Ask Mint Money | If your PF hasn’t completed five years, it will be subject to tax

Ask Mint Money | If your PF hasn’t completed five years, it will be subject to tax

If I have more than one house, only one will be treated as self-occupied; others will be included in the net wealth to be taxed at 1% per annum. Under which section of Income-tax Act do I need to keep my other house on rent for at least 300 days during the financial year to avoid paying taxes? Is there any wealth tax applicable for owning more than one house?

—Suresh Raheja

The subject highlighted in the query is available under the Wealth Tax Act and not under the Income-tax Act. Section 2(ea) of the Wealth Tax Act defines the term “asset" chargeable to wealth tax to include any building or land appurtenant thereto, whether used for residential or commercial purposes. However, there are specific exclusions provided in the same section. As per one of the exclusions, net wealth of an individual does not include any residential property that has been rented out for a minimum period of 300 days in the previous year. Further, any property in the nature of commercial establishments or complexes will also not be included for calculating net wealth due to specific exclusion in this regard.

I retired from a private firm. My provident fund was a little above 5 lakh. The tax deducted at source (TDS) by the company was at the rate of 30% on the entire amount. Is the company justified in recovering TDS?


Assuming that the contributions are being made to a recognized provident fund (PF), withdrawal of PF on retirement may not be subject to tax, provided you have been in continuous service for five years with the company or the funds have been held for at least five years, taking into account the funds transferred from any previous employer. However, the tax provisions provide that if PF is withdrawn before five years of continuous service, then the accumulated balance would be treated as an unrecognized PF and the same shall be taxable.

I had purchased a flat in which my mother is a co-owner. I want to increase my equated monthly instalment (EMI). The extra will be paid through my wife’s salary. Can my wife get tax benefit on it? The EMI is deducted from our joint account now but my wife is not a co-owner.

—Joji Thomas Abraham

Interest on housing loan is available as deduction only to the person in whose hands income from house property is assessable. In your case, since the flat is owned by you and your mother as co-owners, any income from such a flat will be assessable in the hands your mother or you in the proportion of share in ownership. Therefore, house property income shall not assessable in the hands of your wife and she would not be eligible to claim deduction of interest on housing loan.

Nitin Baijal, director, BMR Advisors

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