Indian tax laws have various provisions whereby certain notional items are deemed to be income for the purpose of taxation, though, in the normal sense, one may not regard these as incomes.
One such notional income is the annual value of a house property. The fair rental value of a house is supposed to be its annual value, if the house is self-occupied or vacant. In case of a property let out on rent, while the rent is an actual income, one has to compare the fair rental value with the actual rent received, and the higher of the two is taxable. One of the issues is whether the municipal rateable value, or in the alternative, the standard rent of the property, can be taken as the fair rental value, or whether the tax authorities can adopt rental rates fetched by similar properties in the vicinity as the fair rental value.