FAQ House Property

Q. I own a house property, which is let out. The municipal taxes for the year 2007-08 are Rs.40000 and during the year I paid only Rs.25000. While computing my house property income, will whole of the municipal taxes be allowed to be deducted.

Ans. Sir as per proviso to Sec 23(1) municipal taxes are allowed only on actual payment basis thus in your case only Rs.25000 will be considered while computing the income from house property.
It is to be noted that any of such tax if paid by the tenant will not be allowed to be deducted.
Municipal taxes mean taxes paid for municipal purposes and not other purpose it includes house tax, fire tax, water tax, sewage tax etc. Any such tax if paid to any other department is not covered under municipal tax.

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