Q) I am an employee in a public sector firm and my wife is a retired state government employee drawing a pension. I have rented out a property for a total of `18,000 per month. Under the terms of the lease agreement, this amount has been broken up into three heads — rental of `10,000 per month for the property and rental of `5,000 per month for the furniture. In addition to these, `3,000 per month is the reimbursement for cost incurred in getting the house painted — at the tenant’s request. Since the Housing Loan is in my name I am showing `10,000 as my rental income and my wife is showing `5,000 being the rent on furniture in other income. `3,000 being the reimbursement of cost incurred by us on the request of the tenant we are not showing as income. Are we right?
K.Vijaya Kumar, Via e-mail
An amount of ` 3,000/- received as reimbursement towards cost of painting on your house shall be taxable in your hands as rental income under the head “Income from house property”, You will be eligible to claim mandatory deduction @ 30 per cent on the net annual value towards repairs and maintenance. Further, the amount of ` 5,000 per month received by your wife can be included in her hands provided she owns the furniture and shall be taxed under the head “Income from other sources.”
Q) If personal assets (those assets which do not come under definition of capital assets of IT Act) such as two wheeler, agricultural land etc. are sold at a profit, are they taxable? If they are taxable, under which head of income should it be shown?
P.Sidharth, Via Email
Personal assets of movable nature, such as furniture, utensils, and vehicles held for personal use by the assessee or any dependent member of his family and agriculture land in India which is not situated in any specified area, are not treated as a capital assets Hence, any income derived on sale of such asset shall be exempt from tax. Personal assets do not include jewellery, drawings, paintings, archeological collections. Further, the income on sale of agricultural land shall be exempt only if it is not situated in specified area.
Q) I had a home loan pending which I foreclosed in July-10. Till that time, I was claiming IT rebate on the interest component including the interest paid as PEMI. Since I have foreclosed the loan and paid interest, can I claim the interest component for the financial year 2010-11? Since my tax is deducted at source, how do I inform my payment authorities on the change in my tax deductions?
Srinivas, Via e-mail.
Interest payable is deductible in five equal installments. The first installment is deductible in the year in which construction of property is completed or in which the property is acquired. You are eligible to claim the interest component for all the five years even though your housing loan stands closed. This fact may be duly informed to the disbursing officer.
(Kamal Rathi is a chartered accountant, representing Rathi & Malani, a Hyderabad based accounting firm. Readers can mail their queries on income tax to kamalrathi.ca@gmail.com [1].)
Links:
[1] mailto:kamalrathi.ca@gmail.com