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Example Two |
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Mr X purchases a ready apartment in April 2006 for Rs 15,00,000. Fair rent
is Rs 10,000 per month. He has taken a loan of Rs 15,00,000 at an
interest rate of 10% p.a. from a housing finance company in April,
2005. The interest outgo on the loan for the financial year 2006-2007
is Rs 1,50,000. The principal repayment of loan during 2006-2007
is Rs 1,00,000. In addition, he makes the following expenditure
in respect of the house property:
Municipal taxes: Rs 4,000
Repairs: Rs 2,000
Fire insurance premium: Rs 2,500. |
|
Home
finance |
| Your
guide to taxes |
| Example
one |
| Example
two |
| Example
three |
| Example
four |
| Example
five |
| Example
six |
The apartment is not let out and no benefit other than self occupation
for residential purpose is derived from it. Assuming that the income
of X from other sources is Rs 4,50,000, his Taxable Income and Tax
for the Assessment Year 2007-08 will be: |
| Computation of Tax |
| |
Rs |
Annual Value (as X has occupied the apartment for self-residence
and no other benefit is
derived, annual value of the property would be nil) |
NIL |
| Less: Municipal tax |
NIL |
| Net Annual Value |
NIL |
Less: Deduction:
Standard deduction @ 30% of NAV
Interest on borrowed capital:
(on accrual basis) |
NIL
1,50,000 |
Income from House Property:
Income from Other Sources: |
(-)1,50,000
4,50,000 |
Gross Total Income
Less: Deduction U/s 80C |
3,00,000
1,00,000 |
| Taxable Income |
2,00,000 |
| Income Tax |
15,000 |
| Add: Surcharge |
NIL |
| Add: Education Cess @ 2% |
300 |
| Net Tax Payable |
15,300 |
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