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House Property Incomes Exempted from Income Tax


House Property Incomes Exempted from Income Tax

The Government of India levies Income Tax on the earning of an individual from income earned from house property. Income from house property must be included as a part of the total income of the taxpayer while filing an income tax return. In this article, we briefly discuss some of the house property incomes exempted from income tax that fall under the head of income known as ‘Income from House Property’.

House Property Incomes – Exempted From Tax

There are certain cases where the income from house property are tax-free. They are neither taxable nor included in the total income for taxation. The incomes that are exempted from tax are described below, as follows:

  1. The revenue generated from the buildings in and around the agricultural land that forms a part of agricultural income is exempted from tax as per section 10(1). Examples of this kind of income include renting or leasing of a farmhouse, storehouse or godown.
  2. Income from property confined to local authorities is tax-exempted as per Section 10(20).
  3. House property income of a political party is free from tax under Section 13A.
  4. Revenue earned from a property belonging to an approved scientific research association is exempted from tax under Section 10(21).
  5. Property income of educational organizations, medical institutions are free from tax as per Section 10(23C).
  6. Income from property subjected to charitable or religious purpose is tax-exempted as per Section 11.
  7. Property income of Certified trade union is exempted from tax under Section 10(24).
  8. The annual value of one palace possessed by an ex-ruler of Indian states is free from tax as per Section 10(19A) where other palaces come under taxation.
  9. The annual value of one self-occupied property for own residence is exempted from tax under Section 23(2).
  10. Income from property used for one’s own business or profession is also tax-exempted under Section 22.

Amendment of Section 23 vide Finance Act, 2017

A certificate from the competent authority can be acquired for the annual value to be taken as nil for the house property (a building which may be used for residential, industrial or commercial purposes) that is not let out or detained as stock during the whole or part of the financial year. The assessee can benefit from the amendment if the property is vacant for a part of or the whole year. Also, buildings used for commercial or business purposes, for which depreciation is claimed in accordance with the provisions of the Act, will not fall under the purview of Income from House Property but shall be taxable under the head of Business Income.