Arrears of Rent

I have received arrears of rent in the month of March, 2021 but I have sold the property in the month of January 2020. What will be the treatment of such amount in my Income Tax Return since I was not the owner of the property when I received it?

Hi @Dixita

Amount received as arrears of rent after allowing deduction of 30% of such amount, will be taxable under the head “Income from House Property”. Provided, , the amount should not be charged to income-tax for any PY (earlier years).
Further, arrears of rent shall be chargeable to tax in the previous year in which it is received. Whether the property is owned by the assessee in the year of receipt or not.
So the amount that you received shall be chargeable to tax for the FY 2020-21under the head income from house property.
Hope this helps :slightly_smiling_face:

Continuing the discussion from Arrears of Rent:

Continuing the discussion from Arrears of Rent:

In unrealized rent deduction, what if the adj expected rental value and actual rental value are same amount how should I subtract unrealized rent from actual rent please can you clear my doubt!?

Hi @Izzah ,

Unrealised rent can be deducted from actual rental income subject to fulfilment of following conditions:

  • The tenancy is bonafide
  • The defaulting tenant has vacated or steps have been taken to compel him to vacate the property
  • The defaulting tenant is not in occupation of any other property of the assessee and
  • The assessee has taken all the reasonable steps to institute legal proceedings for the recovery of the unpaid rent or satisfies the assessing officer that legal proceedings would be useless.

If all the conditions are satisfied, then only you can subtract the unrealised rent from actual rental income.

Hope it helps!