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CA Intermediate · Taxation · Income from House Property

Mrs. Latha Iyer sold her let-out property and received arrears of rent of Rs 80,000 relating to earlier years, which was not charged to tax earlier, in tax year 2026-27. How is this arrear taxed?

Arrears of rent not previously taxed are charged in the year of receipt under house property income after a flat 30% deduction, irrespective of ownership at that time. Here Rs 56,000 would be taxable out of Rs 80,000 received.

  1. ATaxable after deducting 30% standard deduction, in the year of receiptCorrect
  2. BFully taxable in the year of receipt without any deduction
  3. CTaxable in the earlier years to which it relates
  4. DExempt as it relates to earlier years

Explanation

Arrears of rent not charged to tax earlier are taxed in the year of receipt as income from house property, after a 30% deduction, whether or not she still owns the property. So taxable amount is 80,000 x 70% = Rs 56,000.

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