Is it advisable to let the tenant pay the monthly outgoing society charges or one should pay after collecting rent which factors in the society charges? e.g.
If rent = 10,000.00, society charges = 2,000.00. Then collect rent as 12,000.00 and pay society charges.
OR
Collect rent as 10,000.00 and tell tenant to pay society charges 2,000.00.
From tax point of view the second option is better. However, is there any other legal implication?
Is there any tax relief on society charges paid?
Since society charges are fixed in nature very month, you can pay the same without asking the tenant to pay the charges. Yes as you said from tax point of view the second option is better.
But as you are the owner you will be required to pay the charges. So you can show only Rs.10000 on the rent receipt & collect the charges from the tenant & pay to the society.
There’s no tax relief on society charges paid. However you can claim 30% as Standard Deduction of the Net Adjusted Annual Value(Gross Rent Collected-Municipal Taxes) u/s24 of the IT Act. This is only if the house property is let out. In case of self occupied property only interest deduction can be claimed.
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