I worked from May 2007 to April 2011 after which I took a year-long break. Recently, I have joined a new organization. In the interim period, I had not claimed the provident fund (PF) amount for withdrawal. Can I withdraw the amount without attracting tax?
—Pranali Jadhav
It appears that while changing employment, you did not transfer the accumulated balance in the PF account maintained with the previous employer to the recognized PF account maintained with the new employer.
As you were in employment with the previous organization for less than five years, you shall be liable to pay tax.
The total of employer’s contribution plus interest thereon, which was not taxed earlier (assuming the PF is recognized), shall be taxable as profits in lieu of salary. Further, you shall be taxed on the amount of tax benefit claimed under section 80C on account of your contribution to recognized PF. Also, the interest on your own contribution shall be taxable as “income from other sources”.
My husband and I co-own a flat in Mumbai but I am not a co-borrower for the housing loan. My husband claimed all the tax benefits when the flat was self-occupied. Now we have moved to Pune and the Mumbai flat is on rent. Do I have to pay tax on half of the rental income or can my husband show the entire rent in his return and claim the tax benefits. Can I also claim tax benefits if I show the rental income in my return?
—Shivani Ahuja
As per the domestic tax law, in respect of co-ownership of a house property, where the share of each co-owner is definite and ascertainable, the share of each co-owner in the income of the property (as computed under the head “income from house property”) shall be included in person’s total income.
Although it has not been specifically provided under the tax laws, an important factor to determine the share of co-owners is the amount invested by each. In your case, though the property is owned jointly, it appears that the it is funded by your husband through a loan. Accordingly, the entire rental from the property shall be offered to tax by your husband. Further, he could claim deduction towards municipal taxes and a flat deduction of 30% of net rental income annual value towards repairs. Also, your husband could avail deduction towards the entire home loan interest paid during the relevant financial year. With respect to principal repayment, a deduction up to Rs1 lakh can be claimed under section 80C.
Queries and views at mintmoney@livemint.com
