Tds/tax on surrender of tenancy

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Querist : Anonymous

Querist : Anonymous (Querist)

27 July 2013 Is TDS applicable on amount received as compensation by a tenant on surrender of his tenancy rights?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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27 July 2013 TDS not attracted but the income will taxable under the Head Income from other sources.

Querist : Anonymous

Querist : Anonymous (Querist)

28 July 2013 thanks.. but if the amt received is invested to acquire another residential property, i dont have to pay tax on that invested amount.. right??

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CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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28 July 2013 No such relaxation. It is available only in case of Capital Gain. This is not a case of capital gain.

Querist : Anonymous

Querist : Anonymous (Querist)

28 July 2013 thanks.. :)

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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30 July 2013 surrendering of tenancy rights amounts to extinguishment of rights and rights are considered as capital assets as per def of capital assets u/s 2(14)

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Querist : Anonymous

Querist : Anonymous (Querist)

31 July 2013 thanks.. :)

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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31 July 2013 Yes once you have stayed in a property for certain number of year you generate right in the property and the compensation received is to be treated as Capital Gains and the treatment shall be that of an assets which has Zero value of acquisition. Hence, 100% of the compensation is capital gains depending on the number of years you occupied the property.

If you invest in purchase of residential property then the provision of section 54F will apply and no tax is payable if the new acquired property is more than or equal to the compensation received against surrender of tenancy rights.

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