Tax on lease income
This query is : Open
03 January 2014
Dear Experts,
How is the lease amount received for a property treated for tax payment.
Lease amount: 10 lakhs, Tenure: 3 Years
Lease amount to be returned after 3 years.
Is it still considered to be income, since we need to return the money after 3 years?
I recently read this post,
http://www.thehindubusinessline.com/features/investment-world/relief-for-tax-on-lease-rental-income/article2982036.ece
If it is considered as income, is there any way to avoid tax(eg:investing in another property)?
How is the lease amount received for a property treated for tax payment.
Lease amount: 10 lakhs, Tenure: 3 Years
Lease amount to be returned after 3 years.
Is it still considered to be income, since we need to return the money after 3 years?
I recently read this post,
http://www.thehindubusinessline.com/features/investment-world/relief-for-tax-on-lease-rental-income/article2982036.ece
If it is considered as income, is there any way to avoid tax(eg:investing in another property)?
03 January 2014
In lease there are 2 components. One is lease rent and the other is deposit. The lease rent has to be as per the agreement of lease and without lease rent the lease agreement is not valid as no one believe that only on deposit the premises is let out. The lease rent is income from business and the expenses can be claimed against lease rent and therefore no service tax, no TDS will be applicable.
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03 January 2014
Dear Agarwal Sir,
Thank You Very much for the reply.
I understood that the lease rent component is considered as income from business and is not taxable.
But, this is not the usual case where one rents his premises for a monthly rent and accepts a minor security deposit(usually 10 times the monthly rent).
We have a verbal agreement that the lessee shall pay a refundable deposit of 10 lakhs which is very high(since there is going to be no rent).
The current market rent is only 10,000pm. So, the idea is that the lessor will have to survive on the interest earned using the deposit. These type of lease agreements are very common where there is no rent but there is a high refundable deposit. I wanted to know what are the tax implications in such cases.
Thank You Very much for the reply.
I understood that the lease rent component is considered as income from business and is not taxable.
But, this is not the usual case where one rents his premises for a monthly rent and accepts a minor security deposit(usually 10 times the monthly rent).
We have a verbal agreement that the lessee shall pay a refundable deposit of 10 lakhs which is very high(since there is going to be no rent).
The current market rent is only 10,000pm. So, the idea is that the lessor will have to survive on the interest earned using the deposit. These type of lease agreements are very common where there is no rent but there is a high refundable deposit. I wanted to know what are the tax implications in such cases.
28 January 2014
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