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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.NoExpense Name

Deduction

Allowed to

Conditions if any
1RentTenant-
2RepairTenant/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

3Insurance PremiumTenant/Landlord-
4Municipal TaxesTenant/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

ParticularsAmt
Income600000
Expenses400000
Profit200000

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 
Income600000

Less

Expenses Allowed

 

(390000)

Profit210000

 

INDIRECT METHOD

Indirect Method 
Profit200000
Add 
Expense disallowed
Municipal Taxes not paid10000
PGBP Income210000

-ea-

Q2

ParticularsAmt
Income550000
Expenses150000
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 
Income550000
Less 
Expenses Allowed except Dep(70000)
(150000-80000) 
Dep on Building(8000)
(80000*10%) 
Profit472000

 -ea-

Indirect Method

-a-

Indirect Method 
Profit400000
Add 
Expense disallowed 
Capital Expenditure80000
Less 
Expense Allowed 
Depreciation on Building8000
PGBP Income472000

  -ea-

About the Author

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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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