RENT paid to wife's House property - tax implications

Tax queries 233 views 3 replies

vsraj

administration

137 Points Joined March 2014

Mr.A's wife is B. Both are senior citizens. B acquired house property out of her own income. She has not let it out. After retirement she is having paltry income through tutions well within Tax limit.

Now husband A has sold his house to a third party. Both are moving to B's (wife's) house and the husband intends to pay rent of Rs.15000 per month and a Repayable Advance of Rs.90,000/- to his wife.

What are the implications from the tax point of view?

1) Will the rent paid to his wife can be taken as her income and subjected to tax ?

2) Should TDS apply in this case ?

3) Or the rent paid to her will be treated as Gift and included as income of the husband.

4) For the rental paid, whether Husband can take appropriate tax benefits ?

rajarajan

Replies (3)

Aashok Kumar Sharma

Manager - Finance & Accounts

58580 Points Joined June 2010

1) Will the rent paid to his wife can be taken as her income and subjected to tax ?

= Yes

2) Should TDS apply in this case ?

= No as the monthly rent does not exceed Rs. 50K

3) Or the rent paid to her will be treated as Gift and included as income of the husband.

= No. It will be shown as Income From House Property.

4) For the rental paid, whether Husband can take appropriate tax benefits ?

= Yes.

CA Prathik Lenin

CA in practice

5 Points Joined May 2019

Just because he sold the property the gains can't be set off with rental payments for a house and I don't think you can claim any tax benefit, the rest I agree with Asha Kanta Sharma. TDS on rents has to be deducted only when it exceeds Rs 2,40,000/- per year.

vsraj

administration

137 Points Joined March 2014

If the Husband has to claim deduction under Section 80GG for the rent paid to his wife, he has to submit a Declaration in Form 10BA (please see rule 11 B also). The wordings of the Declaration in 10BA is given below. If 10BA is closely studied, I have doubts whether he can claim deduction u/s 80GG.

Whether some experts can clarify about this?

The wordings of 10BA is given below:

"It is further certified that no other residential accommodation is owned by

(a) me/my spouse/my minor child/our family (in case the assessee is HUF), at where I/we ordinarily reside/perform duties of office or employment or carry on business or profession, or

(b) me/us at any other place, being accommodation in my occupation, the value of which is to be determined

It is further certified that no other residential accommodation is owned by

(a) me/my spouse/my minor child/our family (in case the assessee is HUF), at where I/we ordinarily reside/perform duties of office or employment or carry on business or profession, or

(b) me/us at any other place, being accommodation in my occupation, the value of which is to be determined"