Mr. Zaid received a lump-sum amount of Rs. 3,000,000 as consideration for vacating the possession of a rented commercial building. He did not pay any amount to originally acquire possession of the building. How will this amount be taxed?

Correct answer: C) C) Rs. 300,000 will be chargeable to tax under 'Income from Other Sources' in the year of receipt and the following nine tax years.

Explanation

Any amount received as consideration for vacating the possession of a building (reduced by any amount paid to acquire possession) shall be chargeable to tax under "Income from Other Sources" in the tax year in which it was received and the following nine tax years in equal proportion (i.e., 1/10th or Rs. 300,000 each year).