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House property

Pardeep Garg (CA-Final Student) (801 Points)

05 December 2017

municipal tax paid in advance or past year o/s paid in current year can be deducted while computing NAV??

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11 Replies

Jenil Shah (132 Points)
Replied 05 December 2017

municipal tax shall be allowed as deduction on payment basis....means the amount you have paid in current year shall only be allowed as deduction against income of current year

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Pardeep Garg (CA-Final Student) (801 Points)
Replied 05 December 2017

Okk.
means advance can be deducted

thanks.

Pardeep Garg (CA-Final Student) (801 Points)
Replied 05 December 2017

Okk.
means advance can be deducted

thanks.

Pardeep Garg (CA-Final Student) (801 Points)
Replied 05 December 2017

Okk.
means advance can be deducted

thanks.

Ritu Majumder (14 Points)
Replied 05 December 2017

yes deduction will be allowed in current year. Local taxes paid by the owner is deducted on cash basis.Doesn't matters for which year the tax is being paid,the deduction is allowed on the year when the payment is made

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RAMAKRISHNAN R (INCOME TAX OFFICER) (1736 Points)
Replied 05 December 2017

past year municipal taxes paid in current year can be deducted but not the municipal taxes paid in advance

Pardeep Garg (CA-Final Student) (801 Points)
Replied 06 December 2017

@ Ramakrishnan, which section says this

RAMAKRISHNAN R (INCOME TAX OFFICER) (1736 Points)
Replied 06 December 2017

section 23

Z ( ) (2965 Points)
Replied 06 December 2017

"Provided that the taxes levied by any local authority in respect of the property shall be deducted (irrespective of the previous year in which the liability to pay such taxes was incurred by the owner according to the method of accounting regularly employed by him) in determining the annual value of the property of that previous year in which such taxes are actually paid by him."

Sir, I think deduction will be allowed even if Municipal taxes are paid in advance because it's mentioned "irrespective of the previous year in which the liability to pay such taxes was incurred..."

Further, If we do not allow the deduction for the advance payment, then in future Assessment Years also deduction will not be allowed because in those years the condition of "ACTUALLY PAID" will not be satisfied because the actual payment would relate to past year and not in the previous year relevant to any succeeding Assessment Year.

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