Income From Property
Monday, April 8, 2013
Property means an
immovable property whether improved / constructed or not, other than
agricultural land from which the income derived is “agricultural income”. It
includes land containing natural resources and income from lease of such land
shall be rental income of property.
RENT [SECTION 15(2)]
Rent means any amount received or
receivable for a tax year, by the owner of land or a building as consideration
for the use or occupation of or the right to use, occupy the land or building.
This also includes any forfeited deposit paid under a contract for the sale of
land or a building.
INCOME
FROM PROPERTY (SECTION 15)
Rent received or receivable for a tax year except rent
exempt from tax, shall be chargeable to tax under the head "Income from
property". [Section 15(1)]. Rent is taxable on accrual basis.
Where rent
received or receivable is less than fair market rent for the property, the
owner shall be treated as having received the fair market rent for the period
the property is let on rent in the tax year. However, this shall not apply
where fair market rent is included in the income of this lessee, chargeable to
tax under the head
“Salary”. [Section 15(4) & (5)]
UNADJUSTABLE
ADVANCE [SECTION 16]
Where the owner of building receives an advance
which is not adjustable against rent, the whole of advance shall be treated as
rent chargeable to tax under the head income from property in the year of
receipt and following nine tax years in equal proportion i.e. 1/10th of such
un-adjustable advance shall be included in the total income of assessed under
the head “income from property”. in 10 tax years commencing from the tax year
in which the advance is received.
If advance is refunded in any year before the expiry of 10 years such advance shall not be included in the income from the tax year in which it is refunded.
After
vacancy, if the property is let out again against another advance, new advance
less advance already charged to tax shall be taxable in ten equal installments
in 10 tax years, commencing from the tax year in which the advance is received
from the succeeding tenant.
Labels: Income From Property, Income Tax
posted @ 12:01 PM,
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