Hello friends, how are you? Welcome to our new lecture, a
new presentation, a new topic, a new discussion.
I, your friend, C. H. Ray Gupta, welcome you to our
discussion.
We were discussing, friends, if you remember, how we used
to tax on house property, what we used to minus from it, a
value of municipal taxes that we used to minus.
Let's take this discussion a little further.
Before taking this discussion further, I would like to tell
a small story.
Friends, last night, I have a dear friend, and the length
of the friend is around 6 feet 2 inches.
He is very serious, and his name is Mr. Anthony Gonzalez.
And his problem was that he came to me and said, I came to
your house, I am very worried.
So I said, brother, what is the problem?
He said, it is like this, Mr. Gupta, my name is Anthony
Gonzalez.
I said, brother, your name is Anthony Gonzalez, so I know.
What is the problem? What is the problem?
He said, the problem is that the heart is also empty.
I said, you have a very big problem.
What else is your problem?
He said, the bigger problem is that the house is also empty.
My name is Anthony Gonzalez, and my heart is empty, and the
house is also empty.
And there will be no rich person in this house.
I said, what are you trying to do?
He said, Mr. Gupta, the case is that I have a property, and
I am the only person.
This is my property, and it has two floors.
This is the ground floor and this is the first floor.
On the first floor, Mr. Anthony Gonzalez lives himself.
He is also self-occupied.
But his problem was that his heart was also empty and his
house was also empty.
So he said, I will get a contractor for my ground floor so
that I also have time pass and I can earn some money like
this.
So what did he do?
He published an advertisement in the paper.
And that advertisement was read by a man who was singing
while walking on the streets that two crazy people are
looking for an ashram in the city.
So those two crazy people came to Anthony Gonzalez and
said, I have heard that you have an empty ground floor
property here.
He said, yes, it is empty.
He said, I want to come and stay here.
He said, yes, with pleasure.
He said, this is so and so rent.
You can come tomorrow.
So those two crazy people came here and started living.
This is Mr. Diwana and his wife Mrs. Diwani.
They are living here.
And what does this property become for Anthony?
It becomes a let out property for them.
Friends, I would like you to look at this diagram carefully.
I would like our director to focus a little on zooming in
this diagram.
Look at this diagram very carefully.
I think zoom up.
It is coming out well.
Can you see Mr.
Actually, Mr. Anthony's head is so big that he is not able
to fit in the camera.
So Anthony, can you see this?
This is a self-occupied property.
Director, please open the screen a little.
Okay, okay.
So the director did our adjustment.
I would like to say thank you to the director.
Director, thank you very much.
So this is Anthony Gonzalez.
He lives on the first floor.
And what is this property for him?
Self-occupied property.
And on the ground floor, this is a let out.
The same property.
There are two parts of the same property.
One part is self-occupied.
One part is let out.
So what should we do?
What should we do, friends?
What should we do with this property?
Think about it.
It's a simple thing.
There is no problem.
The self-occupied property, we said that if he has two
house properties, then his annual value will be zero.
We said this.
So let's assume in this question.
He has only one house property.
So this portion, friends, I am talking about a portion.
I am not talking about the whole house.
I am talking about this portion.
This.
This portion.
Only this portion where he lives,
Anthony Gonzalez.
The value of this portion is of the upper portion.
That will be considered self-occupied.
Self-occupied means, if it is self-occupied, then its
annual value will be zero.
Simple. Is there anything?
Is there anything?
Any problem?
Any fear?
No fear, no worry.
I am with you.
Sir, the dialogue is very interesting.
What to do? I am helpless, sir.
So for the upper portion, the annual value is zero.
And for the lower portion, where Mr.
Diwali lives, for that, do you remember this sheet?
This one.
Simple, isn't it?
Do you remember this?
We used to compare this with the fair value.
With the municipal value.
And whatever was more among the two, we used to compare.
This portion has to run separately, and this portion has to
run separately.
Okay.
From this, we will get its value.
What will we get? We will get the value of the cross sign.
We will get the value of this, because it is not there.
Simple.
It has to run separately.
But friends, sometimes it happens that you are given a
value of the entire property.
Or you have a municipal value of the entire property.
Of the first and second floor.
For example, the government doesn't know that there are
three floors here, not four floors.
The government will say that if you have a house on that
street, then the value of that house is this much.
But now the problem is that
I have put two houses on that house.
So if I have to take the value of one of the two, then what
will I do?
I will take half of the total.
Do you understand?
If I am saying this, simple.
This is a municipal value.
The government doesn't know.
The municipality doesn't know.
The local authority doesn't even know how many houses I
have put on that street on one floor.
They say, let's put three or four houses.
Let's take the value of that land.
Let's take that land.
The value of that land is 10,000 rupees.
But I have put four floors there.
So what will be the value of one floor? 2,500 rupees.
That's what I am saying.
We are looking at it portion wise.
We are talking about two different portions of the same
property.
This portion which was self-occupied by Mr.
Anthony Gonzalez, that was zero.
And the other portion which was let out, what is the
municipal value of that portion?
Only that portion.
