Income tax on rental income for nri

calculation is as follows

a) Gross Annual Value (20000 x 6) = 120000

b) Less: Municipal Taxes paid =xxxx

c) Net Annual Value = Rs.120000

d)Less: 30% of NAV - Standard Deduction = Rs.36000

e) Less: Interest paid on above = xxxx

f) Income from house property = xxxxxx

Less: Deduction u/s 80C - Maximum of Rs.100000

Housing Loan Repayment = xxxxx

Taxable Income

Tax

This is for basic understanding only in case you require any more advice please contact me at mrpraveen @ live.com

HI,

Since u r an NRI, only the income earned in India will be taxable here. You are getting rent on the property purchased by you. This rental income is taxable in India. Take full year rent reciepts and deduct any property taxes paid thereon and claim 30% standard deduction thereafter as explained by Praveen above.

Out of the EMI paid by you during the year, the interest portion without any limit (since property is rented out) can be claimed and deducted from the above amount after 30% standard deduction whereas the principle portion can be claimed as deduction upto Rs. 1 lacs.

Secondly, it doesn't matter within what time your loan is repaid,. During any given year., the interest portion paid can be claimed and the principle loan component can also be claim upto 1 lacs.

thirdly, if house is transferred to wife's name, effectively to tranfer the income from rental reciepts, then the income will be chargeable to your wife. Since she' s no other income, this will be benificial.

______________________________________________________________________

- Ashish

(8802999731)

Hi,

Thanks Praveen and Ashish.  

My understanding is this:

a) Rental income for a year (assume): 20,000 * 12 = 2,40,000

b) LESS: Property tax paid: 4,000 (approx)

c) LESS: Standard Deduction = 30% of 2,40,000 = 72,000

d) Net Rental Income (2,40,000 - 4000 - 72,000) : 1,64,000

e) Deduct the Interest Portion of the EMI for 1 year:  60,000 (Assume)

f) Net Value: 1,64,000 - 60,000 = 1,04,000

e) LESS: Standard Deduction - 1,00,000: (1,04,000 - 1,00,000) : 4000

Total Taxable Income: Rs. 4000.

Hence Tax = 10% of 4000 = Rs. 400.  (Is the tax 10%.  Is my calculation correct based on my assumption)

If i have repaid the Loan completely,  should we just eliminate point no. e) and f) from the above calculation?  Will i still have Deduction u/s 80C of Rs.100000?

Hi,

Let me make some small corrections:

a) Rental income for a year (assume): 20,000 * 12 = 2,40,000

b) LESS: Property tax paid: 4,000 (approx)
                                                         Net Value: 236000

c) LESS: Standard Deduction = 30% of 2,36,000 = 70,800

d) Net Rental Income (2,36,000 - 4000 - 70,800) : 1,61,200

e) Deduct the Interest Portion of the EMI for 1 year:  60,000 (Assume)

f) Net Value: 1,61,200 - 60,000 = 1,01,200

e) LESS: Deduction u/s 80C: - 1,00,000: (1,01,200 - 1,00,000) : 1,200

Total Taxable Income: Rs. 1,200

Now, upto the income of Rs. 200000, the tax is not leviable. In this case, it is only Rs. 1,200. Hence no tax liability.

In case the loan is repaid in full, pls add back Rs. 60,000 and principle component from Rs. 1,00,000 deduction u/s 80C. After Rs. 2 lacs, the tax rate is 10% upto Rs. 5 lacs.

__________________________________________________________________________

- Ashish

(8802999731)