Answer to Question #226277 in Accounting for Khursheed

Question

The particulars of a residential house are given below for the assessment Year 2019-20

Municipal Value 44,000
Fair rent 48,000
Standard rent 36,000
Actual rent 37,200
Municipal taxes paid 8,800
Ground rent payable 60
Interest on money borrowed for construction
5,000
Collection charges actually paid
300

The assessee mortgaged the property for Rs. 36,000; which was spent on
his daughter's marriage. The assessee paid interest of Rs. 3,000 on the mortgage loan this year. Compute his income from house-property.

Answer 1

Income from house property = Gross Annual Value- (taxes+ interests on Loan+ standard deductions)

Gross annual Value = Fair rent (because it is higher than both actual and standard rent) = 48,000

Net annual Value = GAV- Municipal taxes

NAV =48, 000- 8, 000 = 40, 000

Standard deductions: 30% of NAV = 12, 000

Interest on Loan: 5, 000

Other deductions: Ground rent payable= 60

collection charges = 300

Income from house property = Net Annual Value - (all deductions)

= 40, 000- (12, 000+ 5, 000+ 60 + 300)

= 40, 000 - 17360

=22, 640