What are the taxes on commercial properties?

What taxes apply to commercial properties that are utilised for the owner's company, as well as those that are rented or sold? We look at the ramifications in each situation. Property is one of India's earliest investment opportunities, predating the introduction of different financial instruments such as direct equity and mutual funds. If you've rented out a commercial property in Pune, you'll have to pay taxes on the money you've made.

Commercial property that is rented is subject to taxation.

If you manage a business centre on your own premises and offer other services, the revenue can be classified as business income if the other services, as well as the renting out of space, make up a major amount of the total income. Except in such situations, any income derived from property owned by you is taxed under the head particularly designated for property income, regardless of the name given to the revenue. Because the revenue from renting out such commercial property in Pune is taxed under the category "income from home property," no deductions can be sought against the rental income unless the legislation expressly allows them. It's best not to claim additional costs and instead present your true rental income under the heading 'profits and gains of business of profession.'

GST on commercial real estate

If you have rented out your home for commercial reasons and have annual revenue of over Rs 20 lakhs, you will be subject to GST. In this case, you'll have to pay 18 per cent of your yearly income in GST on rent.

Deductions from the rental revenue of a rented property

The income tax regulations enable specific deductions against the rent you get when calculating income under the heading of income from residential property. The first deduction offered is a standard deduction of 30% of the rent collected or due for such commercial property. This standard deduction is applicable regardless of the amount spent on a business or residential property that is rented out, or a self-occupied residential property that is considered as rented out.

Additional to the above statutory deduction for repairs and other expenses, the tax rules permit a deductible for interest paid on any borrowed money for the acquisition, building, maintenance, or rebuilding of your commercial property in Pune. The interest deduction is accessible for all categories of properties, both residential and commercial, per Section 24(b) of the Income Tax Act. Processing and prepayment cost paid to any banking organisation in order to get a loan can be recovered as interest. You can subtract interest not just on borrowed money from banks, but also on borrowed capital from friends and family.

Profits from the selling of commercial property are taxed.

Profits from the sale of any commercial property in Pune you own and use for your own business are taxed as short-term capital gains if no other property falls into the same asset type, regardless of how long you possess it. However, according to certain court declarations, you can seek exemptions under Section 54F by investing the net amount in a residential housing property that has been possessed for more than 24 months. Instead, you can invest the compounded capital gains in designated institution capital gain bonds and obtain a deduction under Section 54EC.

For those seeking to buy commercial properties in the city or rent it out to potential tenants, seeking out professional help from prominent builders like Bramhacorp is a great idea. With plenty of commercial properties dotted across the city, you are sure to find the next base for your business.