Income Tax Returns (ITR) filing: Clubbing of Rental income in the hands of beneficial owner

No deduction of tax under section 194A of the Income-tax Act, 1961 in view of section of 10(26) of the Act

Can I take a home loan and buy a house in my wife’s name, who is a housewife? Since I am working I will pay the EMI. We plan to rent out the house and show the rental income in her income to reduce my tax. Is this possible? Umesh Sinha

Income tax Act provides for clubbing of income in the hands of the person who is the beneficial owner of the asset from which the income is accruing. Accordingly, income from a house property shall be liable to tax in the hands of the person who invested in the house property.

Thus, if the property is registered in the name of your wife, but without her contribution, then the rental income from the property shall be clubbed in your hands as you shall be treated as the ‘deemed owner’ of the property.

This is my first year of working and I will get a Diwali bonus. I was told we will get it after the TDS is cut. Can I show some investment to avoid the TDS? Reena Mehta

You can claim the benefits entailed in the Income Tax Act, 1961 (Act), upon undertaking the investments. If the total taxable income becomes equal to or falls below the maximum threshold limit as provided under the Act, no TDS may be withheld by the employer.

My brother and his family are US citizens. If he inherits property in India will he have to pay inheritance tax in USA? Ravi Sethia

Since this query relates to US tax laws, it is advisable to seek help of a US tax law consultant.

By: Chirag Nangia
(The writer is Director, Nangia Advisore LLP)

Source: zeebiz