TAX TREATMENT ???
This query is : Resolved
CA CMA CS VIRAG SHAH
(Querist)
02 July 2010
SIR/MADAM,
RENT RECEIVED DURING THE REDEVELOPMENT OF EXISTING FLAT ,FROM THE BUILDER WHICH WE CAN NOT PAY FURTHER & WE ARE RESIDE AT OUR RELATIVE’S HOME,
SO WHAT IS THE TAX TREATMENT UNDER THE ACT ?
RENT RECEIVED DURING THE REDEVELOPMENT OF EXISTING FLAT ,FROM THE BUILDER WHICH WE CAN NOT PAY FURTHER & WE ARE RESIDE AT OUR RELATIVE’S HOME,
SO WHAT IS THE TAX TREATMENT UNDER THE ACT ?
Sunil Kr. Sanganeria
(Expert)
02 July 2010
The amount received will be taxable.
Message likes :
1 times
CA CMA CS VIRAG SHAH
(Querist)
02 July 2010
where ?
26 July 2025
Got it! Here’s the tax treatment for **rent received during redevelopment of your existing flat, from the builder**:
---
### Situation:
* Your flat is under redevelopment.
* You are receiving rent from the builder during this period (likely as compensation or temporary rent).
* You are not occupying the flat (staying elsewhere).
---
### Tax Treatment under Income Tax Act:
1. **Rent Received from Builder**:
This amount is treated as **income from house property** in your hands.
2. **Heads of Income**:
The rent received is taxable under **“Income from House Property”**.
3. **Deductions Allowed**:
* You can claim **standard deduction of 30%** on the rental income for repairs, maintenance, etc. (even if no actual expenditure is incurred).
* You can also claim **deduction of municipal taxes** paid (if any).
4. **If You Do Not Own the Flat** (say, builder has possession), but you still own it legally:
The rent received is still taxable as income from house property.
5. **If Rent is Received as Compensation for Vacating Flat** (like temporary rent):
The income is still taxable as income from house property.
---
### Important:
* Even if you are residing at a relative's home temporarily, that does **not affect** the taxation of rental income you receive from your property.
* You must declare this rental income in your Income Tax Return.
* If your total income exceeds the basic exemption limit, tax will be applicable after allowable deductions.
---
---
### Situation:
* Your flat is under redevelopment.
* You are receiving rent from the builder during this period (likely as compensation or temporary rent).
* You are not occupying the flat (staying elsewhere).
---
### Tax Treatment under Income Tax Act:
1. **Rent Received from Builder**:
This amount is treated as **income from house property** in your hands.
2. **Heads of Income**:
The rent received is taxable under **“Income from House Property”**.
3. **Deductions Allowed**:
* You can claim **standard deduction of 30%** on the rental income for repairs, maintenance, etc. (even if no actual expenditure is incurred).
* You can also claim **deduction of municipal taxes** paid (if any).
4. **If You Do Not Own the Flat** (say, builder has possession), but you still own it legally:
The rent received is still taxable as income from house property.
5. **If Rent is Received as Compensation for Vacating Flat** (like temporary rent):
The income is still taxable as income from house property.
---
### Important:
* Even if you are residing at a relative's home temporarily, that does **not affect** the taxation of rental income you receive from your property.
* You must declare this rental income in your Income Tax Return.
* If your total income exceeds the basic exemption limit, tax will be applicable after allowable deductions.
---
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