Income from house property
[Section 20 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 20(1) of Income Tax Act 2025
20(1) The annual value of property consisting of any buildings or lands appurtenant thereto, owned by the assessee shall be chargeable to income-tax under the head “Income from house property”.
Section 20(2) of Income Tax Act 2025
20(2) The provisions of sub-section (1) shall not apply to such portions of the property, as occupied by the assessee for his business or profession, the profits of which are chargeable to income-tax.
FAQs on Section 20 of Income Tax Act 2025
1. What is considered “Income from House Property” under the Income Tax Act, 2025?
As per Section 20(1), income from buildings or land appurtenant thereto owned by an assessee is chargeable to tax under this head.
2. Is self-occupied property also taxable under “Income from House Property”?
No, if the property is occupied by the owner for residential purposes, it is not considered taxable under this head.
3. If I use my property for business, will it be taxable under “Income from House Property”?
No, as per Section 20(2), if a portion of the property is used for business or profession (where profits are chargeable to tax), that portion is not considered under “Income from House Property.”
4. Is rental income from a house taxable under this head?
Yes, rental income from letting out a building or land appurtenant thereto is considered taxable under this head.
5. How is the annual value of a house property determined?
The annual value is generally calculated as the higher of actual rent received or expected rent as per municipal valuation and fair rent.
6. Are there any deductions available under “Income from House Property”?
Yes, deductions like municipal taxes, standard deduction (30% of net annual value), and interest on home loans may be available.
7. What if I own multiple house properties?
If more than one house is self-occupied, only one can be treated as self-occupied (exempt), while others will be considered as deemed let-out and taxed accordingly.
8. Is income from vacant land taxable under “Income from House Property”?
No, only income from buildings or lands appurtenant thereto (such as gardens, garages, etc.) is covered under this section.
9. Can co-owners of a property split the income for tax purposes?
Yes, if a property is jointly owned, income is divided among co-owners based on their share in the property.
10. Is notional rent taxable if a house is not rented out?
Yes, for deemed let-out properties, notional rent (expected rental income) may be considered taxable.
The Income Tax Act, 2025, under Section 20(1), mandates that the annual value of buildings and appurtenant lands owned by an assessee is taxable under the head “Income from House Property.” However, as per Section 20(2), if the property (or a portion of it) is used for business or profession, its income is not taxed under this category.
Taxation of house property is based on annual value, with deductions available for municipal taxes, standard deductions, and loan interest. Special provisions exist for self-occupied, let-out, and deemed let-out properties. Understanding these rules is crucial for taxpayers to ensure proper compliance and tax planning.
