Now Time has come to be ready to file income Tax return for the Assessment Year 2020-21, however there are lot of changes have been made by the Government.

Some changes are more important to know because Income tax Return cannot be filed correctly if are ignorant of these.

I am just making an effort to cover such amendments/changes in a series like what would be Tax Rate for the Assessment year , changes in particular source of income i.e.salary, house property, Business or profession, capital etc.

In earlier parts, we have included

(1 ) Rate of Income Tax for the Assessment year 2020-21 (Read Part -1 here)

(2)"Exempt income" i.e. Income which do not part of Total Income (Read Part -2 here)

(3) Changes in the head "Income from Salary" (Read Part -3 here)

Now we will cover the changes made or brought in the head "Income from House Property" which are specifically applicable for the Assessment year 2020-21 :-

Income From House Property

1. Benefit to declare Two houses as Self Occupied Property : [Section 23(4)]

Up to Assessment Year 2019-20, A Taxpayer could claim only one residential house property as a self occupied property and accordingly it’s Annual Letting Value (ALV) was taken as Nil i.e. his income from House property shall be taken as NIL thus no Tax.

Now From Assessment Year 2020-21 (Financial Year 2019-2020) and onward, the benefit of self occupied property has been expanded from one house property to two house properties.

Therefore, If you have two houses and has not let out these houses during the previous year, now you can claim these two such houses as self occupied properties and accordingly for both of those properties the Annual Letting Value will be considered as NIL thus no tax.

but keep in mind that there is no change in deduction of interest on borrowed capital thus your maximum deduction for interest paid or payable on Home Loan for both properties would be Rs.2,00,000/-

2. Taxability of Property held as stock-in-trade.

Sub-section (5) was inserted in Section 23 vide Finance Act, 2017 which provided that in case where property is held as stock-in-trade and the property or any part of the property was not let during the whole or any part of the previous year, Annual Letting Value (ALV) shall be taken as NIL for a period up to one year from the end of the financial year in which the certificate of completion of construction of the property is obtained from the competent authority.

Thus, no notional rent is chargeable to tax on such properties which were held as stock-in-trade for a period upto one year form the end of financial Year in which completion certificate from competent authority is received.

From Assessment Year 2020-21 and onward, this benefit has been extended for two years. It means that such vacant property shall not be taxable on notional basis up to two years from the end of the financial year in which the certificate of completion of construction of the property is obtained from the competent authority.

Please give your feedback/query in comment section.

Read earlier parts:-

1. Part-1

2. Part-2

3. Part-3