Query on income tax & service tax

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Raghu

MBA

25 Points Posted on 10 March 2015

Me & my mother jointly purchased a site in Bangalore from BDA recently. Now we are going ahead with the construction of the property. This property might fetch a rental income of Rs. 1 Lakh per month. I am a salaried person with income of around 20 lakhs per year. My mother is a pensioner with a monthly pension of around 2.4 lakhs per year. Now my queries are :

1) Since I am already under 30% tax bracket, can I show all the income from rental property to my mother IT returns?

2) Since the rental income is more than 10 lakhs per year, we will need to pay service tax also ?

3) If yes, then by splitting this rental income equally between each of us, will we be able to save on service tax ?

4) We will also get around 10 lakhs as advance by the tenants. Are there any taxes involved for this advance amount also ?

5) Is there any limit on the advance amount ?

Please let me know.

Replies (2)

CMA Poornima Madhava

CMA

9106 Points Posted on 10 March 2015

If the property is let out for residential purpose (and not for commercial purpose), there is no service tax applicable, in which case you don't need to register or pay service tax.

As far as Q1 is concerned, I feel income forms part of co-owner in proportion to ownership. However, I shall also await advices from experts on this point

Lakshman

Director

33 Points Posted on 11 March 2015

Originally posted by : Raghu
	Me & my mother jointly purchased a site in Bangalore from BDA recently. Now we are going ahead with the construction of the property. This property might fetch a rental income of Rs. 1 Lakh per month. I am a salaried person with income of around 20 lakhs per year. My mother is a pensioner with a monthly pension of around 2.4 lakhs per year. Now my queries are : 1) Since I am already under 30% tax bracket, can I show all the income from rental property to my mother IT returns? 2) Since the rental income is more than 10 lakhs per year, we will need to pay service tax also ? 3) If yes, then by splitting this rental income equally between each of us, will we be able to save on service tax ? 4) We will also get around 10 lakhs as advance by the tenants. Are there any taxes involved for this advance amount also ? 5) Is there any limit on the advance amount ? Please let me know.