Income from House Property is a key head of income under the Income Tax Act, 1961. While the computation of income from house property itself remains the same under both the Old and New Tax Regimes, the overall tax liability differs because of the exemptions, deductions, and the tax slabs applicable under each regime. In this discussion, we will calculate the taxable income and tax liability for an annual gross rent income of Rs 12,00,000, assuming one self-occupied house property and one let-out property, under both regimes.
Assumptions:
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Annual Rent Received from Let-Out Property: Rs 12,00,000
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Self-Occupied Property: 1 house
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Standard Deduction: 30% of Net Annual Value (for let-out property)
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Interest on Housing Loan: Rs 2,50,000 for let-out property; Rs 1,50,000 for self-occupied property
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Municipal Taxes Paid: Rs 50,000
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Individual below 60 years of age
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No other income or deductions considered
Note: The computation of income from house property is identical under both regimes, but overall tax depends on slab rates under Old and New Regimes.
Step 1: Compute Annual Value of House Property
A. Self-Occupied Property
| Particulars | Amount Rs |
|---|---|
| Gross Annual Value | Nil (Self-Occupied) |
| Less: Municipal Taxes Paid | Nil |
| Net Annual Value | Nil |
| Less: Interest on Housing Loan (Max 2,00,000) | 1,50,000 |
| Income from Self-Occupied Property | -1,50,000 (Loss) |
B. Let-Out Property
| Particulars | Amount Rs |
|---|---|
| Gross Annual Value (Rent Received) | 12,00,000 |
| Less: Municipal Taxes Paid | 50,000 |
| Net Annual Value | 11,50,000 |
| Less: Standard Deduction @30% | 3,45,000 |
| Less: Interest on Housing Loan | 2,50,000 |
| Income from Let-Out Property | 5,55,000 |
Step 2: Total Income from House Property
| Property Type | Income Rs |
|---|---|
| Self-Occupied | -1,50,000 |
| Let-Out | 5,55,000 |
| Net Income from House Property | 4,05,000 |
Explanation: The loss from self-occupied property (-1,50,000) is allowed under Section 24(b) and can be set off against income from let-out property or other heads of income, subject to Rs 2,00,000 limit if set off against other heads.
Step 3: Tax Computation
Old Tax Regime
Assumptions for Old Regime Slabs (FY 2025-26):
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Up to 2,50,000: Nil
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2,50,001 – 5,00,000: 5%
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5,00,001 – 10,00,000: 20%
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Above 10,00,000: 30%
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Health and Education Cess: 4%
Total Taxable Income (Assuming only house property) = Rs 4,05,000
| Income Slab | Rate | Tax on Slab Rs |
|---|---|---|
| Up to 2,50,000 | Nil | 0 |
| 2,50,001 – 4,05,000 | 5% | 7,750 |
| Total Tax | 7,750 | |
| Add 4% Cess | 310 | |
| Total Tax Payable (Old Regime) | 8,060 |
New Tax Regime
Assumptions for New Regime Slabs (FY 2025-26):
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Up to 3,00,000: Nil
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3,00,001 – 6,00,000: 5%
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6,00,001 – 9,00,000: 10%
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9,00,001 – 12,00,000: 15%
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12,00,001 – 15,00,000: 20%
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Above 15,00,000: 30%
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Health and Education Cess: 4%
Total Taxable Income = Rs 4,05,000
| Income Slab | Rate | Tax on Slab Rs |
|---|---|---|
| Up to 3,00,000 | Nil | 0 |
| 3,00,001 – 4,05,000 | 5% | 5,250 |
| Total Tax | 5,250 | |
| Add 4% Cess | 210 | |
| Total Tax Payable (New Regime) | 5,460 |
Step 4: Analysis and Comparison
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Income from House Property is calculated identically under both regimes using gross annual value, municipal taxes, standard deduction, and interest on housing loan.
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Old Regime allows set-off of loss from self-occupied property only up to Rs 2,00,000 against other heads of income; excess loss is carried forward.
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New Regime has lower slab rates but does not allow most other deductions (Section 80C, etc.). For house property income, interest deduction and standard deduction rules still apply.
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In this case, New Regime results in lower tax on house property income due to lower slab rate (5% vs 5% in Old, but lower base limit).
Step 5: Summary Table
| Particulars | Old Regime Rs | New Regime Rs |
|---|---|---|
| Self-Occupied Property Income | -1,50,000 | -1,50,000 |
| Let-Out Property Income | 5,55,000 | 5,55,000 |
| Net Income from House Property | 4,05,000 | 4,05,000 |
| Tax Before Cess | 7,750 | 5,250 |
| Health & Education Cess 4% | 310 | 210 |
| Total Tax Payable | 8,060 | 5,460 |
Key Points for Examination:
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Gross Annual Value (GAV): Higher of actual rent received or expected rent (municipal/fair rent), capped at standard rent.
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Deductions under Section 24: Standard deduction 30% and interest on housing loan.
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Self-Occupied Property: Annual value Nil; interest deduction limited to Rs 2,00,000.
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Loss from House Property: Set-off allowed against other heads up to Rs 2,00,000; remaining loss carried forward for 8 years.
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Slab Differences: Old Regime allows multiple deductions, higher slabs; New Regime lower slabs, limited deductions.
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Cess: 4% on total tax in both regimes.