Income from House Property: NAV vs. GAV & Section 24 Deductions

1. The Starting Point: Gross Annual Value (GAV)

GAV is essentially the earning potential of your property. The Income Tax Department uses a "Higher of" logic to prevent underreporting.

How to calculate GAV:
  • Step A: Take Municipal Value or Fair Rent, whichever is higher.
  • Step B: Cap Step A at Standard Rent (Expected Rent).
  • Step C: Compare Expected Rent with Actual Rent. The higher is your GAV.

*Note: For Self-Occupied Properties, GAV is always Nil (0).

3. The "Big Two" Deductions (Section 24)

A. Standard Deduction [Section 24(a)]

A flat 30% deduction on the NAV for repairs and maintenance, regardless of actual expenditure. (Not available for self-occupied properties).

B. Interest on Home Loan [Section 24(b)]

Property Type Old Tax Regime New Tax Regime (2026)
Self-Occupied Capped at ₹2 Lakh No Deduction
Let-Out (Rented) Full Interest Deductible Full Interest Deductible

4. Key Takeaways for 2026

  • Loss Set-off: In the New Regime, house property loss cannot be set off against Salary income.
  • Two Self-Occupied Houses: You can now claim up to two houses as self-occupied (Annual Value = Nil).
  • GST Compliance: Commercial owners should note the new FORM GST REG-32 for Rule 14A withdrawals.