5th SERIES OF FAQs ON INCOME FROM HOUSE PROPERTY

Q. 21 How to compute income from a property which is self-occupied for part of the year and let out for part of the year?

At times a property may be let-out for some time during the year and is self-occupied for the remaining period (i.e., let-out as well as self occupied during the year). For the purpose of computation of income chargeable to tax under the head "Income from house property", such a property will be treated as let-out throughout the year and income will be computed accordingly.

However, while computing the taxable income in case of such a property, actual rent will be considered only for the let-out period.

?Q. 22 How to compute income from a property, when part of the property is self-occupied and part is let-out?

A house property may consist of two or more independent units, one of which is self-occupied and the remaining are/are used for any other purpose (i.e., let-out or used for own business). Income from such property will be computed in the following manner:

?a) Part/unit which is occupied by the taxpayer for his residence throughout the year will be treated as an independent property and income from such a part/unit will be computed in the manner as discussed in case of a self-occupied property.

?b) Part/unit which is let out will be treated as an independent property and income from such a part/unit will be computed in the manner as discussed in case of let out property.

?Q. 21 What is the tax of treatment of unrealised rent which is subsequently realised?

Any subsequent recovery of unrealized rent shall be deemed to be the income of taxpayer under the head “Income from house property” in the year in which such rent is realized (whether or not the assesse is the owner of that property in that year). It will be charged to tax after deducting a sum equal to 30% of unrealized rent.

?Q. 22 I have 5 separate let out properties. Should I calculate the house property income separately for each individual property or by clubbing all the rental receipts in one calculation?

The calculation will have to be made separately for each of the properties.

Q. 23 What is the tax treatment of arrears of rent?

The amount received on account of arrears of rent (not charged to tax earlier) will be charged to tax after deducting a sum equal to 30% of such arrears. It is charged to tax in the year in which it is received. Such amount is charged to tax whether or not the taxpayer owns the property in the year of receipt.

Q. 24 Is there any exemption relating to interest on capital gains account?| Whether interest received on amount deposited in capital gain account under capital gain account scheme is taxable ?| Under which head interest earned on capital gain account is taxab

??Capital Gains Account Scheme is a scheme to facilitate the taxpayer.

??If taxpayer could not invest the capital gains

??-?to acquire new asset

??-?before due date of furnishing of return of income

??-?then the capital gains amount can be deposited

??-?before due date for furnishing of return of income

??-?in a special bank account

??-?maintained in any branch of a nationalized bank

???Interest earned on Capital Gains Account is?chargeable to tax?under the head?"Income from Other Sources"

???Interest earned on Capital Gain Account is?charged to tax in the year it accrues and is credited to the capital gain account of the assessee.