INCOME FROM PROPERTY

The rent received or receivable by a person for a tax year is the second source of income and is chargeable under the head income from property. other than the rent which is exempt from tax..

Explanation

Property means constructed building or land.

Building means block of brick or stone work covered by roof.

Land means vacant plot used for erecting temporary huts or for storing

materials.

Rent means any amount received or receivable by the owner of land or a building for its use or the right to use its occupation. The amount of rent shall not be less than the fair market rent.

It means that where the land or building is let on rent and the actual amount of rent received or receivable is less than the fair market rent then fair market rent shall be taken as the amount of rent. The above shall not apply where the fair market rent is included in the income of the lessee (tenant) chargeable to tax under the head salary.

Fair market rent means the amount of rent determined on the basis of a rent fetched by similar property in the same or similar locality at that time.

Procedure for Computing the Amount of Rent

For income tax purposes rent means and includes the following:

1. The amount received or receivable by the Dfa Ho owner of land or a building for its use or the right to use its occupation, is the amount of rent.

2. Any forfeited deposit paid under a contract for the sale of land or building is also included in the amount of rent.