Taxation on lease

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This discussion explores the tax treatment of lease agreements where the lessor is obligated to return the lease amount upon termination. It questions whether the entire lease sum should be declared as income or if it should be treated as a rental advance. The suggested approach is to consider only the interest earned on the advance, akin to bank deposit rates, as taxable rental income.

Ashwini Rao

Ashwini Rao (Querist)
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25 September 2020 What is the impact of taxation, when a person let out his house on lease agreement , where he is liable to return such lease amount on termination of lease agreement ? Should he declare entire sum of lease amount as income when he is liable to return the amount on expiry of lease term.