I rent out my property for Rs 300,000 a year. What deductions can I claim?
Rental income is taxable under the head Income from House Property. Under Section 24 of the Income Tax
Act, 1961, you can claim a deduction on the municipal taxes paid during the year on the property. Thereafter, from this net amount, 30 per cent of it is allowed as standard deduction. There is no deduction for the actual repair or maintenance.
In case you borrowed money to acquire or build this house, the interest payable is also permitted to be claimed as a deduction. However, after claiming all the above deductions, where the net result of income from house property is a loss, this would be adjusted against any other income during the year. However, such adjustment of loss is capped at Rs 200,000. Any excess can be carried forward for the next eight years to be adjusted against any future loss, which may arise under the head income from house property.
I have changed four employers. Every time a new Employees' Provident Fund (EPF) account was opened. I have not claimed any of this money in the past 11 years. I am told that it's better that I should withdraw the money as the process of transfer is very cumbersome. What would your advice be?
Since you are in employment, technically you cannot withdraw the PF
money. However, you may consider transferring your PF
accumulation from all the four accounts to the account that you maintain with your present employer. If all your past accounts are linked to the Universal Account Number (UAN), it can be easily transferred using the online process. Check with your previous employers and consider transferring the funds online.
I am a salaried individual. I have a personal loan and a gold loan. Can I get an income tax deduction for interest paid on these loans?
Unfortunately, no deduction is available for interest paid on personal or gold loan. If you were in business and used the funds for business purposes, you could have claimed the interest as business expense.
My brother became a citizen of the United Kingdom five years ago. He owns a house that was bought 16 years ago. If he sells the house now, will he be liable for capital gains tax? How can he transfer the money abroad? Are there any restrictions on the money a person of Indian origin can repatriate in a year?
Taxability in India depends on the tax residency status of the individual, which in turn depends on the number of days he has spent in India during the year. Assuming that your brother is settled in the UK and has visited India for less than 182 days in the relevant tax year, he is likely to qualify to be a non resident under the Indian tax laws. Since the house which he will sell is situated in India, the gain arising on it would be subject to tax in India. Since your brother held the house for 16 years, the resultant gain would be considered as long term capital gain (LTCG) and would subject to tax at 20 per cent.
Indexation benefit will also be available. Since your brother stays in the UK, he may also be taxed on such gain according to UK tax laws. If such double taxation takes place, the credit for taxes paid in India may be available against the UK tax liability, in accordance with the Indo-UK tax treaty. If your brother plans to save tax by reinvesting the gain in another house under Section 54, he should consider the taxation aspects in the UK . Where no tax is paid in India, credit will not be available and taxes may still need to be paid in the UK. These are general comments and your brother should analyse his UK tax position to frame his views based on the above comments. Regarding remittance of proceeds, that should not be a problem, so long as taxes have been paid, the relevant paper work is completed, and the amount does not exceeds $1 million.
The writer is partner and leader, personal tax, PwC India. The views expressed are the expert’s own. Send your queries to firstname.lastname@example.org