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An owner lives in his house for part of tax year 2026-27 and lets the whole house to a tenant for the rest of the year. How does section 21(7)(b) of the Income-tax Act, 2025 affect the nil annual…

Question and options

An owner lives in his house for part of tax year 2026-27 and lets the whole house to a tenant for the rest of the year. How does section 21(7)(b) of the Income-tax Act, 2025 affect the nil annual value?

  1. Nil value applies for the whole year

  2. Nil value applies if the letting is under six months

  3. Nil value is lost for the whole year

  4. Nil value applies for the months of residence

Answer and explanation

Correct answer: C - Nil value is lost for the whole year

Section 21(7)(b) of the Income-tax Act, 2025 provides that the nil annual value under section 21(6) does not apply if the house or any part of it is actually let at any time during the tax year. The house is therefore valued under the ordinary rules for the whole year; there is no apportionment for the months of residence.

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