How to calculate ‘income from house property’ for income tax purposes

Section 25 of the Income Tax Act 1961 (Amounts not deductible from income from house property):

Notwithstanding anything contained in section 24,

• any interest chargeable under this Act which is payable outside India (not being interest on a loan issued for public subscription before the 1st day of April, 1938),
• on which tax has not been paid or deducted under Chapter XVII-B and
• in respect of which there is no person in India who may be treated as an agent under section 163

shall not be deducted in computing the income chargeable under the head “Income from house property”.

Section 25A of the Income Tax Act 1961 (Special provision for arrears of rent and unrealised rent received subsequently):

(1) The amount of arrears of rent received from a tenant or the unrealised rent realised subsequently from a tenant, as the case may be, by an assessee shall be deemed to be the income from house property in respect of the financial year in which such rent is received or realised, and shall be included in the total income of the assessee under the head “Income from house property”, whether the assessee is the owner of the property or not in that financial year.

(2) A sum equal to thirty per cent of the arrears of rent or the unrealised rent referred to in sub-section (1) shall be allowed as deduction.

Section 26 of the Income Tax Act 1961 (Property owned by co-owners):

Where property consisting of buildings or buildings and lands appurtenant thereto is:

• owned by two or more persons and
• their respective shares are definite and ascertainable,
• such persons shall not in respect of such property be assessed as an association of persons, but
• the share of each such person in the income from the property as computed in accordance with sections 22 to 25 shall be included in his total income.

Explanation.—For the purposes of this section, in applying the provisions of sub-section (2) of section 23 for computing the share of each such person as is referred to in this section, such share shall be computed, as if each such person is individually entitled to the relief provided in that sub-section.

Section 27 of the Income Tax Act 1961 (“Owner of house property”, “annual charge”, etc., defined):

For the purposes of sections 22 to 26—

(i) an individual who transfers otherwise than for adequate consideration any house property to his or her spouse, not being a transfer in connection with an agreement to live apart, or to a minor child not being a married daughter, shall be deemed to be the owner of the house property so transferred;

(ii) the holder of an impartible estate shall be deemed to be the individual owner of all the properties comprised in the estate;

  (iii) a member of a co-operative society, company or other association of persons to whom a building or part thereof is allotted or leased under a house building scheme of the society, company or association, as the case may be, shall be deemed to be the owner of that building or part thereof;

 (iiia) a person who is allowed to take or retain possession of any building or part thereof in part performance of a contract of the nature referred to in section 53A of the  Transfer of Property Act, 1882 (4 of 1882), shall be deemed to be the owner of that building or part thereof;

 (iiib) a person who acquires any rights (excluding any rights by way of a lease from month to month or for a period not exceeding one year) in or with respect to any building or part thereof, by virtue of any such transaction as is referred to in clause (f) of section 269UA, shall be deemed to be the owner of that building or part thereof;

(iv) [***]

(v) [***]

(vi) taxes levied by a local authority in respect of any property shall be deemed to include service taxes levied by the local authority in respect of the property.