News By/Courtesy: ANSHIKA JAIN | 31 Aug 2020 10:20am IST

HIGHLIGHTS

  • Numerous employees have been offered the work-from-home option by their organizations
  • Numerous landlords have agreed to partially reduce or waive off the rent for a few months or on an ongoing basis
  • Deferring of rentals to the subsequent year by the landlord would still make him liable to pay tax for the current year

Due to the threat of coronavirus, many organizations have offered their employees the work-from-home option. Consequently, many people working in cities have temporarily relocated to their hometowns and have left their rented city homes empty. In the present scenario, many tenants have been unable to pay the rent for their rented accommodation. During the lockdown, such tenants may or may not have been able to use the rented premises during the lockdown period. Due to lower demand, there has been a fall in the rental rates as well.

Under the income tax law, every residential property is liable to be taxed every year on an annual value except the one that is occupied by the owner himself.  In normal times, the rent is fixed at the market rent and thereby the landlord faces no difficulty in paying tax on the actual rent receivable.

The tenants have approached their landlords for waiver or reduction of rentals for the lockdown period and also for subsequent months. In numerous cases, the landlords have agreed to partially reduce or waive off the rent, either on an ongoing basis or for a few months only. The premises cannot be considered as vacant during the lockdown period as technically it was still occupied by the tenant as he was in possession of the premises though he wasn’t using the premises. Deferring of payment of some part of the rentals to the subsequent year by the landlord would still make him liable to pay tax during the current year on the rental income of the entire year as such rent is receivable by the landlord.

If the tenant does not pay the rent altogether then the law provides that rent receivable shall not include the rent which cannot be recovered. Certain conditions are however prescribed for such rent to be excluded from taxable income. Considering the severe financial impact of the lockdown and the seriousness of the current pandemic, the government should consider softening the impact of the tax provisions.

 

This article does not intend to hurt the sentiments of any individual, community, sect, or religion, etcetera. This article is based purely on the author’s personal opinion and views in the exercise of the Fundamental Rights guaranteed under Article 19(1)(A) and other related laws being enforced in India for the time being.

Section Editor: Pushpit Singh | 01 Sep 2020 3:20am IST


Tags : #WorkFromHome #ReductionOrWaiverOfRent #DeferralOfRent #TaxLiability

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