Pay advance tax if total tax on estimated income above Rs.10,000

This tax liability is calculated after considering tax deducted at source


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My husband and I own two houses as co-borrowers. One of the houses is rented out for Rs.84,000 per annum and the other is self-occupied. We have taken two housing loans from separate banks. The equated monthly instalment (EMI) for the rented house is paid from my husband’s account (Rs.2.40 lakh a year) and for the self-occupied house, the EMI goes from my account (Rs.2 lakh a year). How should I show this in my tax returns?

—Sunetra Menon

The deduction or tax benefit for a home loan is available against income from the house property in the hands of the individual as an owner on payment of interest and repayment in proportion to the share of the payments. If you and your husband own the house jointly and the home loan is repaid by each of you, tax benefits could be claimed in the same proportion by both of you, respectively. The quantum of deduction towards interest paid on home loan would depend upon whether the property against which the loan is availed is a self-occupied property (SOP) or a let out property (LOP) or deemed to be let out (DLOP).

If the property is an SOP, each one of you can claim deduction towards respective portions of interest paid subject to the cap of Rs.2 lakh per financial year (FY).

If it is treated as LOP or DLOP, the entire interest paid by each of you proportionate to the home loan repaid, can be claimed as deduction against the net rental value or the deemed rental value offered to tax. If the deduction leads to a loss, this can be set off against salary or other income as per specified tax provisions. Each of you can claim deduction towards respective portions of principal repaid to specified lenders subject to an overall cap of Rs.1.5 lakh under section 80C.

Your husband can claim a deduction of total interest in respect of let out property in his tax return and you can claim a deduction of interest subject to an overall cap of Rs.2 lakh in respect of the self-occupied property in your tax return. Both of you can claim a deduction of Rs.1.5 lakh each paid towards principal repayment for the respective houses.

I’m a salaried individual. Do I have to pay advance tax?

—Rustim Bawaji

Advance tax is payable by individuals (as applicable) as per the prescribed instalments, if the total tax liability on the estimated income is likely to be Rs.10,000 or more during the financial year. This tax liability is calculated after considering tax deducted at source (TDS). We understand that you are not a senior citizen.

If you don’t have income from sources other than salary, and appropriate taxes have been deducted and paid by your employer on the same, you will not be liable to pay advance tax. However, if you have personal income, then the applicable tax would have to be calculated and paid, if liability on such income is Rs.10,000 or more for the financial year.

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