest of the assessee in the The interest of the assessee in the

co-parcenary property of any HUF [sec.5(ii)]co-parcenary property of any HUF [sec.5(ii)]


Exemption u/s 5 of Wealth Tax ActExemption u/s 5 of Wealth Tax Act

3.3. Any building in occupation of Ruler being a Any building in occupation of Ruler being a building which was decleared as his official building which was decleared as his official residence by the Central Govt. under Merged residence by the Central Govt. under Merged State Order [sec.5(iii)]State Order [sec.5(iii)]

4.4. One house (whether residential or commercial One house (whether residential or commercial or whether let out or self occupied) or part of or whether let out or self occupied) or part of a house or a plot of land of 500 sq. metres or a house or a plot of land of 500 sq. metres or less [sec.5(vi)]less [sec.5(vi)]


Determination of value of Immovable Determination of value of Immovable PropertyProperty

Valuation of Property as per Valuation of Property as per

Rules 3, 4 and 5 of Part B of Rules 3, 4 and 5 of Part B of

Schedule IIISchedule III xxxxxxxxxx

Add: Add: Adjustment for unbuilt AreaAdjustment for unbuilt Area

As per Rule 6As per Rule 6 xxxxxxxxxx

Less: Less: Adjustment for unearned Adjustment for unearned

increase in the value of landincrease in the value of land xxxxxxxxxx


Valuation of PropertyValuation of Property

Valuation of property shall be done as perValuation of property shall be done as per

rules 3,4 and 5 of part B of schedule IIIrules 3,4 and 5 of part B of schedule III

which is divided in 5 stepswhich is divided in 5 steps


Step-1 Determination of actual rentStep-1 Determination of actual rent

Actual rent received or receivable Actual rent received or receivable Add:Add:

1.1. Taxes in respect of the property agreed to be borne Taxes in respect of the property agreed to be borne by the tenant by the tenant

2.2. 1/91/9thth of actual rent received or receivable where the of actual rent received or receivable where the repairs are to be borne by the tenant repairs are to be borne by the tenant

3.3. 15% interest on the deposit received reduced by 15% interest on the deposit received reduced by interest actually paid by the tenant (only if such interest actually paid by the tenant (only if such deposit is for more than three months)deposit is for more than three months)


Step-1 Determination of actual rentStep-1 Determination of actual rent

4. 4. Non refundable deposit spread equally over Non refundable deposit spread equally over the period of the leasethe period of the lease

5.5. Value of any perquisite or benefit received Value of any perquisite or benefit received by the assessee for leasing out the propertyby the assessee for leasing out the property

6.6. Any obligation of the owner met by the Any obligation of the owner met by the tenanttenant


Step-2 Determination of annual rentStep-2 Determination of annual rent

Where property is let Where property is let out for the entire yearout for the entire year

Actual RentActual Rent

Where property is let Where property is let for part of the yearfor part of the year

Actual rent*12Actual rent*12

No. of month for which No. of month for which property was let outproperty was let out


Step-3 Determination of Gross Step-3 Determination of Gross Maintainable RentMaintainable Rent

Where property is not let outWhere property is not let out

Annual value as assessed by the Local Auth.Annual value as assessed by the Local Auth. Otherwise Fair Market RentOtherwise Fair Market Rent


Step-3 Determination of Gross Step-3 Determination of Gross Maintainable RentMaintainable Rent

Where property is let out then higher ofWhere property is let out then higher of

Annual RentAnnual Rent Annual Value as assessed by Local Auth.Annual Value as assessed by Local Auth.


Step-4 Determination of Net Step-4 Determination of Net Maintainable RentMaintainable Rent

Gross Maintainable RentGross Maintainable Rent xxxxxxxxxx

LessLess: 15% of GMR: 15% of GMR xxxxxxxxxx

LessLess: Municipal Taxes : Municipal Taxes xxxxxxxxxx

(on paid basis whether (on paid basis whether

by owner or tenant)by owner or tenant)

NET MAINTAINABLE RENTNET MAINTAINABLE RENT xxxxxxxxxx


Step-5 Valuation of PropertyStep-5 Valuation of Property

CASE-1CASE-1

Where property has Where property has been acquired or been acquired or constructed on or before constructed on or before 31.03.197431.03.1974

CASE-2CASE-2

Where property has Where property has been acquired or been acquired or constructed after constructed after 31.03.197431.03.1974


Case-1Case-1

Property constructed on Property constructed on freehold landfreehold landProperty constructed on Property constructed on Lease hold Land and Lease hold Land and unexpired Period of unexpired Period of Lease is 50 years or Lease is 50 years or moremoreWhere unexpired Period Where unexpired Period of Lease is less than 50 of Lease is less than 50 yearsyears

NMR * 12.5NMR * 12.5

NMR * 10NMR * 10

NMR * 8NMR * 8


Case-2Case-2

Value of the property shall be higher of the Value of the property shall be higher of the following:following:

