Rental Income in IT return

NRIPIO 16
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Dear Pankaj,

First of all best wishes for new year 2013.

I (NRI) and my spouse (PIO) own a flat in our joint names. Recently we took a second flat and registered the sale agreement in Dec 2012. Builder has not yet handed over second house and some partial payment is also pending which will be settled on final handover. Property purchase is finance thru self and spouse's savings. Payments made from our joint NRE account. My queries are :

  1. Since when will the deemed rental income for second property be applicable to me.

  2. Do I need to include this deemed rental income in my & spouse's IT returns for the current year Apr 2012-Mar 2013.

  3. Can I avail of any tax saving benefits for above purchase in this year or next year

  4. Do I split the deemed rent into half and show and equal portion in my and spouse's Income.

  5. Is it mandatory to file IT return even if rental income is below taxable limits.

Thanks and regards. Await your response.

second-house non-resident-indian rental-income nri
1 Answers
  1. Since possession of flat is not yet taken, there is no need to show notional rental income as of now.
  2. Even if you get possession in this remaining financial year, I don't think you should show notional rental income as most part of year flat was not with you. But it want to avoid any notice from IT department you can show rent for remaining months in year after which possession is taken.
  3. If you have not sold any capital asset (any property, gold etc) in India, there would not be ant tax benefit available against this purchase u/s 54 or 54F. However if you sell any such asset in next one year from date of possession, you may avail tax benefit u/s 54/54F.
  4. You should split notional rent in same ratio ratio as ownership of flat. Say, If amount paid in purchase from your accounts is in is in 70:30 ratio then you should split rent in 70:30.
  5. Its not mandatory to file income tax return if total income falls below basic exemption limit.
Pankaj Batra5212

Thanks for response Pankaj. To clarify some more on point 4 - we made the payment from our joint NRE a/c and not from separate accounts, so how can I do an allocation here or do I just show a notional allocation. However, funding of the joint NRE account was through remittances from my account and wife's account separately. Should I take that as the proportion.

NRIPIO•

As funds were transferred to NRE account from individual accounts. You can consider that proportion in which amount was transferred from your accounts.

Pankaj Batra•
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