Mr. A owns a residential house which was let out

Solution

Solution Step 1: Determine Expected Rent Expected Rent = Higher of Municipal Value and Fair Rent But cannot exceed Standard Rent · Municipal Value = ₹2,40,000 · Fair Rent = ₹2,70,000 · Higher = ₹2,70,000 · Standard Rent = ₹2,50,000 Expected Rent = ₹2,50,000 Step 2: Determine Gross Annual Value (GAV) GAV = Higher of Expected Rent or Actual Rent Received · Expected Rent = ₹2,50,000 · Actual Rent = ₹2,60,000 · GAV = ₹2,60,000 Step 3: Net Annual Value (NAV) NAV = GAV – Municipal Taxes paid by owner NAV = ₹2,60,000 – ₹20,000 NAV = ₹2,40,000 Step 4: Deductions under Section 24 1. Standard Deduction @30% of NAV = 30% of ₹2,40,000 = ₹72,000 2. Interest on Housing Loan = ₹1,80,000 Step 5: Income from House Property Income = NAV – Standard Deduction – Interest = ₹2,40,000 – ₹72,000 – ₹1,80,000 = ₹21,000