Ownership shares govern the separate computation
Section 24 of the Income-tax Act, 2025 provides separate assessment of co-owners with definite and ascertainable shares, rather than assessment as an association of persons for that property. This article applies that principle to companies co-owning let-out buildings in tax year 2026–27. It does not import the new Act's section numbers into an AY 2026–27 return for FY 2025–26. The models assume ordinary house-property treatment is otherwise correct; property occupied for a company's taxable business needs the separate section 20 analysis. Income-tax Act, 2025, amended by Finance Act, 2026: sections 20–24.
Build one property schedule and separate owner schedules
Start with title documents, acquisition records, the lease and the supported ownership percentages. Determine the property's annual-value inputs under section 21, including relevant rent and local taxes actually paid by the owner. Then reconcile each owner's share and its own eligible deductions. A shared spreadsheet is useful for consistency but should not become a pooled return that erases the separate legal taxpayers. Confirm that all shares reconcile to the whole without unexplained duplication. Income-tax Act, 2025, amended by Finance Act, 2026: sections 20–24.
Cash collection is a separate control
A tenant may pay the entire rent to one co-owner acting as collection coordinator. Reconcile that bank receipt to amounts belonging to the other owner and actual onward settlements. A temporary collection arrangement does not, by itself, rewrite definite ownership shares. Equally, a tenant's payment description is not conclusive proof of a share percentage. Document any genuine ownership change and analyse the correct period rather than backdating a new percentage to the whole year. Income-tax Act, 2025, amended by Finance Act, 2026: sections 20–24.
Apply deductions on supported facts
Section 22 includes the 30% deduction from the annual value determined under section 21 and relevant borrowed-capital interest subject to its conditions and other applicable restrictions. Establish the actual loan obligation and eligible interest for each owner; do not assume that the person paying all EMIs owns all the property or that every owner can claim the same entire interest certificate. The examples separately stipulate eligible interest and exclude special-regime restrictions, losses and other adjustments to isolate allocation. Income-tax Act, 2025, amended by Finance Act, 2026: sections 20–24.
Avoid treating every jointly held arrangement as identical
Section 24 requires definite and ascertainable shares. Where title, beneficial ownership or the alleged percentage is disputed, resolve those facts rather than inserting an arbitrary equal split. The provision also refers to individual entitlement to the section 21(6) relief; that reference should not be used to give a company the personal-residence assumptions of an individual. This guide's calculations are for let-out property and do not model self-occupation relief. Income-tax Act, 2025, amended by Finance Act, 2026: sections 20–24.
Close the property-to-owner bridge
For each company, retain annual value, the shared-amount allocation, separate interest evidence and final computed income. Reconcile those amounts back to the property-level control and the collecting owner's bank ledger. Keep withholding credits separate and claim them under their own evidence and allocation rules; a proportionate income working does not by itself validate a tax-credit claim. A clear bridge helps prevent one owner reporting all the rent while another duplicates the same income or deduction. Income-tax Act, 2025, amended by Finance Act, 2026: sections 20–24.
Applicable primary references
Income-tax Act, 2025, amended by Finance Act, 2026: sections 20–24
Six worked illustrations
All facts and amounts below are fictional. Assumptions describe the model, not additional statutory rules.
Illustrative example 1: Equal company owners
Assume supported annual value after the relevant section 21 adjustments is ₹20 lakh and two companies own 50% each. Each allocates ₹10 lakh annual value and ₹3 lakh standard deduction, leaving ₹7 lakh before separate eligible interest. Combined pre-interest income is ₹14 lakh.
Illustrative example 2: Unequal shares
Annual value is ₹30 lakh; Company A owns 40% and B 60%. Their annual values are ₹12 lakh and ₹18 lakh. After 30% deductions, pre-interest incomes are ₹8.40 lakh and ₹12.60 lakh, totalling ₹21 lakh.
