You do not have a TDS responsibility, unless the monthly rent exceeds Rs50,000
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I am a bank employee and have been provided with leased accommodation by bank at Rs35,000 per month since November 2017.
Please advise if TDS (tax deducted at source) is applicable on rent paid for FY2017-18. The total rent payable will be Rs1.75 lakh for 5 months of 2017-18. Can security deposit of 10 month rent be considered to recover the TDS? Can the landlord submit 15G/15H for non-recovery of TDS? Also, is there a threshold income to be eligible to submit 15G or 15H in lieu of TDS?
It is not clear from the query if rent is paid by the bank under a company lease with the landlord or if the rent is paid by you under a lease contract between you and your landlord. Presuming it is the former (your employer bank has leased the premises from the landlord and provided to you for your use), the bank as your employer will withhold taxes from your salary, in respect of the perquisite value of the accommodation provided to you. The valuation of such perquisite would be rent actually paid by the bank to the landlord or 15% of your specified salary, whichever is lower.
This value can be reduced by the rent recovered (if any) from you by your employer. The bank will also be liable to withhold taxes (TDS) on the rent paid to the landlord (assumed that the landlord is a tax resident of India) if such payment exceeds Rs1.8 lakh per financial year. Such TDS is not applicable on a lump sum deposit paid to the landlord that is not adjustable against periodic rent. The landlord can provide a declaration seeking nil tax deduction in Form 15G / 15H (depending on the age of your landlord), if the landlord’s (not being a company or a firm) total income during the financial year in question is below the taxable threshold. The landlord depending on his total tax liability, including this rental income, may make an application to the income tax authorities for a lower or ’nil’ TDS. Alternatively, in case you are paying the rent directly to the landlord (presuming he is a tax resident of India) and presuming that you are not subject to tax audit under the Indian tax law, you do not have a TDS responsibility in respect of the rent paid unless the monthly rent exceeds Rs50,000.
Can I claim tax deductions under both section 71, for rented property loan interest, and under section 24 for self-occupied home loan interest concurrently? I am paying off two home loans simultaneously. One of the properties is self-occupied while the second is let out. Can I claim Rs2lakh under section 24 for the self-occupied property plus Rs2 lakh as loss under section 71 for rented property after deducting rental income?
The interest paid on a housing loan taken to acquire a house property can be claimed as a deduction under section 24 of the income-tax Act. The actual interest paid or payable in respect of the let-out property can be claimed as a deduction, whereas the interest deduction in respect of the self-occupied property is capped to Rs2 lakh per financial year.
Beginning from 1 April 2017, the aggregate loss from house properties (all house properties whether self-occupied or let out), that can be set off against other prescribed heads of income, is capped to Rs2 lakh per financial year under section 71 of the Act. Any loss exceeding this cap, if any, can be carried forward and set-off against income from house property in any of the 8 immediately succeeding financial years. Therefore, if the total of the interest payable by you on your self-occupied property as well as the net computed loss from your let-out property, exceeds Rs2 lakh in FY2017-18, you can set-off up to Rs2 lakh of such loss against other prescribed income—such as salary and other income—and carry forward the remainder loss for future set-off against income from house property.
Parizad Sirwalla is partner (tax), KPMG.
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