Composite rent

HI Friends,

I have a query -   A "residential flat" purchased lately, being let out for commercial purposes of runing a play home or creche - all amenities water electricity, municipal taxes are paid as per commercial rates. The rental income has two components

a) House rent - Rs.10000 per month

b) Rent for furniture and fixtures Rs. 18800 per month

Please advise if the tax treatment of the income if the rent is clubbed. If so what is the variance in the tax computation. Interest on borrowed capital is close to 6 L per annum.

 

House Rent 120000 ( 10000 Per month) 
Furniture Rent 225600 (18800 Per month)
HL Interest 600000  
Municpal taxes  25000  
Income from Salaries 1500000  

Thanks for your time and efforts to understand and address the query

Replies (2)

Here the income received from renting of the property is separable from the income received from  providing the furniture and the fixtures for rent .

 

Hence the income received from Renting of property is taxable under the head Income from House Property .

The income received from renting of furniture and fixtures is Taxable under the head Income from Other Sources and under Income from business in case if it your business .

 

Taxable Income is calculatedd as follows :

 

Income from Salaries                                                                                                15,00,000

Loss from House Property (1,20,000 - 25,000 - 1,50,000 HL interest)                                -55,000 

Income from Other sources ( Furniture Rent )                                                                2,25,600                                                                                       

 

Gross Taxable Income                                                                                               16,70,600

In case of let-out property the interst deduction is taken without any limit.  hence the whole of interest of Rs. 6lacs will be deductible

Taxable Income would be as follows:

 

Rental Income  120000
Less Municipal Tax -25000
Net Adjsuted Annual Value 95000
Less: Std Ded @ 30% -28500
Interest on Loan -600000
Loss from HP -533500
   
   
Income from Salaries 1550000
Income from Hp -535500
Income from Other sources 225600
Taxable Income 1240100

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