The total value of the house is divided by if it is two
floors, if it is three floors, then it is divided by three.
You have to go by the value of that portion.
This is a fair value.
The symbol is like this.
If they have given you the value of the house, then divide
it by two.
It is a good survey.
It is not right.
The concept is not right.
Why did I say it is wrong?
You think you are a hero.
Why did I say it is wrong?
Sir, what is the difference between the municipal tax?
I will give you the municipal tax.
So sir, why don't you divide the municipal tax by two?
It is a simple thing.
You have to take the value of the portion.
There are two different portions.
So whatever calculations we have to do, divide it by two.
Divide it by three.
It happens a lot.
There is a house above and there is a shop below.
What is the value of the house?
It is self-occupied.
What is its value?
It is zero.
And what is the value of the shop below?
I will take the total rent.
Will I get the actual rent?
This is not a solution.
I will never get the actual rent.
I will get the actual from the property.
I will get whatever I get.
But the municipal value of that house was of the whole
house.
The fair value was of the whole house.
Divide it by two or three.
This is the thing.
I am not giving the total property tax.
I am just giving the floor tax.
So that municipal tax will be divided by two.
This is the solution.
This is the concept.
So, you can remember this as an example of Anthony Gonzalez.
If you have not read it, you can believe it.
Let me show you the reading.
Sir, is this the concept?
Yes, this is the concept.
These are the small concepts.
The main concept which you helped me to understand.
This is the concept.
Let me show you the reading.
What is this?
In case of house property...
Now portion is let out and portion is self occupied.
Our portion is self occupied and one portion is let out.
In one portion Mr. Anthony Gundamrish lives and in other
portion Mr. Diwana and Mrs. Diwani lives.
So, take out the let out portion.
What is let out?
Take out the let out portion according to the let out.
According to the let out, there is no expected rent vs.
actual rent.
Whichever is higher.
And portion is self occupied.
Take out according to self occupied.
The whole property, this is point 1.
The whole property should not get single unit.
If you have a question about municipal value, fair value
etc.
Separately, if you have not given different portions which
are not given in practical life.
So, what you have to do?
You have to take the value of the whole property.
From that you can see how many floors are there and how
much rent is there.
If there are 3 floors and 1 is on rent, then multiply the
value by 1.
If there are 2 floors and 1 is on rent, then multiply it by
1.
This is C point.
Municipal value, fair rent.
If not given separately, then portion it.
We do floor wise according to winter period.
If you have any other reasonable basis.
Sometimes it happens that your 1 floor is little big and
2nd floor is not that big.
How? Have you seen these tiles?
What are tiles?
You must have seen these tiles.
For example, if I have a room.
For example, this is my house.
This is my house.
I live here.
This is self occupying.
This is my roof.
I was making a room in the roof.
I use this whole roof for my purpose.
I have laid out only this portion.
Ok.
Suppose this portion is of Rs.500.
Suppose this portion is of Rs.200.
How will I divide it?
I will divide it by ratio.
I will divide it by built up area.
Suppose this is Rs.200 and this is Rs.500.
Suppose if you have municipal value of Rs.10,000.
Then Rs.10,000 will be total value.
It will not have value.
Because you are living here.
Value of Rs.5,000.
Out of Rs.5,000, I am using the remaining Rs.200.
I am using Rs.200.
Out of Rs.5,000, I am using Rs.200.
Then Rs.2,000 will be total value.
Ratio will be 2 to 3.
See this.
Let out property.
This is let out.
Ratio of 2 to 3 is let out.
Let out on self occupied.
I am using Rs.200.
I am using Rs.300.
I am not cleaning my clothes on the roof.
What is the value of this?
If Rs.10,000 is there.
Out of Rs.10,000, you have divided it.
One is Rs.5,000.
Out of other Rs.5,000, you have divided it.
Suppose this is Rs.2,000.
This is Rs.3,000.
This is Rs.2,000.
Either you can divide it on your floor.
Either you have reasonable basis.
You can divide it by that.
Either you have built up area.
There is difference in square feet.
These are general things.
There is nothing technical in this.
Property tax.
If you are paying property tax for whole house.
And you are running one house.
And you are not running other house.
Then 50-50.
1 by 2.
Property tax can be bifurcated.
As attributable to each person.
On a reasonable basis.
Simple question.
Nothing else.
Is there anything in this portion?
We have touched on a very important topic.
I feel like
I have zeroed out any opening bets of Pakistan team.
We have covered so much topic.
And we didn't take much time.
But we have understood things in depth.
We have gone in depth.
And I have tried to explain you on a basic level.
If you don't understand failure.
Then you can watch the lecture again.
You will understand.
There is nothing like this.
There is no such tough topic.
The tough one was GAB calculation.
We have discussed about it.
Now we have come to next topic.
There is nothing.
Elephant has left.
Treatment of unrealized rent.
He is teaching us.
In our discussion.
Tell me one thing.
Actual rent.
What did I say?
What did you get?
Simple thing.
If I have rent of Rs. 10,000 per month.
Then actual rent.
What did you get in 12 months?
Rs. 1,20,000.
