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It is advised not to take any flat in a company name to save stamp duty to be paid at the time of further transfer in future. There will not only a problem in current year, but assessment of last 6 years can be reopened. This can be explained as follows:

1) Notional rent can be charges: If one take a flat in a company than notional rent shall be charged to tax, if there is no actual rent income. However, in case of individual, notional rent on one self occupied property is not charged to tax.

2) Problem of reopening of assessment: If rent income is not shown than the assessment can be reopened u/s 148 for last 6 years too.

3) Provisions of Direct Tax Code: It also contains that 6% of the municipal value or cost shall be charged as presumptive rent.

Sec 25. (1) The gross rent in respect of a property shall be the higher of the amount of contractual rent and presumptive rent, for the financial year.
(2) The contractual rent referred to in sub-section (1) shall be the rent receivable by the assessee under a contract, whether in writing or otherwise.
(3) The presumptive rent referred to in sub-section (1) shall be six
per cent. of -
(a) the ratable value fixed by any local authority in respect of the property; or
(b) the cost of construction or acquisition of the property if no such value has
been fixed by the local authority.
(4) The gross rent shall, regardless of anything to the contrary contained in subsection
(1), be taken to be nil if the property consists of a house or part of a house
which is not let out.
(5) The provisions of sub-section (4) shall not apply if-
(a) the house or part of the house is actually let during any part of the financial year; or
(b) any other benefit is derived from it by the owner.
(6) The provisions of sub-section (4) shall, in a case where a person owns more than one house, apply only in respect of one house, which the person may specify at his option.

Tax planning:

1 Property can be let out

2 Take two flats per individual. First flat is exempt and on other flat, offer tax on     notional rent by enjoying tax exemption limit of individual.

2 Take flats in the name of HUF.

3 Take flats in name of trust in which minor can be beneficiary.

Published by

CA Amit Kumar Hallen
(Practising Chartered Accountant)
Category Income Tax   Report

  32 Shares   9465 Views


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