One of my clients has a guest house in his village. The guest house is given on rent on daily basis. No other service are provided. Whether the income from letting out the property is a business income or Income from house property? How to calculate the Total income? 

Posted 2 years, 10 months ago by Rakesh Bharadwaj

The income will be taxed under the "Income from House Property". Income from property consisting of building is always taxable under the head income from house property.

Even if the flats on rent by land developer are considered as house property and income is taxable under the head income from house property.

Posted 2 years, 10 months ago by Rahul Rai

A brilliant question in deed Mr. Rakesh.

I suggest before posting this question, it would be opinion, a difference between the word " Guest House" and " House property" be looked at.

Though both terms resemble the same and interchangibly used, there exists difference. I would bring to your kind attention in addition to the Income tax Act,1961, section 2(ea) of Wealth Tax Act,1957 too defines the guest house as an asset for wealth tax purpose.

i sincerely opione, that renting of guest house, falls under business income considering the following pressumptions

a. House Property converted to provide accomodation to Guest house is termed as Guest house.

b. An guest house may involve other services like food, entertainment and servant aides too and may not have any such services too.

c. Renting of property on daily basis constiutes business and not renting ( Ex: Autorikshaw, though we hire it daily, the Autorikshaw owners income will be business and not renting of auto even though the auto is exclusively hired every day by same person for whole day for a fixed sum.)

I beleive i have provided enough insight to arraive on classification of the income under relevant head of income while considering the taxation aspects.



CA. S Kamath

Posted 2 years, 10 months ago by CA Sundeep Kamath

I change my stand after reading the reply of respected Mr. Sundeep.

Sir, can you please visit the site frequently as most of the replies here are not to the level to match your knowledge.

We need a strong knowledgable person like you on the site.

Thanks for clarifying the doubts and hope to read more from you.

Thank you sir.

Posted 2 years, 10 months ago by Rahul Rai

@ Rahul Ji,

Your welcome. I appreciate your time, however please keep posting your doubts, i will always support you all. You can expect me behind you always however small the issue be.



S kamath

Posted 2 years, 10 months ago by CA Sundeep Kamath

Your Reply:

You need to be logged in to reply.