CAF-2 · Chapter 6 · Question 9 of 15
Mr. Z received a non-adjustable advance of Rs. 1,000,000 from a tenant in tax year 2023. The tenant vacated the premises in January 2026, and the advance was refunded. A new tenant moved in on 1 February 2026, paying a new non-adjustable advance of Rs. 1,500,000. What amount of the new advance will be added to the rent chargeable to tax in tax year 2026?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) B) Rs. 120,000
Explanation
The previously taxed amount of the old advance (3 years x Rs. 100,000 = Rs. 300,000) must be subtracted from the new advance. The balance (Rs. 1,500,000 - Rs. 300,000 = Rs. 1,200,000) is then divided by 10. Therefore, Rs. 120,000 is chargeable to tax in tax year 2026.
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