Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
How the income is computed
Start with the annual rent (or expected rent). Deduct municipal taxes actually paid by you to get the Net Annual Value. From that, take a flat 30% standard deduction under Section 24(a) — given regardless of actual spend — and the home-loan interest under Section 24(b). The result is your taxable house-property income.
Self-occupied versus let-out
A let-out property is taxed on its rent as above, with full interest deductible (subject to the ₹2 lakh loss set-off cap). A self-occupied house has nil rental value but still allows up to ₹2 lakh of interest. Deemed-let-out rules can apply if you own several houses — confirm for your case.
A worked example
Example: annual rent ₹3.6 lakh, municipal tax ₹20,000. Net Annual Value ₹3.4 lakh; less 30% (₹1.02 lakh) = ₹2.38 lakh; less home-loan interest ₹2 lakh = ₹38,000 taxable. The 30% deduction is automatic, so you get it even if you spent nothing on repairs. Rent received from a tenant who is your child is taxable to you in the same way. Our team can compute it.