Income from House Property

Sections 24, 25, 19(22), 19B, 18(2)(b) Subsections of sec. 2: (3) TDS (Tax Deducted at Source): [common sections 48 & 49], 53A Rules 12 [u/s 49], 17B, 14(2) Sixth Schedule, Para-1, Para-14
Part A Sixth Schedule, No paragraph Part B

Income from House Property: Sections 24 & 25 Scope: Income from house property let out for: - residential purpose - commercial purpose Gross rental income is to be treated as Annual Value defined in sec. 2(3) Deemed income from house property u/s 19(22) In case of multi-ownership, proportional income of the assessee shall be computed [sec. 24(2)] In case of any part of the house used for selfbusiness, no imputed income from the house or expenditure for office-rent should be considered [sec. 24(1)]

Procedure of computation: Annual Value: u/s 2(3) Actual rent or reasonable rent, higher one Add: Deemed income as amount received in advance which is not adjustable against monthly rent (at assessees option, 1/5th of the total amount) u/s 19(22)
Section 19(22) Income from House Property: Receipt from tenant not adjustable against rent (Security money) Period of income recognition: The income year in which the amount is received, or at the option of the assessee, the amount may be allocated for assessment purpose in equal proportion for 5 income years
Non-Assessable Income under the head Income from House Property

Part A, Sixth Schedule Para-1: Income derived from house property held under trust or other legal obligation (not applicable for an NGO registered with NGO Affairs Bureau) Para-14: Income from newly constructed house property (original version was valid up to income year 2003-2004). Clause (h) of paragraph 14 deleted by the Finance Act 1999 [w.e.f. AY 1999-2000] Clause (h) of paragraph 14: If any house constructed during 1-7-1995 to 30-6-1999, the annual value up to Taka 36,000 was exempted.

Allowable Deductions u/s 25 1. Land development tax or rent to Government [u/s 25(1)(a)] 2. Insurance premium [u/s 25(1)(b)] 3. Interest on mortgage or other charge [u/s 25(1) (d)] 4. Other non-capital annual charge [u/s 25(1)(e)]
5. Ground rent [u/s 25(1)(f)] 6. Interest on borrowed capital (current income years) [u/s 25(1)(g)]
From AY 2007-08, where the property or a portion thereof is self occupied and acquired, constructed, renewed or reconstructed with borrowed capital, the amount of any interest, payable on such borrowed capital not exceeding Tk. 20 lakh, shall be deducted from total income.

7. One-third of total interest on borrowed capital up to the date first

letting out (for first 3 income years) [u/s 25(1)(gg)] 8. Repair and maintenance [u/s 25(1)(h)]: 1/4th of annual value in case of house let out for residential purpose 30% of annual value in case of house let out for commercial purpose

[Repair and maintenance includes repair, collection of rent, water and sewerage, electricity and salary of darwan, security guard, pump-man, lift-man and caretaker and all other expenditure related to maintenance and provision of basic services.]
Vacancy allowance in proportion to time [u/s 25(1)(j)] 10. Vacancy allowance in proportion to space [u/s 25(1)(k)]
9.

Limitations on deduction: No deduction in respect of interest or annual charge payable outside Bangladesh shall not be allowed as deduction if tax has not been deducted or collected at source under the provisions of Chapter VII [vide u/s 25(2) ].

Withholding Tax on Income from House Property: Section 53A and Rule 17B

No TDS (tax deducted at source), if monthly rent is up to Taka 20,000 3% TDS, if monthly rent is above Taka 20,000 and up to Taka 40,000 5% TDS, if monthly rent is above Taka 40,000

Payment of TDS in case of section 53A [Rule 14(2)]:

TDS has to be deposited before the payment of remaining after-tax amount.

Section 18(2)(b) To compute the income from house property as domestic income the house must be situated in Bangladesh.