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Chapter IV - Computation of Total Income

Section 20

Section 20: income from house property

Section 20 is the charging section for the "Income from house property" head. It taxes the annual value of buildings (and the land attached to them) that the assessee owns, while carving out any portion the owner actually uses for their own business or profession.

Official text
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Need advice on Section 20?

This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.

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Statutory text

Bare law

(1) The annual value of property consisting of any buildings or lands appurtenant thereto, owned by the assessee shall be chargeable to income-tax under the head “Income from house property”.

(2) The provisions of sub-section (1) shall not apply to such portions of the property, as the assessee may occupy for his business or profession, the profits of which are chargeable to income-tax.

Introduction

Section 20 decides the income head for an owner's building or appurtenant land. The annual value is computed under the following provisions; the business-occupied portion is carved out by subsection (2).

Key takeaways

1

Annual value is the starting point

The annual value of a building, or land appurtenant to it, owned by the assessee is charged under the house-property head.

2

Business-use exclusion

The charge excludes portions occupied by the owner for a business or profession whose profits are chargeable to income-tax.

What Section 20 says

"(1) The annual value of property consisting of any buildings or lands appurtenant thereto, owned by the assessee shall be chargeable to income-tax under the head 'Income from house property'."

"(2) The provisions of sub-section (1) shall not apply to such portions of the property, as the assessee may occupy for his business or profession, the profits of which are chargeable to income-tax."

What this means in practice

Tax under this head is charged on the property's "annual value" (as determined under section 21), not on the actual rent alone - ownership of the building, not merely receiving rent, is the trigger for this head.

If the owner occupies part of the property for their own business or profession (and the profits of that business/profession are separately taxed), that portion is excluded from the house property head - it isn't taxed twice.

Mixed-use property

Identify each part of the building or appurtenant land and how the owner uses it during the tax year.

Apply the house-property head to the relevant owned portion. Exclude any portion the owner occupies for a taxable business or profession, as subsection (2) directs.

Step-by-step flow for applying Section 20

  1. 1

    Is the property a building or land appurtenant to a building?

    • No: Not chargeable under "Income from house property" by Section 20.
    • Yes: Go to the next step.
  2. 2

    Is the assessee the owner?

    Ownership includes the deemed owners listed in Section 25.

    • No: Section 20 does not charge this assessee.
    • Yes: Go to the next step.
  3. 3

    Is any portion occupied by the assessee for a business or profession whose profits are chargeable to tax?

    • Yes: That portion is excluded by Section 20(2); its use is dealt with in computing business or professional income.
    • No: The whole property is within this head.
  4. 4

    Compute the annual value of the remaining portion under Section 21, then apply the deductions in Section 22

Practical checklist

Do

  • Keep ownership and floor-use records for a mixed-use building.
  • Compute annual value under Section 21 for the portion falling under the house-property head.

Avoid

  • Do not put an owner-occupied business portion under this head merely because it is in the same building.

Illustrative example

Worked example: a building used partly for a clinic

Hypothetical facts (illustration only, not a real taxpayer): Dr. Kapoor owns a two-floor building. She runs her medical practice from the ground floor and lets the first floor to a tenant.

  1. Nature of the property

    It is a building owned by her, so Section 20(1) applies to it.

  2. Ground floor

    She occupies it for her profession, the profits of which are chargeable to tax, so Section 20(2) keeps it out of the house property head.

  3. First floor

    The let-out floor is not used for her profession, so its annual value is chargeable under "Income from house property".

Outcome

  • Only the first floor's annual value is computed under Sections 21 and 22.
  • Keep a record of which portion is used for the practice, since the split decides the head of income.

Glossary

Annual value
The statutory value of a house property determined under Section 21 for computation under this income head.
Appurtenant land
Land attached to and used with the building, included in the property description in Section 20.

Frequently asked questions

Is house property income based on actual rent received or on 'annual value'?

It is based on the "annual value" of the property as determined under section 21, which may or may not equal the actual rent received - see section 21 for how it's computed.

If I use part of my building for my own shop, is that portion taxed under house property?

No - Section 20(2) excludes any portion the owner occupies for their own business or profession whose profits are separately chargeable to tax.

Related sections

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Last updated 9 October 2026

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