Difference between Unrealized Rent and Arrears of Rent

Unrealized Rent Received

Arrears of Rent Received


Rent per month =10000

Tenant fails to pay rent of 3 months due to some financial problem.

Later it pays 2 month pending rent of 20000

In this case

Unrealized Rent=10000*2=20000

Unrealized Rent Recovered=10000*2=20000


Rent increased but tenant pays Old Rent

(Suppose Rent was earlier 10000 but increased to 12000.Tenant pays old rent of 10000 for 2 years.


Later it pays Arrear of Rent of 2000*15=48000

As per Section 25A(1)

In Case of
Arrears of Rent
Unrealized Rent
Received Subsequently

It shall be deemed to be income from house property
in the financial year in which such rent is received or realised, and

It shall be included in the total income of the assessee under the head “Income from house property”,
whether the assessee is the owner of the property or not in that financial year.

Standard Deduction of 30% will also be available

Effect of Amendment

Earlier there were Separate Sections for

Unrealized Rent (Section 25AA)

And Arrears of Rent (Section 25B)

Now a common section has been introduced in their place.


Mr. Anand sold his residential house property in March, 2016.

In June, 2016, he recovered rent of Rs. 10,000 from Mr. Gaurav, to whom he had let out his house for two years from April 2010 to March 2012. He could not realise two months rent of Rs. 20,000 from him and to that extent his actual rent was reduced while computing income from house property for A.Y.2012-13.

Further, he had let out his property from April, 2012 to February, 2016 to Mr. Satish. In April, 2014, he had increased the rent from Rs12,000 to Rs15,000 per month and the same was a subject matter of dispute. In September, 2016, the matter was finally settled and Mr. Anand received Rs. 69,000 as arrears of rent for the period April 2014 to February, 2016.

Would the recovery of unrealised rent and arrears of rent be taxable in the hands of Mr. Anand, and if so in which year?

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CA Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 14 years. He also provides Accounts Tax GST Training in Delhi, Kerala and online.