Rental Income
Also called: Rent Received
Rent earned by letting out property or equipment you own, on the Profit and Loss statement. Tenants may withhold 10 percent TDS.
In detail
Rental Income records rent earned from letting property or equipment the company owns, such as a spare flat or a vehicle hired out between tours. If the company is VAT registered and lets commercial space, the rent attracts 13 percent VAT and is billed with a Sales Invoice; residential rent is exempt. A tenant that is a business will deduct 10 percent TDS before paying, so the receipt will be short of the invoice and the difference goes to TDS Receivable. The ledger shows the gross rent for the period; the Accounts Receivable report shows which tenant still owes. Rent received in advance for future months belongs in Contract Liabilities until the month arrives.
Formula
Rental Income for the period = Rent invoiced for months in the period, excluding VAT and before TDS deducted by the tenant
Accounting entry
| Account | Debit | Credit |
|---|---|---|
| Debtors (tenant) | Rs 45,000 | |
| Rental Income | Rs 45,000 |
How to record it in BRAccount
- 01Go to Selling > Customer and create the tenant if not present.
- 02Go to Invoicing > Sales Invoice > New each month, pick the tenant and add a rent item posting to Rental Income.
- 03Apply VAT 13% - YFF for commercial space or VAT Exempt (Schedule 1) - YFF for residential.
- 04Submit. The entry below posts.
- 05Record the receipt with Create > Payment Entry; put the TDS the tenant withheld in the Deductions table against TDS Receivable.
When to use it
Post by Sales Invoice or Journal Entry each month for the rent due. Pair with Investment Property for let-out buildings.
Example from the demo books
Dr Debtors Rs 45,000, Cr Rental Income Rs 45,000 for the Baluwatar flat tenant's Shrawan rent.