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Income tax liability for house rent for person with no indian salary

Saurabh (IT professional) (21 Points)

19 December 2016

I am put up in the house owned by my elder brother who is now settled in USA for last few years and has no earnings in INR or does not have draw any Indian salary. I pay 16,500 per month and that amounts to around 2 lacs per year. If I disclose his PAN number in my HRA, will he be liable to pay any tax in India considering that the minimum amount for tax eligibilty is 2.5 lacs?

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4 Replies

Jay modi (Student CA Final ) (24 Points)
Replied 19 December 2016

No he would not be liable to tax provided Your Rent Income does not gross the basic exemtion limit .

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Easetaxsolutions (Properitor) (41 Points)
Replied 19 December 2016

Hi Saurabh,

If your Brother Income exceeds the basic exemption limit i.e. 2.5 lakhs, then he shall be liable to pay Income tax under the Indian law due to the fact the property is own in his name.

white collar (8 Points)
Replied 19 December 2016

Hey,

You can find your answer here in this video

https://www.youtube.com/watch?v=SnAVZ290SWo

Abhinav (CA) (397 Points)
Replied 25 January 2017

This rental income will be taxable in your brother's hands as per Indian income tax law. However, if the total income (including this rental income) for the entire year is below INR 2.5 lacs, then your brother need not file a tax return in India, even if he files a return, there will not be any income tax liability.

You can show this rent in your HRA tax calculation to your employer. Ensure you pay by cheque and fund transfer is clearly evident in bank statement.

Since your brother is an NRI, you need to deduct TDS @ 30.90% from each rent payment and deposit in government account using ITNS 281 and file TDS return in Form 27Q - your brother can claim this TDS after filing his tax return in India.

On a safer side, ensure you and your brother have an agreement documenting term of lease and rent amount, to produce to an assessing officer in case of enquiry.

From a US tax perspective, your brother will have to also offer this rental income from India in his USA tax return and pay applicable tax in USA.