Annual Value – Section 2(7) | Income-tax Act, 2025 vs 1961

§ 2(7) · Income-tax Act, 2025

Annual value

ITA 2025 · 2(7) ITA 1961 · 2(2)
Definition — Section 2(7)

Means the annual value of any property as determined under section 21 of the Income-tax Act, 2025. Under section 21, annual value is the higher of: (1) the sum for which the property might reasonably be expected to let from year to year, or (2) the actual rent received or receivable by the owner if the property is let. Where the property was vacant and actual rent received fell below the reasonable expected rent owing to such vacancy, the actual amount received is taken as the annual value. Local authority taxes (including service taxes) actually paid by the owner during the tax year are deducted from the annual value. For a self-occupied property or one the owner cannot occupy due to any reason, the annual value is taken as nil — this benefit applies to up to two such houses as specified by the assessee.

Act Comparison
Income-tax Act, 2025
2(7)
Annual value
Income-tax Act, 1961
2(2)
Annual value
Key Points
  • Continues from Section 2(2) of the 1961 Act — both Acts cross-refer to their respective computation sections (s. 21 in 2025 Act; s. 23 in 1961 Act)
  • Central concept for taxation under 'Income from House Property'
  • Under section 21, annual value is the higher of: the sum the property might reasonably be expected to fetch on letting, or the actual rent received or receivable
  • Vacancy relief applies — if the property was vacant and actual rent fell below the reasonable expected rent, the actual amount received is taken as annual value
💡 Practical Note

For a self-occupied property, annual value is taken as nil — but only one property gets this benefit; the rest are deemed let-out.

Published by Simplified Tax India — Clear, section-wise comparison of Income-tax Acts. ← Back to Section 2 Definitions Table
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