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June 6, 2014

Vaccancy Allowance u/s 23(1)(c)

The tax is levied on the income-earning potential of the property, and not on the income generated from the property. However, if the property is let out and is vacant for a part of the year, the assessee is entitled to proportionate relief called "vacancy allowance" under Section 23(1)( c) of Act.

Vaccancy Allowance u/s 23(1)(c)

Where let out property is vacant for a part of the year and owning to vacancy, the actual rent is lower than ALV, then the actual rent received or receivable will be GAV of the property.

Provisions of Section 23(1)(c) dealing with vacancy allowance applies only to a property which is let out – Self-occupied property is not eligible for vacancy allowance

Where the property has not been let out at all during the year, there is no question of granting any vacancy allowance under Section 23(1)(c) – Period for which a let out property may remain vacant cannot exceed period for which property has been let out

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