## Computation of Income from House Property

### Standard Format

Particulars	Letout / Deemed Letout	Self-Occupied / Unoccupied (Max 2)
Gross Annual Value (GAV)	XX	Nil
Less: Municipal Tax (paid by owner)	(XX)	Nil
Net Annual Value (NAV)	XX	Nil
Less: Deductions u/s 24
(a) Standard Deduction @ 30% of NAV	(XX)	Nil
(b) Interest on Loan	(XX)	(XX) — subject to limit
Taxable Income from HP	XX	(XX) — loss

### Key Rules

1. Municipal tax is deductible only if (i) paid by the owner (not tenant), and (ii) actually paid in the previous year (cash basis), regardless of which year it relates to.

2. Standard deduction (30% of NAV) is a fixed flat deduction; NOT applicable to SOP (since NAV is Nil).

3. Interest on loan is allowed for both letout and SOP, but SOP has a cap (₹ 2,00,000 / ₹ 30,000 depending on loan-purpose & date).

4. SOP always shows Nil GAV / Nil NAV → no standard deduction → only interest deduction → results in negative income (loss) that can be set off against other heads.

Worked example

### Example 1

Example: A letout property — GAV ₹ 3,60,000; Municipal Tax paid ₹ 36,000; Interest on housing loan ₹ 1,00,000.

• GAV = 3,60,000

• Less: Municipal Tax (36,000)

• NAV = 3,24,000

• Less: Std Ded @ 30% = (97,200)

• Less: Interest on loan = (1,00,000)

• Income from HP = ₹ 1,26,800

⚠️ Common exam mistakes

Deducting municipal tax paid by tenant — only owner-paid tax is deductible.
Computing 30% of GAV instead of NAV.
Allowing 30% standard deduction on SOP — NAV is Nil, so no standard deduction.
Forgetting that SOP loss (from interest) can be set off against other heads (up to ₹ 2,00,000 cap under Sec 71).

Reference:

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Computation Format — Income from House Property

Worked example

⚠️ Common exam mistakes