1. NMR * Capitalization Factor (12.5/10/8)1. NMR * Capitalization Factor (12.5/10/8)

2. Cost of acquisition /construction + cost of 2. Cost of acquisition /construction + cost of improvementimprovement


Remedy to assesseeRemedy to assessee

Valuation of any one house property which is Valuation of any one house property which is constructed/acquired after 31.03.1974 constructed/acquired after 31.03.1974

and used for his own residential purpose and used for his own residential purpose throughout the yearthroughout the year

and whose cost of acquisition/construction + and whose cost of acquisition/construction + cost of improvement does not exceed :cost of improvement does not exceed :


Remedy to assesseeRemedy to assessee

-Rs.50 lakhs in case house is situated in -Rs.50 lakhs in case house is situated in

Delhi/Mumbai/Kolkata/ChennaiDelhi/Mumbai/Kolkata/Chennai

-Rs.25 lakhs in case of other cities-Rs.25 lakhs in case of other cities

shall be the NMR * Capitalization Factor shall be the NMR * Capitalization Factor (12.5/10/8)(12.5/10/8)


Adjustment for unbuilt area of plot of Adjustment for unbuilt area of plot of land as per Rule-6land as per Rule-6

If unbuilt area > Specified areaIf unbuilt area > Specified area

then there shall be addition in the value of then there shall be addition in the value of

property as per Rules 3, 4 & 5 of property as per Rules 3, 4 & 5 of

as per % of defaultas per % of default


What is percentage of default?What is percentage of default?

Unbuilt Area - Specified AreaUnbuilt Area - Specified Area

Aggregate AreaAggregate Area


What is Specified Area?What is Specified Area?

Specified Area is in the sense of permissible Specified Area is in the sense of permissible

unbuilt area unbuilt area

Therefore if Unbuilt Area > Specified Area, Therefore if Unbuilt Area > Specified Area,

then addition shall be made as per Rule 6then addition shall be made as per Rule 6


Specified Area mentioned in Specified Area mentioned in Wealth Tax ActWealth Tax Act

Where property Where property situated insituated in

Delhi, Mumbai, Delhi, Mumbai, Kolkata, ChennaiKolkata, Chennai

Specified citiedSpecified citied

Other citiesOther cities

60% of aggregate area60% of aggregate area




Addition in the value of property as Addition in the value of property as per Rule -6per Rule -6

% of default% of default

Upto 5%Upto 5%

5% to 10%5% to 10%

10%to 15%10%to 15%

15% to 20%15% to 20%

Above 20%Above 20%

AdditionAddition

NILNIL

20% of value as per 20% of value as per rules 3 4 & 5rules 3 4 & 5

30% of value30% of value

40% of value40% of value

FMV of property FMV of property (Rule-8)(Rule-8)


Adjustment for unearned increased in Adjustment for unearned increased in value of land as per Rule-7value of land as per Rule-7

If the property is constructed on a land taken on lease If the property is constructed on a land taken on lease from Govt. Authorityfrom Govt. Authority

and Govt. Authority is entitled to recover a specified and Govt. Authority is entitled to recover a specified % of unearned increase in the value of land at the % of unearned increase in the value of land at the time of transfer of property time of transfer of property

then, the value determined as per Rules 3, 4, 5 & 6 then, the value determined as per Rules 3, 4, 5 & 6 shall be reduced by the shall be reduced by the least least of the following :of the following :


Adjustment for unearned increased in Adjustment for unearned increased in value of land as per Rule-7value of land as per Rule-7

Amount of unearned increase liable to be Amount of unearned increase liable to be recovered by the Govt. Authorityrecovered by the Govt. Authority

50% of the value as per Rules 3, 4, 5 & 650% of the value as per Rules 3, 4, 5 & 6


What is unearned increase?What is unearned increase?

Unearned increase means the difference Unearned increase means the difference between the :between the :

value of such land as determined by the Govt. value of such land as determined by the Govt. Authority for the purpose of calculating such Authority for the purpose of calculating such increase increase

and the lease premium paid or payable to the and the lease premium paid or payable to the Govt. Authority for lease of landGovt. Authority for lease of land


Rule-8Rule-8

Notwithstanding contained in Rules 3 to 7 the Notwithstanding contained in Rules 3 to 7 the value of the property shall be estimated to be value of the property shall be estimated to be the price which, in the opinion of the the price which, in the opinion of the Assessing Officer,Assessing Officer,

it would fetch if sold in the open market on the it would fetch if sold in the open market on the valuation date.valuation date.


Cases, where Rule-8 applyCases, where Rule-8 apply

1.1. Where the A.O. is of the opinion that it is not Where the A.O. is of the opinion that it is not practicable to the apply Rules 3 to 7practicable to the apply Rules 3 to 7

2.2. Where the difference between the unbuilt area and Where the difference between the unbuilt area and the specified area exceeds 20% of the aggregate the specified area exceeds 20% of the aggregate areaarea

3.3. Where the property is constructed on a leasehold Where the property is constructed on a leasehold land and the lease expires within a priod of less land and the lease expires within a priod of less than 15 years and the deed of lease does not give an than 15 years and the deed of lease does not give an option for the renewal of the leaseoption for the renewal of the lease


welcome to presentation on taxability of house property 1prepared by: ca. v.k. saini (9999772095)

Documents

assessee property

owner of house property

types of house property

owner of property

taxability property

possession of property

cases property

single house