How to compute gross annual value of a property which is let-out throughout the year?

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.

                                               

Particulars	Property A (Rs.)	Property B (Rs.)	Property C (Rs.)
Municipal Value	8,48,484	8,48,484	2,52,252
Fair Rent	2,52,252	2,52,252	8,48,484
Standard Rent	Not Applicable	84,252	9,84,000
Actual rent for the entire year	9,60,000	60,000	9,60,000
Unrealised rent (*)	1,60,000	NIL	80,000

(*) All the conditions specified for deduction of unrealised 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

Particulars	Property A (Rs.)	Property B (Rs.)	Property C (Rs.)
Amount at Step 1 (Note 1)	8,48,484	84,252	8,48,484
Amount at Step 2 (Note 2)	8,00,000	60,000	8,80,000
Amount at Step 3, i.e., Gross annual value (Note 3)	8,48,484	84,252	8,80,000

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 2 is actual rent after deducting unrealised 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.​