All India Bar Examination (AIBE) 16-XVI Previous Year Question Papers with Answers

Practice Mode:
39.

Amount of deduction under section 24 of the Income Tax Act annual value is -

A: 1/2 of Annual Value
B: 1/3 of Annual Value
C: 3/10 of Annual Value
D: 17/10 of Annual Value

The answer is: C

Explanation

The correct option is C: 3/10 of Annual Value.

This is because the standard deduction under section 24 of the Income Tax Act is 30% of the net annual value of the property. This deduction is allowed irrespective of the actual expenditure on the property, such as repairs, insurance, electricity, water supply, etc. For a self-occupied property, the net annual value is nil, so the standard deduction is also nil. For a let-out or deemed to be let-out property, the net annual value is the rent received or the reasonable rent of a similar property, whichever is higher. The standard deduction is 30% of this amount.