Q.1) Mr. Sachin has given house property on rent. The particulars of the house for the P.Y.2025-26 are as under: Particulars Municipal valuation p.a. Rs. 1,50,000 Fair rent p.a. Rs. 1,75,000 Standard rent p.a. Rs. 1,60,000 Actual Rent Received Per month Rs. 15,000 Unrealised Rent for 1 month Municipal taxes paid during the year by assessee 10 % Interest on money borrowed for repair of property during the current year 55,000 Compute Mr. Sachin’s income from house property for A.Y. 2026-27

Answer: Income from House Property = Rs. 50,000

Step-by-step solution

Step 1: Compute Expected Rent (ER)

Reasonable Expected Rent is computed in two stages under Section 23(1)(a). First, we find the higher of the Municipal Valuation of $150000$ and Fair Rent of $175000$ , which gives $175000$ . Then, this figure is restricted to the Standard Rent of $160000$ , yielding an Expected Rent of $160000$ .

Step 2: Compute Gross Annual Value (GAV)

The annual rent is $12 \times 15000 = 180000$ . Deducting $1$ month of unrealised rent of $15000$ , the actual rent receivable is $165000$ . Since the actual rent received or receivable of $165000$ exceeds the Expected Rent of $160000$ , the Gross Annual Value is $165000$ .

Step 3: Calculate Net Annual Value (NAV)

Municipal taxes paid by the owner during the previous year are deductible from the Gross Annual Value. Municipal taxes equal $10\%$ of the Municipal Valuation, which is $0.10 \times 150000 = 15000$ . Subtracting $15000$ from the Gross Annual Value of $165000$ gives a Net Annual Value of $150000$ .

Step 4: Deductions under Section 24 and Total Income

Under Section 24(a), a statutory standard deduction of $30\%$ of the Net Annual Value is allowed, giving $0.30 \times 150000 = 45000$ . For a let-out property, the entire interest on money borrowed for repair under Section 24(b) of $55000$ is deductible without any upper limit. Subtracting total deductions of $100000$ from the Net Annual Value yields a taxable income of $50000$ .

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