Computation of taxable income

Example Calculation

Suppose the Gross Annual Value (GAV) of a property is ₹3,00,000. Municipal taxes paid during the year amount to ₹30,000. The property owner is entitled to a deduction for interest on borrowed capital of ₹50,000.

1. GAV = ₹3,00,000
2. Less: Municipal Taxes Paid = ₹30,000
3. Net Annual Value (NAV) = ₹3,00,000 - ₹30,000 = ₹2,70,000
4. Less: Standard Deduction (30% of NAV) = 30% of ₹2,70,000 = ₹81,000
5. Less: Interest on Borrowed Capital = ₹50,000
6. Taxable Income from House Property = ₹2,70,000 - ₹81,000 - ₹50,000 = ₹1,39,000