ITR filing: How to calculate net annual value from house property, deductions allowed from rental income

economictimes.indiatimes.com:

income, it is important to calculate the Net Annual Value (NAV) of his house. It is based on this NAV one can claim the eligible tax deductions. The value arrived at after claiming eligible deductions will be the 'income from house property' on which tax liability will be calculated. According to income tax laws, the NAV of a house property is to be calculated in two situations: A) when house is on rent; or B) when it is assumed to be put on rent, i.e., deemed rent «Landlords need to select the ITR form based on their residency status (Resident or NRI), taxable income and type of income. For resident individuals having one house property, ITR 1 should be filed. In the case of other individuals, ITR 2 is applicable for income other than business or profession. Else, they are required to file ITR 3,» said Neeraj Agarwala, Partner, Nangia Andersen India, a Business Advisory Company.

To calculate the NAV of the house property, the first step is to calculate its Gross Annual Value (GAV).

How to calculate gross annual value of house property for ITR filing

Follow the steps below to calculate the GAV.Step 1: Know the municipal rent value and fair rent value. Depending upon the area in which house is located, the municipal corporation will have a value assigned to the house based on their own calculations. This is called municipal value of the house. The fair rent value of a house is arrived at by comparing the rental value of the similar houses in the same locality. Once both the values are known, compare the municipal rent value with the fair rent, and take the higher of the two.Step 2: Next, compare the value derived in step 1 with the standard rent