what premium you are receiving. rent received by sub lessee us treated as income from other sources and taxed at slab rates. if sub lease is cancelled there's no capital gains
premium was paid by me when the deed was executed and now the premium is paid by the sub lessee in installment part he is paying me right now and part within 12 months subject to interest so wat would be implications on such
capital gain = full value consideration ( i.e., total premium receivables excluding interest) less expenses incurred wholly and exclusively for the purpose such transfer/ ( expenses incurred for cancellation of sub lease) less (index)* /cost of acquisition (only for remaining portion of sub lease)
* indexation benefit is available only if, the period of holding such sub lease, is more than 36 months
-interest is taxable under the head income from other sources
I m a sub lessee , receiving premium on cancellation of sub lease deed from the sub lessor which was paid by me while executing the sub lease deed. For example- if i m receiving premium of 1 cr now and 1 cr withing 12 months with respect to interest what will be be tax implications on such under income tax
first of all, you have to calculate any excess amount received from cancellation of sub lease (using formula given in my first reply) - if there is any income (excess) then, it is taxable as capital gain in the year in which such sub lease is cancelled interest for payment within 12 months is taxable as income from other sources
as per section 145A (b) interest received by an assessee on compensation or on enhanced compensation shall be deemed to be his income for the year in which it is received -in your e. g., full value consideration = (1cr + 1cr)
in your case section 145A is not applicable because, it is interest on delay payment , not interest on compensation or enhanced compensation in your case interest is taxable either received basis OR accrued basis - in case assessee maintain books of accounts in cash basis then it is taxable as received basis - in case assessee maintain books of accounts in mercantile basis then it is taxable as accrued basis # for further information please reply