26 August 2010
I HAVE A COMMERCIAL PLOT IN MY MOTHER'S NAME, WE ARE DISCUSSING WITH BANK WHO WANT CONSTRUCTED PREMISES ON RENT FOR RUPEES 6 LAKH PER MONTH INCLUSIVE OF ALL TAX LIABILITIES, WHICH WILL BE FINANCED BY THEM. DEPENDENTS ON THE RENT ARE FATHER, MOTHER, BROTHER & WIFE AND MYSELF WIFE AND TWO CHILDREN. MY ISSUE IS WHETHER WE SHOULD GIVE ON RENT THROUGH PARTNERSHIP FIRM OR WE SHOULD GET THE PLOT PARTITIONED BETWEEN OURSELVES OR OTHER WAYS TO MINIMISE TAX LIABILITIES CONSIDERING SERVICE TAX, INCOME TAX SINCE FULLY DEVELOPED PREMISES WILL FETCH RUPEES 10 LAKH PER MONTH.....PLEASE HELP!!!
If u r constitute a firm then the transfer of asset attracts the Capital Gain Tax. Then share of Firm income is possible . However sleeping partners are not eligible for salary.
If the plot partitioned through a will then the bank has to get into an agreement with each of the person. The loan in there individual name for claiming under relevant head of income tax ACt. The rent can be recovered based on the agreement.
28 August 2010
Creating multiple tax entities will minimise income tax and service tax incidence. It enables getting the benefit of lower tax slab / investment based tax exemptions.
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