Section 23 — Arrears of rent and unrealised rent received subsequently
Old Act equivalent: Section 25A of IT Act 1961 Sub-part: C.—Income from house property
Statutory Text
(1) The amount of arrears of rent received by an assessee from a tenant, or the unrealised rent realised subsequently from a tenant, shall be deemed to be the income from house property in respect of the tax year in which such rent is received or realised.
(2) The amount deemed to be income from house property under sub-section (1) 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 tax year.
(3) A sum equal to 30% of the arrears of rent or the unrealised rent referred to in sub-section (1) shall be allowed as deduction.
Sub-sections
Sub-section (1)
Arrears of rent received from a tenant, or unrealised rent subsequently realised, is deemed income from house property in the tax year of receipt/realisation.
Sub-section (2)
This deemed income is taxable under the head “Income from house property” even if the assessee is no longer the owner of the property in that tax year.
Sub-section (3)
30% standard deduction is allowed on the arrears of rent or unrealised rent.
Provisos
None.
Explanations
None.
Tables
None.
Key Structure
- Applies to: Any assessee who receives arrears of rent or subsequently realises unrealised rent
- Taxability: Deemed income from house property in the year of receipt/realisation
- Ownership not required: Taxable even if assessee no longer owns the property (sub-section (2))
- Deduction: 30% standard deduction on arrears/unrealised rent (sub-section (3))
- Monetary limits: None
- Time limits: Tax year of receipt or realisation
Cross-References
- s020-charging — Section 20: main charging section for house property
- s021-annual-value — Section 21(4): unrealised rent excluded from annual value computation — this section catches it when subsequently realised
- s022-deductions — Section 22(1)(a): parallel 30% standard deduction for regular annual value
Amendment Notes
None noted from the extracted pages.
Practical Notes
- This section operates as a catch-all: rent excluded under section 21(4) (unrealised rent) comes back into tax when actually received.
- The 30% deduction under sub-section (3) is a flat rate — no actual expenses need to be proved.
- Sub-section (2) is notable: even if the assessee has sold the property, arrears of rent received from the old tenant are still taxable as house property income in the assessee’s hands.
- This section applies to both arrears (rent that was due but delayed) and unrealised rent (rent excluded earlier because it could not be realised).