An individual owns and lives in three houses, none of them rented out, and specifies two for nil annual value under section 21(7) of the Income-tax Act, 2025. How is the annual value of the third…
Question and options
An individual owns and lives in three houses, none of them rented out, and specifies two for nil annual value under section 21(7) of the Income-tax Act, 2025. How is the annual value of the third house determined?
Its expected rent for the year
As half of its expected rent
As nil, being also self-occupied
As nil, since no rent is received
Answer and explanation
Section 21(7)(a) of the Income-tax Act, 2025 limits the nil annual value to two specified houses. The third house is valued under section 21(1)(a) at the sum for which it might reasonably be expected to let from year to year, even though no rent is received.
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