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Monday, November 19, 2012

Exempted income from house property


Under section 10 of income tax act 1961 following incomes from house property are exempted from income tax. These incomes are not to be included in the total income of the assessee. Hence to tax is payable on such incomes. These incomes are as follows.

1- Agricultural house property:- under section 2(1)(c) of income tax act, income from such house property which is situated on or in the immediate vicinity of agricultural land which is used for agricultural purposes by cultivator is exempted from income tax.

2- House property held for charitable purposes: - under section 11 of income tax act, held for charitable or religious purposes and also rent from shops owned by a temple is also exempted from income tax.

3- Self-occupied but vacant house:- under section 23(3) of income tax act, in case an assessee keeps one of his own house reserved for self-occupation but is living in a rented house due to his employment or profession, the income from such house taken to be nil.

4- House used for own business or profession: - in the case of house used for own business or profession, there is no income chargeable to income tax.

5- Property held by registered trade unions:- under section 10(24) of income tax act, income from house property owned by a registered trade unions is not be to be included in gross total income.

6-  Any income from a house property held by following shall be exempted.
- house property held by  Local authority
- house property held by Scientific research institute
- House property held at a political party.
- House property held by a university and any other educational institute working for spreading education and not to earn profits.
- House property held by a hospital or medical institution working for the spreading of medical services to the people and not meant for earning profits.

7- One house property owned by a former ruler of Indian states: - ex-rulers of Indian states may be owing many places but only one palace of their choice shall be treated as self-occupied house and shall be exempted.

8- One self-occupied house: - in case an assessee owns one residential house, the net annual value of the same shall be taken as nil but in the case he owns more than one house, then only one of his choice but normally of higher value shall be treated as a self-occupied one and others are treated as deemed to be let out.
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