Income Tax--Income From House Property

Issues in Income From House Property

V.K. Subramani

Income from house property is one of the heads of income governed by only 7 statutory provisions in the repealed Income-tax Act, 1961. The newly introduced Income-tax Act, 2025 deals with income from house property in sections 20 to 25. In the case of a property which is used for business or profession such property is not governed by this head of income. Obviously because the taxpayer can claim depreciation in respect of such property. This write-up discusses the provisions of Income-tax Act, 1961.

Determination of annual value is contained in section 23 which is meant for both self-occupied and let out property. In the case of self-occupied property if the assessee occupies more than 2 house properties for self-occupation (other than for use to business or profession) the excess would be deemed as let-out. The Finance Act, 2025 substituted section 23(2) by stating that the annual value of the property which cannot be occupied by the owner due to any reason shall also be taken as 'nil'. Previously, it had a condition that it could not be occupied for the reason that the assessee had to reside at a place in a building not belonging to him. With this liberal substitution, a taxpayer who could not occupy the premises can claim the annual value of the property to be 'nil' even where he has resided in the same place in yet another building belonging to him. As a corollary a taxpayer can claim 2 house properties as self-occupied including the one referred to in section 23(2).