Income From Rent
What is income from rent
1. Any asset’s rental value less allowable expenses
2. If rents come from business then it will be regarded as
business income not rental income.
3. Any sort of rental income will be regarded as rental
income. Such as rent from tenants, business, so on.
Property means house property, land, furniture, fixture,
factory building, business premises, machineries, personal
vehicle and any other real assets that can be rented.
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House Property
House Property means-
a) Furniture, fixture, fittings that are integral part of the house; and
b) Land on which the house is built, but no factory building is included.
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Rent
• Giving right to use the property for a specified period of time without sacrificing the
ownership right;
• Irrespective of the ownership of the asset, it does not include the rent provided by
• Any schedule bank;
• Any investment bank;
• Any development financial institution or mudarab or leasing company to others.
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When the house property is owned by more than one individual
a) When the share of individual ownership of the house property is certain and specific– then
the proportional (at that specific rate) income from that house property will be added to the
individual’s income;
b) When the share of individual ownership of the house property is not specifically determined
– for the purpose of determining income from rent of that house property, the individuals will
be treated as Association of Persons.
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Classification
Income from
Rent
Income from
Income from Special
house
other property Income
property
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Total Rental Value Determination for House
Property
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For other property other than
house property
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Special rent
1. Total Advanced rent during a year exceeding 5 lacs not
received through bank transfer will be treated as special
income from rent.
2. Advanced rent received through bank transfer will be
adjusted within 5 years or the contract period whichever
is shorter. However, any unadjusted amount will be
treated as special income of that year.
3. Any amount received against rental of property which is
not subject to an adjustment (e.g Security deposit) will be
treated as special income from rent , spread over a
maximum of 5 years. When returned it will be deductible
from income from rent.
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4. No deduction is allowed against special income from rent 9
.
Allowable Deductions [u/s 38]
a) Premium paid for any insurance policy to cover the damage or destruction of the property;
b) Interest or profit paid for any capital loan received from a financial institution for the
acquisition, building, renovation, rebuilding or renovation of the property;
c) Any property tax, fee or other annual charge paid for the property which are not capital
charge in nature;
d) For repair, collection of rent, water and sewerage, electricity, maintenance and any other
basic service related expenses are to be determined as per the following table:
SL No. Property Type Deductible Amount
(% of Total Rental Value)
1 House property used for commercial purpose 30%
2 House property used for non-commercial purpose 25%
3 Other Property (in applicable cases) 10%
But provided that, if the tenant pays for items mentioned here as service charges along with
the rent, no deduction is allowed.
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Allowable Deductions [u/s 38]
e) For interest or profit paid, prior to the rental income received from the property, for any
capital loan received from a financial institution for the acquisition, building, renovation,
rebuilding or renovation of the property, the interest of that period needs to be a adjusted in
three equal instalments. The unadjusted amount of interest or profit will not be allowed
thereafter.
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Restrictions on the Allowable Deductions [u/s 39]
1. If tax is not deducted at source on applicable expenses or
deducted tax is not deposited to the government as per the
provision of this act, the expense will not be allowed.
2. For partially rented house property, allowable deductions will be
partially/proportionately determined.
3. If house property is rented for a partial period (not for full year),
allowable deductions will be determined as per the partial period.
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Cont..
If one or more tenants pay a house rent exceeding a total of
Tk. 25,000 per month, the landlord shall deposit the rent
received into a bank account. In case the landlord
(individual, firm, company, or any other organization) fails to
comply with this provision, a penalty shall be imposed at the
rate of 50% of the income tax payable on the income from
such house property or Tk. 5,000, whichever is higher.
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Example
Mr. Mushtaque Ahmed’s house is let out at Tk. 10,000 per month. Income year
ended on 30 June 2023.. House remained vacant for 3 months during the alterations.
The owner claimed the following deductions:
Taka
Cost of repairs 15,000
Alterations expenses 30,000
Interest on mortgage 12,000
Fire insurance premium 5,000
Municipal tax 10,000
Required: Compute his rent income.
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Mr. M has a house at Dhanmonid. It is a four storied house. He resides with his family
on the second floor and all other floors (in each floor there are two flats) are let out for
residential purpose. Monthly rent of each flat is Taka 20,000. Municipal value of the
house is Taka 22,00,000. He received Taka 80,000 as advanced from one tenant.
However during the income year , he adjusted Taka 20,000 and the rest amount was
remained as advance. In addition to the advanced rent he has received Taka 100,000
as security deposit from the tenants. Also he refunded Taka 40,000 to a leaving tenant.
During the year, one flat remained vacant for two months and Landlord has informed to
DCT. Expenses incurred during the year : repair expense Tk. 200,000; City Corporation
Tax Tk. 18,000; fire insurance premium Tk. 12,000; night guard's salary Tk. 40,000;
Installation of electricity line Tk. 25,000; Collection expenses Taka 20,000; Utility bills
Taka 80,000. During the year Mr. M paid instalment of loan to HBFC Tk.67,500 (out of
which principal amount is Tk. 60,000). However, there are unadjusted interest amount
of Taka 6000 during the construction period. . This amount will be adjustedthis year.
During the year Mr. M incurred investment and expenses as follows: Taka 400,000
family expenses, Inusrance premium Taka 10,000 (policy value Taka 900,000);
Invested in listed compnays shares Taka 300,000. DPS (monthly ) Taka 15,000;
donation to a local club 100,000. His net wealth 6 crore and he has a car of 2500 cc.
Calculate the net tax payable.
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Mohammadpur Uttara Mohakhali
Number of storied 4 3 5
Number of flats in each floor 2 2 4
Rental status Fully rent One floor personal, other let Fully rent
out
Purpose Residential Residential Commercial
Municipal value 90 lacs 55 lacs 2 crore
Rental value ( each flat per 90,000 80,000 1.9 core (annual)
month except Mohakhali)
Repair and Maintenance 240,000 220,000 600,000
Insurance premium 12,000 9000 20,000
(quarterly )
Salary of supervisor(per 15,000 10,000 24,000
month)
Municipal tax 15,000 12,000 24,000
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Additional Information:
1. During the year one tenant left Uttara flat without paying rent for two months. Two
flats of Mohammadpur remained vacant for 2 months.
2. Security deposit taken for Mohakhali House Taka 4 lacs and Taka 1 lac for
Mohammadpur house. However, Taka 50,000 for Uttara house was adjusted during the
year.
3. Advanced rent taken for Mohakhali Taka 600,000 cash, owner adjusted Taka 100,000
during the year. However Taka 100,000 was taked as advanced for Mohammadpur
trhough banking channel.
4. A construction loan of Taka 5 crore was taken for Mohammadpur house in the last
year. The loan has to be repaid in 5 equal installment staring last year. Interest rate is
10%.
5. During the year investment and expenses as follows: Taka 600,000 family expenses,
Insurance premium Taka 20,000 (policy value Taka 2100,00); Spouse Insurace Taka
20,000 (Policy value Taka 19,0000) Invested in listed company's shares Taka 300,000.
Investment in Sanchoypatra Taka 800,000; DPS (monthly ) Taka 20,000; donation to a
local club 100,000. His net wealth 10 crore and he has a car of 3000 cc. Calculate the
tax payable.
net9/3/2025 17
