My tax liability on rental income

TDS 1800 views 4 replies

Amit

Software engineer

26 Points Joined November 2009

HI,

I am going to give my self-owned apartment on rent (being based in Pune) and will earn income of more than 1,20,000 a year. The licensee (since i will enter into a leave and license agreement) has mentioned that TDS will be deducted at source.

Am I correct in assuming that the such TDS deduction should not be more than 10% ?

Suppose I am earning 30,000 per month, am I right in assuming taht following are the deductions I will be able to claim ?

30% for repairs, others etc. : so 9000 8 12 = 108,000

suppose 10,000 interest on loan taken : so 1,20,000

So out of an income of 3,60,000/- per annum, 228,000 I shall be able to claim as deduction and the taxable component will be 132,000/- and on this, since i come in th highest slab, it will be 30%, so the tax amount will be : 39,600/- so if the licensee deducts 36,000/- my balance liability will be of 3,600.

Further, if I buy another property where the loss on house property exceeds my income from it. Say I am paying 25,000 as interest on the loan and earning only 8000/- as rent, then the balance will be my loss from house property.

Ideally if the whole of my first income comes in my hand without any deduction, I can set it off against the loss from house property.

While filing my final returns, in above case, I am assuming that I will have to file for refund on TDS deducted from income from property 1 because my loss from property 2 will more than offset my income from property 1.

Hope above is making sense. Any advice will be highly appreciated.

Thanks,

- Amit

Replies (4)

CA.Tarun Maheshwari

CA DISA

7150 Points Joined March 2008

All the views are absolutely correct. Yu are having a perfect direction and calculations.

Amit

Software engineer

26 Points Joined November 2009

thanks a lot for reply. I have a related question and some Pune or Mumbai based lawyer/CA might know this. Suppose the rateable value of the flat right now, which is self-offupied is considered X and thus the property tax liability is say, 10,000 per annum. Now because of higher rent (higher than fair market rent as considered by pune municipal corporation) realized (as per regisration of the leave and license agreement),

1) will the rateable value be revised upwards and thus cause a higher property tax liability to the owner ?

If so, on what basis is this increase calculated ?

Secondly, say after the leave and license period is over, when the owner re-occupies the flat, of course the rent is no longer realized so will the rateable valueand hence the property tax incidence be again revised downwards ? (either to earlier or to prevailing fair rent value) Will the fact that once the house was let out on leave and license or lease for a higher than fair market rent permanently change the propery tax liability ?

Will the fact that once a self-owned property was given on rent change the annual value to be more than zero when again it becomes self-occupied ? because as per I-Tax laws, a self-occupied property has annual value of nil. but don't know whether this will change if if was rented out or leased any time subsequent to its purchase and is agian being self-ocupied.

Here the licensor is individual. Any ideas on this will be much appreciated.

thanks

P-A-W-A-N

TAX - MANAGER AT GURGAON

541 Points Joined September 2009

sir is right

All the views are absolutely correct. Yu are having a perfect direction and calculations

manish kumar

Dy. Manager(Internal Audit)

44 Points Joined April 2009

Pl somebody guide me

Our senior Management personnel are eligible for leased accomodation and if they are having their own house, they can opt for self lease also. For using lease accomodation, 10% of basic will be recovered. In one case the executive has opted for self lease. The company is paying Rs 11000 per month to him as a lessor and 10% of his basic is being recovered as rent say Rs 2300/- p.m. The net income Rs 8700/- is being added to his income and tds are being deducted at the highes rate say 30.9%

My query is

a) Whether we are liable for 194 I deduction @ 10 % as annual amount shall be exceeding Rs 1.2 lacs.

b) whether separate perquisite valuation for house is reqd

c) whether current practice is correct.