Determination of annual value
Section 21(1) of Income Tax Act 2025
(1) For the purposes of section 20, the annual value of any property shall be deemed to be the higher of the following:—
(a) the sum for which it might reasonably be expected to let from year to year; or
(b) the actual rent received or receivable by the owner, if the property or any part of it is let.
Section 21(2) of Income Tax Act 2025
(2) In case the property or any part of it is let in normal course and was vacant for the whole or any part of the tax year, the annual value of such property shall be computed as per sub-section (1)(b).
Section 21(3) of Income Tax Act 2025
(3) The annual value of the property shall be reduced by the taxes (including service taxes) levied by a local authority in respect of such property, actually paid during the tax year by the owner, irrespective of when such taxes became payable.
Section 21(4) of Income Tax Act 2025
(4) The rent which cannot be realised by the owner shall not be included in computing the actual rent received or receivable, subject to the rules as may be made in this behalf.
Section 21(5) of Income Tax Act 2025
(5) In respect of a property or its part held as stock-in-trade and not let wholly or partly at any time during the tax year, the annual value shall be nil for two years from the end of the financial year in which completion certificate is obtained from the competent authority.
Section 21(6) of Income Tax Act 2025
(6) The annual value of the property consisting of a house or any part thereof shall be taken as nil, if the owner occupies it for his own residence or cannot actually occupy it due to any reason.
Section 21(7) of Income Tax Act 2025
(7) The provisions of sub-section (6)––
(a) shall apply only in respect of two of such houses as specified by the assessee in this behalf;
(b) shall not apply, if the house or any part thereof is actually let during any time of the tax year, or if the owner derives any other benefit from it.