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Cancellation of sub lease deed

Others 393 views 10 replies
Cancellation of sub lease deed

where i m a sub lessee and receiving premium will it attract gst or income tax ie capital gain
Replies (10)
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
as per section 2(47) transfer includes ' the extingushment of any rights therein '

cancellation of sub lease amount to extingushment of rights.

if, any income arise from the above, is taxable under the head "income from 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
premium is paid back by the sub lessor * in installments
no matter you can receive it at once or in installments, it is taxable in the year in which transfer is made (i.e., when sub lease is cancelled )
Final clearification required

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)

# for further information please reply
thankyou so very much
I regret for my last comment on interest

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


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