Annual Value

Tax queries 963 views 5 replies
I am renting-out my apartment in a society. Rent has 2 components; rent and maintenance charges. Both will be paid by the tenant to the owner monthly and owner will pay maintenance charges to the society monthly. This means maintenance charge is not an income for the owner. As per tax laws, 30% of AV is allowed as deduction for tax purposes. AV is (roughly) equal to annual rent. Is maintenance charge included/excluded while calculating AV? Does it change if tenant is paying maintenance charges directly to the society?
Replies (5)

If you receive the maintenance charges from the tenant it will have the risk of included for purposes of determining the  Annual Value. Better that the tenant pays it to the society directly.

Thanks for the reply. This looks like a loophole in the tax system.


Could you please direct me to the related tax section.

Actually the section does not say any thing on combining maintenance charges collected along with rent. It is only a cautioning that it is mostlikely to be combined in cases where the consideration appears to be split into rent amenities maintenance etc.

according to me of the maintenence charges includes electricity , water bills generator charges etc and it is received without any proper calculation and it has been fixed every month and received by the owner only then the tenent is liable to deduct tax U/S 194C. As the amount is received by the society only the income of society cannot be treated as income of the owner. Therefore no Tax

That is why advised the payment being made directly to the society, instead of to the flat/house owner


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