As Business Are Waiving Off And Shifting The Rent Liability To Support The Business Due To COVID-19, What Would Be The Tax Treatment For Rent Supplies?

TAX TREATMENT FOR RENT SUPPLIES

As Business Are Waiving Off And Shifting The Rent Liability To Support The Business Due To COVID-19,
What Would Be The Tax Treatment For Rent Supplies?

There Could Be Two Scenario

    • Waiver of Rent Payment
    • Extension of deadline for rent payment

    Waiver Of Rent Payment

    Example:- PRS LLC owns a commercial unit and leased out the same to ABC LLC for one year. PRS LLC waived the payment of rent for 3 months starting from April 2020.
    Waived off rent payment will be considered as reduction of supply value by way of discount and there will no VAT due

    Extension Of Deadline For Rent Payment

    Example:- PRS LLC owns a commercial unit and leased out the same to ABC LLC for one year. The rent payable in 4 cheque which is due on Jan 20, Apr 20, Jul 20 and Oct 20. PRS LLC extend the date of payment of rent for 3 months starting which is due on April 2020.
    Reporting of rent supplies will also delayed by 3 months in PRS LLC Vat return as rent will be due on July 2020 instead of April 2020

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