What Is The Full Form Of GAV In Income Tax?
GAV full form in income tax is Gross Annual Value. This is a key concept when figuring out how much tax should be paid from income earned from a property, according to India’s Income Tax Act. The Gross Annual Value represents the highest value assessed from a number of estimations of rental income for that property, and it is important to work out the taxable income from the house property. This is so critical, especially for rental properties, since it forms the basis of determination of the amount to be taxed as income.
Calculation of Gross Annual Value:
To calculate the GAV of the property, one has to look at different kinds of rents, which include the actual rent received, expected rent, reasonable market rent called fair rent, the value assessed by the municipal authorities known as municipal value, and maximum allowable rent under the Rent Control Act known as standard rent. The highest of these values, which could include adjustments for any vacancy or unrealized rent, is considered the GAV.
Tax Implications and Deductions:
After determining the GAV, you subtract any municipal taxes paid to arrive at the Net Annual Value (NAV). Further, the NAV allows for a standard deduction of 30% for maintenance expenses. Interest on housing loans is also allowed as a deduction. This calculation derives the taxable income under “Income from House Property.” Further, certain deductions, such as those under Section 80 EEA for first-time homeowners in affordable housing, can greatly reduce the final tax liability.