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Good News! Owners of more than one house property get tax relief; here’s all you need to know

Do you have multiple house properties? If affirmative, here’s excellent news for you. Now, for taxationfunctions, you'll be able to modify the choice of a house property as ‘self-occupied’ even throughout the stage of elaborated tax scrutiny/assessment of your taxation come back. This has been allowed by the citybench of the taxation proceedings judicature (ITAT) in a very recent case.

“This ruling can modify a payer to interchange a house property with alternative house property claimed as ‘self-occupied’ in legal document just in case notional rent of such property is higher, thereby reducing the notional rent to be offered for tax and eventually reducing the general liabilities,” says Akhil Chandna, Director, Grant Thornton India LLP.

Under the prevailing provisions of domestic tax laws, just in case a private owns multiple house properties as ‘self-occupied’, it's at the choice of such individual to treat any of the house property as ‘self-occupied’ with relative quantity annual worth and supply alternative house properties to tax at notional rental worth, i.e. cheap rent a property will fetch if truly rented out. within the instant case before the city bench, the payer treated a various house property as ‘self-occupied’ at the time of filing his legal document and later throughout his assessment, he opted to alter constant with alternative house property with low notional rental worth.

“This move wasn't allowed by the tax officer on the bottom that creating any such modifications throughout a assessment isn’t permissible below the law. On the contrary, the ITAT in its order declaredthat tax provisions regarding ‘Income below the top House Property’ obscurity state that when choosing a house property as ‘self-occupied’, the payer cannot create any succeeding change(s),” says Chandna.

Tax provisions regarding multiple house properties

Before taking a glance at this case well, let’s begin with the tax provisions regarding self-occupied, ‘let out’ or ‘deemed to be let out’ properties below the taxation Act.

In case of a unfettered property, the income is subject below the top ‘Income from House Property’. amazingly, notwithstanding the property isn't truly unfettered, still it's treated as deemed to be unfettered if you have got over one house property. “Income tax is owed on notional rent from such properties. However, a typical deduction of half-hour along side alternative deduction of municipal tax is allowable from the notional or actual income, whereas just in case of a self-occupied property, the notional rent is termed as annual worth that is often relative quantity in these properties,” says CA Abhishek Soni, Founder,

Further, you'll be able to avail the deduction of interest paid on home equity credit from all types of house properties, be it self occupied, unfettered or deemed to be unfettered.

Therefore, “taxpayers additional highly to|favor to|choose to} select that house property as ‘self-occupied’ that has more annual worth compared to the annual worth of alternative properties that he owns. the explanation being the annual worth becomes relative quantity and lowers the tax out-go. This provision permits him to mitigate his liabilities to an excellent extent,” says Soni.

Since the assessee has the selection to pick out that property is to be treated as self occupied, thus in some cases some problems arise with the I-T authorities. seeable of such disputes, a recent judgement has been gone along the city bench of the taxation proceedings judicature (ITAT). Now, let’s discuss what the case was regarding and what did the ITAT upheld.

Mr. Venkatavarthan N Iyengar had 3 house properties, that were set at Juhu, Santacruz East and Vasai. He set his Vasai property as ‘self-occupied’ and declared consequently in his taxation come back (ITR). Afterwards, throughout his assessment, he selected his Juhu property as ‘self-occupied’ rather than his Vasai property, however the I-T official wasn't glad and command that such a amendment wasn'tpermissible. Later, the dispute finally reached the bench of ITAT. Mr. Iyengar submitted to the ITAT that it'sat the choice of the assessee to work out that property is to be treated as ‘self-occupied’ and obscurity the I-T Act prohibits the substitution of the self-occupied property.

Finally, the ITAT additionally in its order upheld the submission of the assessee and same, “The I-T Act obscurity states that the choice of selecting a self-occupied property, once exercised, can't be modified.” Further, the I-T officer was directed to simply accept the submission by the assessee and treat his Juhu property as self-occupied.


If AN assessee declares a specific house property to be self-occupied in his ITR, “then throughout the particular assessment of his case he will substitute this with another house property in hand by him, thatmaybe has additional worth. Thereby, it becomes attainable for him to scale back the notional rent that has got to be offered for tax and therefore lower his tax outgo,” says Soni.

Thus, tax specialists say, the on top of ruling may be a welcome move for bonafide payers because itreiterates the basic rule of not sick tax over that a taxpayer is really at risk of pay below the law.

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