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charegability

shyam sundar (Article Assisstant) (183 Points)

15 June 2010

if a person lets out a house to a person without charging any rent but accepting a refunable deposit say for Rs..3,00,000 which is repyable after 3 years? then whether any notional rent will be charged under the income tax act, as if it is deemed to be let out? i asked this because refundable deposit is not taxable.....give your suggestion......

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4 Replies

Amir (Learner) (4016 Points)
Replied 15 June 2010

Dear Shyam,

We have a concept of taxability of notional income of a self occupied house but no such concept is there in case of a let out property.

The reason for the above is the same is not required since the computation provision says, if the house is let out higher of the following shall be taxable (subject to other conditions)

1) Actual Rent

2) Expected Rent

In other words, you can say the taxabiliity of notional rent comes in the form of "Expected Rent" in every case, so nothing further is required where Owner has not recovered any rent from the tenant.

CA B Anand (CHARTERED ACCOUNTANT) (198 Points)
Replied 15 June 2010

dear amir,

reply in two words, whether income 'll be assessed under those municipal valution or it is not at all an income ?

Akhil Gupta (Manager F&A) (856 Points)
Replied 15 June 2010

If the assessee has only one house which is under question then the assessee can show it a self-ooccupied house property and Income from House Property is NIL.

If the assessee has more than one house property then yes notional rent will be charged under Income Tax Act.