Any taxes levied by any local authority in respect of the house property is to be deducted from the gross annual value, if the following conditions are fulfilled:-
a) Municipal taxes have been borne by the owner, and
b) These have been actually paid during the previous year.
Notes:-
a) Deduction is allowed only when taxes are paid irrespective to the year to which such local tax relates or the method of accounting used by the assessee.
b) Taxes includes municipal taxes, water and sewage taxes, fire tax etc which are levied by local authority. Also, education cess and service tax paid on the taxes are allowed as deduction.
c) Income from house property situated outside India will be computed as per Sec. 22 in the same manner as is done for a property situated in India. Municipal taxes paid for such house property shall be allowed as deductions.
