Income from three houses under the new tax regime

Assumptions

1. Municipal taxes at 10% of municipal value were paid by Mr. X during the year.
2. The unrealised rent of H-2 meets the conditions the rules lay down (a genuine tenancy, steps taken to recover the rent, the tenant having left or been asked to leave), so it is left out of the actual rent (section 21(4)).
3. Each loan was outstanding in full until its last date of repayment, with interest at 10% a year.
4. Assumption for H-2: let from its completion. H-2 was completed on 10/6/2026, so it is taken as let for the 295 days from then to 31/3/2027 at ₹70,000 a month; its municipal value, fair rent, standard rent and rent are taken for that period on a days basis (295 of 365 days), while the municipal taxes and the interest are as paid for the year. The full-year and ten-month readings are given at the end (The other reading).

House H-1: self-occupied

Its annual value is nil (section 21(6)), and no loan was taken for it; under the new regime section 202(2)(a)(v) would in any case withdraw the interest deduction of section 22(1)(b) for such a house. Income: nil.

Houses H-2 and H-3: let out

For H-3 the actual rent after the vacancy (₹5,00,000) equals the expected rent, so the vacancy does not reduce the annual value below it.

Interest on borrowed capital (section 22(1)(b), (c))

H-3 was completed on 10/10/2018; its five instalments of pre-construction interest ran from 2018-19 to 2022-23 and are over. Under the new regime, interest on a let-out house remains deductible: section 202(2)(a)(v) withdraws the section 22(1)(b) deduction only for a self-occupied house of section 21(6). Under either regime, interest chargeable under the Act and payable outside India is not deductible if tax has been neither paid nor deducted on it under Chapter XIX-B and there is no agent in India for it under section 306 (section 22(6)); both loans here are taken as payable in India. H-2's pre-construction interest is taken as not allowed under any other provision, so it is not reduced before the instalments are worked out (section 22(3)).

Income from house property for tax year 2026-27

The other reading. If H-2 is taken as let for the full 12 months, since the paper gives its monthly rent and no vacancy: expected rent ₹6,10,000, actual rent ₹7,00,000 (₹8,40,000 less ₹1,40,000), net annual value ₹6,50,000, 30% ₹1,95,000, H-2 income ₹1,35,000 and total ₹2,83,333. On a ten-month basis (June to March): expected rent ₹5,08,333, actual rent ₹5,60,000, net annual value ₹5,10,000, 30% ₹1,53,000, H-2 income ₹37,000 and total ₹1,85,333. The completion date of 10/6/2026 makes letting from completion the likelier reading, so the days basis is taken above.