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CA Intermediate · Taxation · Income from House Property

Mr. Arvind Menon owns a flat in Pune that he let out in earlier years. In the tax year 2026-27 he received Rs 1,50,000 as arrears of rent relating to earlier years. This amount was not charged to tax in any earlier year, and Mr. Arvind still owns the flat. How much is taxable as income from house property for the tax year 2026-27?

Rs 1,05,000 is taxable. Arrears of rent not taxed earlier are charged under house property in the tax year of receipt, and a flat 30% deduction is allowed on them. Rs 1,50,000 less Rs 45,000 gives Rs 1,05,000.

  1. ARs 1,50,000, with no deduction
  2. BRs 1,05,000, after a 30% deductionCorrect
  3. CNil, because the rent relates to earlier years
  4. DRs 1,20,000, after a 20% deduction

Explanation

Arrears of rent received later and not taxed earlier are taxed as income from house property in the year of receipt. A flat 30% deduction is allowed on that amount whatever the actual expenses. Taxable amount = 1,50,000 − 30% (45,000) = Rs 1,05,000. Taxing the full amount ignores this deduction.

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