When the owner of the building gets along with the rent of the building, rent or hire of other assets (like furniture) or charges for different services provided in the building (e.g. charges for security, lift, air-conditioning etc.), the total amount so received is called ‘composite rent’.

Tax treatment of Composite Rent

When composite rent consists of rent for building and rent or hire for other assets (like television, furniture etc.) and the two rents are inseparable (i.e. the other party will not accept the letting of one without the other), then such income is taxable as business income or ‘Income from Other sources’.

When composite rent consists of rent for building and rent for other assets (like television, furniture etc.) and the two rents are separable (i.e. the other party will accept the letting of one without the other), then rent of building is taxable as ‘Income from House Property’ and rent or hire of other assets is taxable as ‘Income from Other sources’.

When composite rent consists of rent for building and charge for different services (like security, lift, air-conditioning) the composite rent is split up and the portion which relates to rent of building is taxable as ‘Income from House Property’ and the portion which relates to the services offered is taxable as ‘Profits and gains of Business or profession’ ‘Income from Other sources’.

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