LIVE GST Certification Course by CA Arun Chhajer begins 21st April. Register Now!!

Regarding reporting rental income

SushantSingh (Others) (110 Points)

20 June 2019

Dear expert,

I own the flat, but my wife receives rental income as cash which she uses for her expenses. Can she report this rental income in her returns ? The tenant qotes her pan card in his office to receive HRA benefits.

Important to mention that though I do not receive the rent, the flat belongs to me, and I do the lease agreement from time to time depending on my availability in town.

Kindly advice can she report this rental income in her returns ?

Reply
Follow
Share

9 Replies

Raman Singla (Accounts Services) (167 Points)
Replied 20 June 2019

if flat registered in your name...than income will be yours

1 Like

Om Goyal (445 Points)
Replied 22 June 2019

otherwise u lease to wife even then rental income is yours

CA. Umesh kumar (ca.umesh11@gmail.com) (1465 Points)
Replied 22 June 2019

Income tax department has information that your wife receive rental income so she should report this rental income in her ITR

Raman Singla (Accounts Services) (167 Points)
Replied 22 June 2019

agreed..
on mere reporting of tenant about rent to wife...in actual it should be in the name of husband...

Suresh Thiyagarajan (Student) (3986 Points)
Replied 22 June 2019

1. No, it cannot be reported. Rental income will be taxed in the hands of the owner who owns it. It does not matter who receives the rental income but the tax on it will be in the hands of the owner.
2. In your case even though your wife receives rental income, it will be considered as if she is receiving it on behalf of you and using it for household expenses. It does not matter how you spend your rental income, as far as the tax liability goes it will be taxed in the hands of the owner. Charging sec 22 clearly states that rental income will be taxed in the hands of the owner of the House property.
3. Income Tax department has given clarification regarding this issue.
Please correct me if the solution has an alternative view.

1 Like

SushantSingh (Others) (110 Points)
Replied 23 June 2019

Appreciate your replies, however here is what I found on the income tax website FAQ. Is rental income from sub-letting chargeable to tax under the head “Income from house property”? _Rental income in the hands of owner is charged to tax under the head “Income from house property”. Rental income of a person other than the owner cannot be charged to tax under the head “Income from house property”. Hence, rental income received by a tenant from sub-letting cannot be charged to tax under the head “Income from house property”. Such income is taxable under the head “Income from other sources” or profits and gains from business or profession, as the case may be._ Rental income from property is charged to tax under the head "Income from house property in the hands of the owner of the property". _If a person receiving the rent is not the owner of the property, then rental income is not charged to tax under the head "Income from house property" (E.g. Rent received by tenant from sub-letting). In the following cases a person may not be the registered owner of the property, but he will be treated as the owner (i.e., deemed owner) of the property and rental income from property will be charged to tax in his hands:_

SushantSingh (Others) (110 Points)
Replied 23 June 2019

_If a person receiving the rent is not the owner of the property, then rental income is not charged to tax under the head "Income from house property" (E.g. Rent received by tenant from sub-letting). In the following cases a person may not be the registered owner of the property, but he will be treated as the owner (i.e., deemed owner) of the property and rental income from property will be charged to tax in his hands:_ r of the property, then rental income is not charged to tax under the head "Income from house property" (E.g. Rent received by tenant from sub-letting). In the following cases a person may not be the registered owner of the property, but he will be treated as the owner (i.e., deemed owner) of the property and rental income from property will be charged to tax in his hands:_

Suresh Thiyagarajan (Student) (3986 Points)
Replied 23 June 2019

1. If subletting is the case, the same will be taxed in the hands of the tenant (person who has taken your house property on rent) and leaves it to some other person on rent and it will be taxed under head IOS or PGBP depending upon the circumstances.
2. Whereas in your case your wife is not the tenant but she receives rent on behalf of you. Hence, it cannot be termed as subletting. She merely receives rental income in your absence. There is no deemed owner or subletting concept in this situation.
Please correct me if the above interpretation has an alternative view.

1 Like

CA. Umesh kumar (ca.umesh11@gmail.com) (1465 Points)
Replied 23 June 2019

Dear sushant singh practically you should disclose rental income in wife ITR to avoid problem in future. because your wife has received income in the eyes of income tax department