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vsraj (administration)     11 June 2021

RENT paid to wife's House property - tax implications

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
 



 2 Replies

Asha Kanta Sharma

Asha Kanta Sharma (Manager - Finance & Accounts)     20 June 2021

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 Prathik Lenin (CA in practice)     21 June 2021

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. 


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