Section 24 of Income Tax Act

Other than owning a beautiful home for yourself and your family, people also take home loan to get some income tax benefits on home loan. As per Income tax Act 1961, any building and/or land attached to the building is considered as house property. Government imposes tax on house property as income from house property may not implicitly mean the rent or income received or generated by the property but it emphasizes on the fact that the potential income that the house property is capable of generating. So, it can be said that the tax is imposed on the potential income that the property may yield in future. Here, the important point to be noted is that rental properties and self occupied house property also fall in the purview of sources of income from house property.

What is the basis of calculating tax on Income from house property?

The calculation of tax is based on the “Annual Value” of the property. Annual Value of the property is the capacity of the property to generate income. This tax is to be borne by the owner.