Income Tax Complete Details
Income Tax (also written shortly as I. tax or Inc. tax) Slabs and Rates for Assessment Year 2015-16 (applicable on income earned during 01.04.2014 to 31.03.2015) for various categories of Indian Income Tax payers
Interest on Housing Loans Section
For self occupied properties, interest paid on a housing loan up to Rs 200,000 per year is exempt from tax. This deduction is in addition to the deductions under sections 80C, 80CCF and 80D. However, this is only applicable for a residence constructed within three financial years after the loan is taken and also the loan if taken after April 1, 1999.If the house is not occupied due to employment, the house will be considered self occupied.For let out properties, the entire interest paid is deductible under section 24 of the Income Tax act. However, the rent is to be shown as income from such properties. 30% of rent received and municipal taxes paid are available for deduction of tax.
Income from House property: (Model Calculation)
1. Rent received Rs.10,000 pm x 12months= Rs.1,20,000
2. Less Municipal Tax paid = Rs. 20,000
3. Balance amount (Rs.1,20,000-Rs.20,000) Rs.1,00,000
4. Less:30% deduction U/s 24 for repairs on bal Rs.1 lakh= Rs.30,000(This deduction is allowed even if you do not spend the amount for repairs)
5. Balance after 30% deduction = 1,00,000-30,000=70,000
6. Less interest paid on Housing loan-----------Rs. 1,60,000
7. Balance Amt.= 70,000-160000=Rs. -90,000 (loss from house property). But the interest on housing loan is allowed Max. Rs.1,50,000 only. So the loss from house property will become Rs.80,000 insted of Rs.90,000. This loss Rs.80,000 can be adjusted in other income say salary or business. Supposing if your salary income is Rs.3,00,000 per year. After this house loss your net taxable income will be *Rs.2,20,000. Further the principal paid to the bank through EMI, Say Rs.1,20,000. This principal amount paid will be treated as deduction u/s 80C. 80C deduction Max. allowed is restricted to **Rs.1,00,000 (along with other investments link LIC,PPF & NSC ect.). This deduction of Rs.1,00,000 can be claimed by you on your total income. The above said net taxable income *Rs.2,20,000 will be reduced by the above said 80c deductioin **Rs.1,00,000. After adjusting the income with 80C deduction, balance taxable is Rs.1,20,000 only.
Self Occupied Property
A self Occupied property is one which is used by the person for his own residential purpose.If a person has occupied more than one property for his residential purpose then only one house is treated as self occupied and others are treated as "Deemed to be let out".If a person uses his property for carrying on the business and profession then income from such property is not chargeable to tax under House Property
How to determine annual value of self-occupied property?
In case of one self-occupied house property which has not been actually let out at any time, the annual value is taken as ‘nil’. If, one is having more than one house property using all of them for self-occupation, he is entitled to exercise an option in terms of which, the value of one house property as specified by him will be taken at nil. The annual value of the other self occupied house properties will be determined on notional basis as if these had been let out.
Annual Value of one house away from work place
A person may own a house property, say in Bangalore, which he normally uses for his residence. He is transferred to Chennai where he does not own any house property and stays in a rental accommodation. In such case, the house property income therefore would normally have been chargeable although he derives no benefit from the property. To save the taxpayer from hardship in such situations, it has been specifically provided that the annual value of such a property would be taken to be nil subject to the following conditions:
• The assessee must be owner of only one house property.
• He is not able to occupy the house property because of his employment, business etc. being away from place where the property is situated.
• The property should not have been actually let.
• He has to reside at the place of employment in a building not belonging to him.
• He does not derive any other benefit from the property not occupied.
How to Compute Income from House Property? Let-Out (Rented) and Self-Occupied
Any Income from house property should be a part of your total income from other various sources such as salary, capital gains, business/profession and other income like winning from lottery, horse race etc. Mostly such Income from house property are in the form of rental income, even some time these incomes can be negative; for example, you have taken a home loan and you are paying the interest on the outstanding loan principal amount. If the house property is self occupied where obviously no rental income can be generated then these interests paid will be treated as loss (negative income) from house property. And the best part is you can claim such losses to reduce your net tax liability, but upto certain limit.