Illustrative example 3: One company collects all rent
Assume annual value is ₹12 lakh with equal definite shares, and Company A collects all ₹12 lakh. Each company's allocated annual value remains ₹6 lakh on these facts; ₹4.20 lakh each remains after the 30% deduction. The collection ledger must separately account for B's entitlement.
Illustrative example 4: Different eligible interest
Annual value is ₹24 lakh with equal shares. Each has ₹12 lakh annual value and ₹8.40 lakh after the standard deduction. Assume separately verified eligible interest is ₹2 lakh for A and ₹3 lakh for B. Resulting property incomes are ₹6.40 lakh and ₹5.40 lakh, not equal figures obtained by splitting total interest mechanically.
Illustrative example 5: Three co-owning companies
Annual value is ₹40 lakh and definite shares are 50%, 30% and 20%. Allocations are ₹20 lakh, ₹12 lakh and ₹8 lakh. After the 30% deduction, pre-interest incomes are ₹14 lakh, ₹8.40 lakh and ₹5.60 lakh, totalling ₹28 lakh.
Illustrative example 6: Two properties, different ratios
Property X has annual value ₹10 lakh split equally; property Y has annual value ₹20 lakh split 25% to A and 75% to B. A's aggregate allocation is ₹10 lakh and B's ₹20 lakh. Before interest, the respective 70% balances are ₹7 lakh and ₹14 lakh. Do not use one property ratio for the entire portfolio.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Confirm tax year | Identify tax year 2026–27 under the 2025 Act. |
| 2 | Identify tax head | Check let-out property and any business-occupation issue. |
| 3 | Verify co-owners | Retain each company's identity and title evidence. |
| 4 | Prove definite shares | Match percentages to enforceable ownership facts. |
| 5 | Compute annual value | Document section 21 inputs and local-tax evidence. |
| 6 | Allocate property amounts | Reconcile owner shares to the property control total. |
| 7 | Apply owner deductions | Verify standard deduction and separate eligible interest. |
| 8 | Reconcile collection | Bridge the collection account to owner entitlements. |
| 9 | Check credit evidence separately | Review withholding allocation without assuming automatic credit. |
| 10 | Close company schedules | Retain separate final income workings and reviewer sign-off. |
Sixteen practitioner FAQs
1. Does this guide use FY 2025–26 return section numbers?
No. It concerns tax year 2026–27 under the new Act.
2. What condition is central to section 24?
Definite and ascertainable co-ownership shares.
3. Are qualifying co-owners assessed as an AOP for that property?
Section 24 provides separate computation in accordance with their shares.
4. Can companies co-own let-out property?
The working addresses companies with established ownership and ordinary house-property treatment.
5. Does collection of all rent establish 100% ownership?
No. Collection arrangements and ownership need separate evidence.
6. Is an equal split always acceptable?
No. Use supported actual shares.
7. Should each property have its own ratio?
Yes, unless the evidence supports the same ratio for all.
8. Which provision determines annual value?
Section 21, with its applicable conditions.
9. What is the standard deduction used here?
Section 22's 30% of annual value as determined under section 21.
10. Can each owner claim the entire shared interest certificate?
Do not assume so. Establish each owner's eligible obligation and deduction.
11. Can EMI payment alone establish ownership?
No. Examine the actual ownership and borrowing facts.
12. Do these models cover special corporate-regime restrictions?
No. Their interest assumptions are expressly stipulated; review applicable restrictions separately.
13. Is business-occupied property automatically within these examples?
No. Section 20 has a separate business-occupation exclusion to examine.
14. Does section 24 automatically validate TDS credit allocation?
No. Tax-credit evidence and the applicable rules require separate review.
15. Can the portfolio use a single average ownership ratio?
Only if independently supported; property-specific ratios usually need separate reconciliation.
16. What is the essential closing test?
Owner schedules plus collection reconciliations should explain the complete property income without duplication.
Conclusion
For definite and ascertainable co-ownership shares, reconcile each owner’s property income separately. Rent collection through one owner does not by itself change legal ownership proportions.