Union Budget 2016: Existing provisions of sections 25A, 25AA and 25B relate to special provisions on taxation of unrealised rent allowed as deduction when realised subsequently, unrealised rent received subsequently and arrears of rent received respectively. Certain deductions are available thereon.
It is proposed to simplify these provisions and merge them under a single new section 25A and bring uniformity in tax treatment of arrears of rent and unrealised rent. It is proposed to provide that the amount of rent received in arrears or the amount of unrealised rent realised subsequently by an assessee shall be charged to income-tax in the financial year in which such rent is received or realised, whether the assessee is the owner of the property or not in that financial year. It is also proposed that thirty per cent of the arrears of rent or the unrealised rent realised subsequently by the assessee shall be allowed as deduction.
The amendment will take effect from 1st day of April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.
Clause 11 of Finance Bill 2016
Clause 11 of the Bill seeks to substitute sections 25A, 25AA and 25B of the Income-tax Act relating to special provisions for cases where unrealised rent allowed as deduction is realised subsequently, unrealised rent received subsequently to be charged to income tax and special provision for arrears of rent received, with a new section 25A.
It is proposed to provide that the amount of rent received in arrears or the amount of unrealised rent realised subsequently by an assessee shall be charged to income-tax in the financial year in which such rent is received or realised, whether the assessee is the owner of the property or not in that financial year.
It is also proposed that thirty per cent. of the arrears of rent or the unrealised rent realised subsequently by the assessee shall be allowed as deduction.
This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-2018 and subsequent years.
[Clause 11]
