tax computation on leased housed property

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Subramanya (Querist)
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30 December 2011 Dear Experts,
If a Property is given on lease say for a period of 5 yrs for 10 lacs,
Wat is the accounting treatment for lease amount received and tax treatment under head HP..
If the same amt is invested some whr under which head do i tax it?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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30 December 2011 Such rental will be taxable under the head 'Income from House Property'.

If you receive the lease rental in lump sum, the whole amount will be taxable in the year of receipt.

If you receive monthly rental, then the rental will be taxable on accrual basis.

You will be allowed a deduction of 30% of the gross annual value.

Also, deduction of interest paid on loan availed for construction of such building is also allowed as deduction.

The answer to the second question depends on the nature of the investment.

If you invest in shares/mutual funds, then the income will be taxable under the head Capital Gains.

If you invest in debentures/bonds/fixed deposit, then the income will be taxable under the head 'Income from Other Sources'.

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Subramanya

Subramanya (Querist)
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30 December 2011 Thanx for the valuable input Sir..
I wanted to kno the treatment wen lumpsum amt recd is to be given bak after specified period of time as per thr agreement..
In such case amt recd ll b liability and cant be taxed under head HP i feel..
Correct me if i am wrong and also pls reply me the treatment of lumpsum amt recd initially and supposed to be givn bak afte the term in agreement..

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