The steps involved in computation of gross annual value of a property which is let-out throughout the year are already discussed earlier, hence, we will take an illustration for better understanding.

Illustration

From the following information provided by Mr. Raja in respect of 3 properties rented out by him compute the gross annual value of all the properties.

(*) All the conditions specified for deduction of unrealized rent are satisfied.

**

Gross annual value will be computed as follows:

Step 1: Compute reasonable expected rent of the property.

Step 2: Compute actual rent of the property.

Step 3: Compute gross annual value.

Based on these steps the computation will be as follows:

Note 1: Amount at Step 1 (,i.e., Reasonable expected rent)is higher of municipal value or fair rent (subject to standard rent).

Note 2: Amount at Step 2is actual rent after deducting unrealized rent., i.e., Rs. 8,00,000 (9,60,000 – Rs. 1,60,000) in case of property A, Rs. 60,000 in case of property B and Rs. 8,80,000 (Rs. 9,60,000 – Rs. 80,000) in case of property C.

Note 3: Gross annual value will be higher of amount at Step 1 or Step 2.

The steps involved in computation of gross annual value of a property which is let-out throughout the year are already discussed earlier, hence, we will take an illustration for better understanding.

IllustrationFrom the following information provided by Mr. Raja in respect of 3 properties rented out by him compute the gross annual value of all the properties.

(*)All the conditions specified for deduction of unrealized rent are satisfied.**Gross annual value will be computed as follows:

Compute reasonable expected rent of the property.Step 1:Compute actual rent of the property.Step 2:Compute gross annual value.Step 3:Based on these steps the computation will be as follows:

Note 1:Amount at Step 1 (,i.e.,Reasonable expected rent)Note 2:Amount at Step 2i.e.,Rs. 8,00,000 (9,60,000 – Rs. 1,60,000) in case of property A, Rs. 60,000 in case of property B and Rs. 8,80,000 (Rs. 9,60,000 – Rs. 80,000) in case of property C.Note 3:Gross annual value will be higher of amount at Step 1 or Step 2.Source:- Income tax website.