Assume that I have got rent of 9 months.
And you didn't get rent of 3 months.
Sometimes it happens.
You have rented a property.
And the person whom you have rented a property.
He is not like Vijay Mallya.
He paid rent of Rs. 23,000 in 9 months.
He ran away to London.
Now you will go to London to collect rent of Rs.
You can't do that.
So what will we take?
Actual rent?
What is there to think?
We will take Rs. 90,000.
Actual rent of 9 months.
Answer in words.
Use logic.
What is word?
Actual.
This is it.
12 months.
Ok.
But how much did he pay me? 9 months.
How much will I take in my calculation? 9 months.
Actual rent received.
The rent which I didn't get.
I don't take that.
I consider only that which I receive.
Is there anything to say?
No.
Come, let's sit.
This is a dark line.
Actual rent received should not include rent which is not
capable of being realized.
The rent which you won't be able to collect.
The rent which you didn't get.
Which can't be collected.
How can't it be collected?
He ran away to London.
To get his ticket.
He paid Rs. 10,000.
But the government said don't give like this.
Because this can be tax spending.
You always say suppose your house is in such a place where
the expected rent means it is in such a backward place.
Suppose the expected rent is
Rs. 2,000.
What is the comparison of that?
With whom did you do it? With actual.
So the person will say
I have kept it on rent for 12 months.
But that person didn't pay the rent for 12 months.
So that is zero for me.
So what should I do now?
So my expected rent is
Rs. 2,000. So I will take tax on Rs. 2,000.
No matter how much my actual rent is.
Sometimes this happens.
There are some places in urban areas where the expected
rent is less.
So its market rate is less.
Or its municipal rate is less.
But actually when you pay the rent.
What is the setting?
You have to pay more money.
Let me explain.
This is one thing.
This is the point of tax planning.
Listen to this carefully.
What happens is
As I told you expected rent vs actual rent.
I am saying expected rent is such a place where your house
is in such a place where the expected rent is Rs.
Ok.
And you told that person that you paid him
Rs. 10,000 per month.
You paid him Rs. 10,000 per month.
But then what did you do?
You told that person that do one thing.
Don't give me money through cheque.
Because if you give me money through cheque then it will be
proved that you are paying me rent.
In future if someone comes to ask me that are you getting
the rent?
I will say no.
He will ask me to show him my bank account.
He will give me the entry.
I will say do one thing.
Give me cash.
There is no proof of cash.
He will give me cash.
I will eat that money.
According to the books
I will get the entry.
I will tell the government that my actual rent is Rs.
You will pay me Rs.
I will pay you Rs. 2,000.
But actually I have got a lot.
This is called tax planning.
Or sometimes if a person runs away then he will show that
he ran away the whole year.
This is also called tax planning.
Have you run away for 3 months?
You will say no.
He has run away the whole year.
What is tax?
This is called tax planning.
Government also prescribes some rules for this that you
should not directly minus this we are saying that you
should not include the land which you did not get actually
so government said don't do like this don't include but
there are some conditions if you fall with those conditions
then only you should not include those conditions are
those conditions are friends, second point that tenancy was
bona fide you have genuinely rented that house
you have genuinely rented that house
diverting tenant has wicked it we have taken these steps to
wicked the property
the person who did not pay my rent
if I will keep him in my house if he does not pay rent for
2, 3, 4 months then I will throw his stuff
it does not look good to say but in real life why will I
let him stay in my house so government says tell me one
thing you wanted to zero your actual rent from us have you
taken any steps yourself
I asked what kind of steps steps like if he did not pay
your rent then did you try to throw him out of the house
did you try to recover the rent did you file a complaint
with the police
if not then what will the government say they will say
I did not do anything stupid
your objective was that I will show my actual rent to zero
so that you can tax my expected rent
this was the planning
so government's conditions first point that tenancy is bona
fide you have genuinely rented that house
diverting tenant
has wicked the property or I am taking steps to vacate the
property
diverting tenant is not in occupation of any other property
of the SAC
sometimes it does not happen that I settle with that person
with the rent
I told him do one thing this is my property show it to the
government that I threw you out of my house
do one thing leave my property and there my brother's
property let's go and live there
in another lane
it will not happen government said no don't do so much
planning we all know that we have seen all this drama
so government said it is not like that it is written in C
point diverting tenant the person who has deferred your rent
he is not staying on any other property of yours
and fourth point is in SAC all reasonable steps have been
taken to do legal proceedings
for the recovery of unpaid rent
these reasonable steps have been taken what will the
reasonable steps do? if I file a complaint against the
police then the complainant will file a complaint against
him if he has taken these reasonable steps then out of the
actual rent if you have the figure of the total rent in the
question the police will come this is the actual then minus
that the rent which he is not recovering that is a very
common sense thing if I remove it from the topic the money
which I have not earned why should I
it why should I include it it is just a matter of saying
that you have deferred the rent for 10-15 months if you
have deferred the rent for 9 months then why should you pay
the rent for 3 months it is a simple thing this topic will
end with this we will meet in the next
Dharam Bhai's blog till then take care of yourself thank
you friends