Under the Income-tax Act, 2025, the following details relate to a house owned by J. Ramkumar, let out…
The gross annual value is ₹ 4,80,000. Under section 21 of the Income-tax Act, 2025, the expected rent is the higher of municipal value (₹ 4,50,000) and fair rental value (₹…
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Under the Income-tax Act, 2025, the following details relate to a house owned by J. Ramkumar, let out throughout the tax year with no vacancy:
| Item | Amount |
|---|---|
| Municipal value | ₹ 4,50,000 |
| Fair rental value | ₹ 5,00,000 |
| Standard rent | ₹ 4,80,000 |
| Actual rent | ₹ 4,20,000 |
What is the gross annual value?
Answer and explanation
Correct answer D
The gross annual value is ₹ 4,80,000. Under section 21 of the Income-tax Act, 2025, the expected rent is the higher of municipal value (₹ 4,50,000) and fair rental value (₹ 5,00,000), that is ₹ 5,00,000, but it cannot exceed the standard rent, so it is restricted to ₹ 4,80,000. The annual value is the higher of this expected rent and the actual rent of ₹ 4,20,000, giving ₹ 4,80,000. Taking ₹ 5,00,000 ignores the standard-rent ceiling, and ₹ 4,50,000 or ₹ 4,20,000 ignore the higher-of comparison.
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Gujarat SET (GSET)