This Section Covers following Expenses of Building

1 Rent

2.Current Repairs of Building

3. Taxes of Building like Municipal Taxes/House Tax

4.Insurance Premium

 

These may be paid by landlord or tenant.Deduction  Allowed to person who pays it

 

Deduction is Allowed subject to following Conditions

S.No Expense Name

Deduction

Allowed to

Conditions if any
1 Rent Tenant -
2 Repair Tenant/Landlord

They should be Current Repairs

If they are in nature of Capital Expenditure,then not allowed as deduction.

Instead Depreciation available u/s 32

For Ex- New floor Constructed

3 Insurance Premium Tenant/Landlord -
4 Municipal Taxes Tenant/Landlord

They should be actually paid before return filing date 31 July/30 September.

If not paid till then,then not allowed as deduction


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Q1

Particulars Amt
Income 600000
Expenses 400000
Profit 200000

Suppose the Expenses Include Municipal taxes of 10000 which were not paid till Return Filing Date

Calculate PGBP Income

-a-

Since they were not paid,hence they will not be allowed

PGBP Income will be computed either by Direct Method or Indirect Method

DIRECT METHOD

Direct Method  
Income 600000

Less

Expenses Allowed

 

(390000)

Profit 210000

 

INDIRECT METHOD

Indirect Method  
Profit 200000
Add  
Expense disallowed
Municipal Taxes not paid 10000
PGBP Income 210000

-ea-

Q2

Particulars Amt
Income 550000
Expenses 150000
Profit

400000

Suppose Expenses Include Repair and Maintenance Expense of 80000 which were actually Capital expenses on construction of a new shop.

Depreciation on Building is 10%

Calculate PGBP by Direct and Indirect Method

 

 Direct Method

-a-

Direct Method  
Income 550000
Less  
Expenses Allowed except Dep (70000)
(150000-80000)  
Dep on Building (8000)
(80000*10%)  
Profit 472000

 -ea-

Indirect Method

-a-

Indirect Method  
Profit 400000
Add  
Expense disallowed  
Capital Expenditure 80000
Less  
Expense Allowed  
Depreciation on Building 8000
PGBP Income 472000

  -ea-

  1. Income Tax
  2. PGBP Income
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About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 6 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .
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