The Direct Taxes Code Bill , 2010, is a bill to consolidate and amend the law relating to direct taxes such as income-tax and wealth-tax. After the Direct Taxes Code, 2010 becomes law, it shall come into effect from 1st April, 2012. The provisions relating to income from house property have also been restructured under the Code which are given below.

The income from letting of any house property owned by any person shall be computed under the head "income from house property" and such income shall be computed under this head notwithstanding that the letting, if any of the property is in the nature of trade, commerce or business.

The income from house property owned by two or more persons having definite and ascertainable shares shall be computed separately for each such person in respect of his share, and in case where such shares are not definite and ascertainable, such persons shall be assessed as an association of persons in respect of such property.

These provisions shall not apply to a property or any portion of a property which (i) is used by the person as a hospital, hotel, convention centre or cold storage, and (ii) forms part of Special Economic Zone , the income from which is computed under the head "income from business". These provisions shall also not apply to house property which is not ready for use during the financial year.

The income from house property shall be the gross rent as reduced by the aggregate amount of permitted deductions. The gross rent in respect of a house property shall be the amount of rent received or receivable, directly or indirectly for the financial year or part thereof for which such property is let out.

The permitted deductions for the purpose of computation of income from house property are:

(a) The amount of taxes levied by a local authority in respect of such property, to the extent the amount is actually paid during the financial year.

(b) A sum equal to twenty per cent of the gross rent towards repair and maintenance of such property,

(c) The amount of interest on loan taken for the purposes of acquisition , construction, repair or renovation of the property or interest on loan taken for the purpose of repayment of such abovementioned loan.

The above interest which pertains to the period prior to the financial year in which the house property has been acquired or constructed shall be allowed as deduction in five equal installments beginning from such financial year, and such interest shall be reduced by any part thereof which has been allowed as deduction under any other provision of the Code.

The amount of rent received in advance shall be included in the gross rent of the financial year to which the rent relates. Also the amount of rent received in arrears shall be deemed to be the income from house property of the financial year in which such rent is received, and such arrears shall be included whether the person is the owner of the property in that year or not, and a sum equal to twenty per cent of the arrears shall be allowed as deduction towards repair and maintenance of the property.

The concept of presumptive rent has been done away with in the Code. Further under the present Income Tax Act, a deduction of thirty per cent of the annual value is allowed. The annual value is arrived at after deduction of taxes levied by the local authority from the rent.