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 |
DOWNLOAD AND TRY
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
View answer
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 |
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
View answer
| Direct Method | |
| Income | 550000 |
| Less | |
| Expenses Allowed except Dep | (70000) |
| (150000-80000) | |
| Dep on Building | (8000) |
| (80000*10%) | |
| Profit | 472000 |
Indirect Method
View answer
| Indirect Method | |
| Profit | 400000 |
| Add | |
| Expense disallowed | |
| Capital Expenditure | 80000 |
| Less | |
| Expense Allowed | |
| Depreciation on Building | 8000 |
| PGBP Income | 472000 |
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