Section 25A — the law in short
What the courts have decided on section 25A, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Statutory position — s.25A: arrears of rent and unrealised rent are charged in the year you receive them, thirty per cent comes off, and it makes no difference that you no longer own the property
CBDT Circulars & InstructionsCuts both waysSuperseded by amendment
A tenant who stopped paying years ago has finally paid up, and I sold the flat in between. The officer wants to tax the whole amount now. Which year is it taxable in, do I get any deduction, and does it matter that the property is not mine any more?
Section 25A charges arrears of rent and unrealised rent in the financial year you actually receive or realise them, and it says in terms that it does not matter whether you own the property in that year. Sub-section (2) allows a flat thirty per cent of the amount as a deduction, and that is the only deduction the section gives. The section you are reading is not the old one: with effect from 1 April 2017 a single section 25A was substituted for the three provisions that used to do this work — the old section 25A, section 25AA and section 25B — and the substitution is what first gave unrealised rent the thirty per cent, which section 25AA had never allowed. It joins up with section 23: the Explanation to section 23(1) keeps rent the owner cannot realise out of the annual value when it falls due, and section 25A brings it back when the money comes in, so the earlier year is never reopened. Section 25A governs an amount received or realised up to 31 March 2026; for an amount received on or after 1 April 2026 the provision is section 23 of the Income-tax Act, 2025.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
