Income tax - treatment of ground rent

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Vinay Channabasappa

CA in Practice

55 Points Joined October 2015

The land belongs to an assessee. He has let out the land to petrol bank. The monthly rent which the petrol bank is paying is being treated as GROUND RENT taxable under INCOME FROM OTHER SOURCES. The petrol bank is using the land for their typical commercial activities & serving the public. They have constructed their office as well by using part of the land. Hope, the treatment of treating the receipts as GROUND RENT taxable under INCOME FROM OTHER SOURCES from assessee point of view is right. We understand that this receipt DOES NOT QUALIFY AS INCOME FROM HOUSE PROPERTY wherein we can claim 30% standard deduction. Kindly suggest Regards Vinay

Replies (2)

Senu Reddy

ca final

291 Points Joined April 2013

Yes any income arising as Ground rent or lease rent for letting to petrol bunks will be charged under Income from other Source, hence standard deductions 30% which is allowable under house property will not be allowed..

Stranger

5531 Points Joined December 2013

Fully agreed with the above reply, as for charging the income u/h "House Property", one of the conditions of section-22 of the Income Tax Act, 1961 is that "the property should consist of any buildings or lands appurtenant thereto".

Since in your case, there exists only a vaccant plot of land, so any rental income, with whatever name called, will be chargeable u/h "Other Sources".