Loss from Home Property is a reasonably widespread situation and generally arises whereas submitting the Revenue Tax Return. On this article, we might primarily be focussing on the Motive for Loss from Home Property and the Revenue Tax therapy of the identical.
The Revenue/ Loss from Home Property is computed within the following method:-
|1.||Gross Annual Worth (i.e. Precise Hire or Anticipated Hire, whichever is greater)||xx|
|(Much less)||2.||Municipal and Different taxes paid to Native Authority||(xxx)|
|3.||Web Annual Worth (1-2)||xxx|
|(Much less)||4.||Deductions allowed below Part 24|
|a. Statutory Deduction @ 30% of NAV||(xxx)|
|b. Curiosity on Borrowed Capital (Dwelling Mortgage)||(xxx)|
|5.||Revenue chargeable below head Home Property (3-4)||xxx|
Motive for Loss from Home Property
There will be 2 causes for Loss below head Home Property:-
- In case of Self Occupied Property, the Gross Annual Worth will likely be Nil. From this Gross Annual Worth (which is Nil), Municipal taxes and Curiosity on Mortgage could be decreased which might finally lead to a Loss arising below head Home Property. (In case of Dwelling Mortgage for Self Occupied property, the most deduction below Part 24 for Curiosity on Dwelling Mortgage could be Rs. 2 Lakhs solely)
- In case of different sort of Property, the Gross Annual Worth won’t be Nil. Nevertheless, if the Deductions claimed are greater than the Gross Annual Worth, this may once more consequence a Loss arising below the top Home Property.
- Really useful Learn: Deductions from Home Property allowed below Revenue Tax Act
Therapy of Loss from Home Property for Tax functions
Set-off of Loss from Home Property
The Loss from Home Property is allowed to be set-off in opposition to some other Revenue arising throughout the identical 12 months. Subsequently, if there’s a loss below head Home Property, and there may be Revenue below any of the opposite 5 heads of Revenue i.e. Wage/ Home Property/ Enterprise or Occupation/ Capital Positive aspects/ Different Sources, this loss from Home Property will be adjusted in opposition to such earnings.
The online earnings so computed after set-off of Loss below head Home Property could be taxable as per the Revenue Tax Slabs
- Really useful Learn: Newest Revenue Tax Slab Charges in India
Modification launched vide Finance Act 2017: The Loss below head Home Property which is allowed to be set-off in opposition to Revenue from Different Sources is restricted to Rs. 2 Lakhs for every evaluation 12 months. The steadiness unabsorbed loss could be allowed to be carried ahead to the following evaluation 12 months and set-off accordingly. This modification is relevant from Evaluation Yr 2018-19 onwards.
Carry-forward of Loss from Home Property
In case the Loss from Home Property has not been adjusted in the identical 12 months, such loss will likely be carried ahead to the following 12 months and allowed to be set off with earnings arising different the identical head i.e. Home Property.
It needs to be famous whereas setting off the Loss below head Home Property in the identical 12 months, it may be set-off with some other head of earnings however in case the loss is being carried ahead to the following evaluation 12 months, it will probably solely be set-off in opposition to incomes arising below the identical head i.e. Revenue from Home Property solely.
Such Loss from Home Property is allowed to be carried ahead for a most of 8 evaluation years. Such carry ahead of Loss could be required to be proven within the Revenue Tax Return.
- Really useful Learn: Process for submitting Revenue Tax Return
Related Level concerning Loss from Home Property
Though the Loss from Home Property is allowed to be carried ahead for 8 evaluation years, such loss needs to be set off within the subsequent evaluation 12 months if there may be earnings below head Home Property. The steadiness which has not been set-off shall be carried ahead to the following evaluation 12 months.
In different phrases, the taxpayer can not maintain carrying ahead the loss from Home Property for 8 evaluation years as per his personal want and he could be required to regulate the loss in that 12 months itself in which there’s earnings below head home property.
If the taxpayer doesn’t set-off the loss in opposition to the earnings, such losses won’t be allowed to be set-off at a future date. [Tyrosoles (India) v CIT (1963)49ITR 515 (Mad)]