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Classification of Rental Property as Income from HP or PGBP

Tax planning 647 views 2 replies

I bought a Commercial land on which i Partly built a Commercial Complex and let it on rent, I have been filing it as Income from House Property in past years, but its a part of my Business investment and it takes a lot of time to manage that complex, from maintanence to new agreements, arrangements of multiple tenants, everyday issues etc, I spend a lot of time managing that, Now i plan to build another building and let it on rent, now as its my main source of income and its my main business, 

  1. Can i show whole rental income under Income from PGBP?
  2. If Yes, (a) Can i file Income from PGBP under section 44AD, as my total rental receipts wont exceed 1 crore ? (b) can i ignore my earlier filing of rental income as Income from HP? won't assessing officer raise any concern?
  3. If No, what should be my planning ?

Thanks in advance for answering.

Replies (2)
Quick Summary
Rental income from property is usually taxed as House Property with 30% deduction and lower risk. Treating it as business (PGBP) depends on facts; 44AD may not apply. Changing head may invite scrutiny-professional advice recommended.

Continue under House Property (Safest & Cleanest)

Advantages

  • Standard deduction 30% u/s 24

  • Interest deduction u/s 24(b)

  • No books audit issues

  • Least litigation risk

📌 This is still the most tax-efficient route in many cases.

This happens to be your business that is building new complex and giving on rent that too comercial

How can you treat it as income from house property?

Approach practising C.A & take opinion as per income tax act


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