How is income calculated for a house that is deemed let-out?

livemint.com:

I have bought a flat far away from my workplace. I have not let it out currently. However, will I be eligible to claim interest incurred on HBA (house building advance) under the new tax regime in case of a deemed let-out property? If I pay municipal taxes, how is income calculated? Do note that the approximate annual rent of similar flats is ₹96,000 and municipal taxes come to ₹56,147 and ₹2,000 is the annual interest paid on HBA of ₹1.97 lakh.

—Name withheld on request

As per provisions of the Income Tax Act, 1961, a property may be considered as self-occupied with a ‘nil’ annual value, if it is actually occupied by the owner for the purpose of his residence or if it cannot be actually occupied by the owner, on account of him having to reside in another house (not owned by him) due to his workplace (either employment or business/ profession related) being at any other place. If a taxpayer has multiple houses which qualify for classification as self-occupied, the said provision applies to two of such houses, which the taxpayer may choose.

Any house in excess of the two chosen houses, which is self- occupied, shall be considered to be deemed let-out and a notional rental value is required to be offered to tax against such house as income from house property.

In your case, assuming you own only two self-occupied properties or less (including the subject property), the subject property will be considered as a self-occupied property and not a deemed let-out property.

Under the new tax regime, interest paid on housing loan shall not be allowed as deduction in case the property is treated as self-occupied property. In case the property is considered as deemed let-out property, interest paid on a housing loan shall be