Income From Property

PROPERTY

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.