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Tag: Flat

  • How is revenue calculated for a home that’s deemed let-out?

    I’ve purchased a flat distant from my office. I’ve not let it out at present. However, will I be eligible to say curiosity incurred on HBA (home constructing advance) beneath the brand new tax regime in case of a deemed let-out property? If I pay municipal taxes, how is revenue calculated? Do be aware that the approximate annual lease of comparable flats is ₹96,000 and municipal taxes come to ₹56,147 and ₹2,000 is the annual curiosity paid on HBA of ₹1.97 lakh.

    —Name withheld on request

    As per provisions of the Income Tax Act, 1961, a property could also be thought-about as self-occupied with a ‘nil’ annual worth, whether it is truly occupied by the proprietor for the aim of his residence or if it can’t be truly occupied by the proprietor, on account of him having to reside in one other home (not owned by him) attributable to his office (both employment or enterprise/ career associated) being at every other place. If a taxpayer has a number of homes which qualify for classification as self-occupied, the mentioned provision applies to 2 of such homes, which the taxpayer might select.

    Any home in extra of the 2 chosen homes, which is self- occupied, shall be thought-about to be deemed let-out and a notional rental worth is required to be provided to tax towards such home as revenue from home property.

    In your case, assuming you personal solely two self-occupied properties or much less (together with the topic property), the topic property will probably be thought-about as a self-occupied property and never a deemed let-out property.

    Under the brand new tax regime, curiosity paid on housing mortgage shall not be allowed as deduction in case the property is handled as self-occupied property. In case the property is taken into account as deemed let-out property, curiosity paid on a housing mortgage shall be allowable as deduction to the extent of internet rental revenue. However, in case of loss beneath the pinnacle ‘income from house-property’, such loss shall not be allowed to be set-off towards every other heads of revenue or be carried ahead to the long run years.

    As per the steering accessible on the income-tax web site, the gross annual worth of the deemed let-out property could also be thought-about because the affordable lease (i.e., increased of municipal worth of the property and honest lease that the property could also be anticipated to be let-out at, topic to a most of ordinary lease if the property is roofed beneath the Rent Control Act).

    Parizad Sirwalla is accomplice and head, international mobility companies, tax, KPMG in India.

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    Updated: 19 Sep 2023, 10:46 PM IST

  • Can I draft a will that advantages my household as per my phrases?

    I’m 54-years-old and reside with my spouse and son . I personal the home we reside in in addition to the adjoining home through which my mom resides. Additionally, I’ve investments in PPF (public provident fund) account, and varied different belongings. I’m planning to write down a will with my spouse as the only beneficiary. In case she predeceases me, I would like the belongings to go to my son. I would like my mom to retain the flat until her demise, whereupon my son ought to get custody of that home. How do I accomplish all this with a will?

    —Name withheld on request

    As per your question, we assume that you’re is a Hindu. Further, we perceive that there is no such thing as a proper or curiosity of every other particular person in your properties and that the identical have been held solely by you. We additional perceive that these are self-earned and self- created.

    In a state of affairs like this, the primary choice is making a will.

    You can draft a will for all of your belongings. The will ought to have particulars of the beneficiaries and particulars of all belongings and investments. The will ought to then specify the distribution of belongings as per your needs.

    With reference to the flat the place your mom is residing, it’s best to specify the property and insert a “life curiosity” clause to create a dwelling curiosity to your mom. The life curiosity clause ought to specify clearly that you really want your mom to benefit from the property for her lifetime. The property on which such a life curiosity is created can’t be bought, mortgaged or alienated by any methodology by every other particular person for the lifetime of your mom, thus will permit your mom to benefit from the property with none issues.

    The will ought to be dated and signed by you and attested by no less than two witnesses (ideally youthful to you), appoint the executor within the will and have the identical registered (that is elective).

    In case of your demise, the executor has to hunt probate in your will and distribute the belongings as per your needs.

    The second choice is to create a non-public household belief.

    However, you’ll both should switch the property within the belief which is able to appeal to stamp obligation levied on the market price or make a provision in your will that the property will get bequeathed to the non-public belief upon your demise.

    Here, the belief can have the phrases the place your mom can have the fitting to benefit from the property throughout her lifetime and solely then will that be given to your spouse or son.

    A personal belief is an efficient car to make sure a correct succession plan and doesn’t require probate to switch/ profit from the property.

    Do bear in mind to replace your will periodically to mirror adjustments in your belongings, beneficiaries, or different circumstances.

    Neha Pathak is head of belief and property planning, Motilal Oswal Private Wealth.

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    Updated: 22 Aug 2023, 10:26 PM IST

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  • How are bond investments reported in ITR?

    In FY 2022-23, I supplied a flat and invested a taxable portion after indexation in bonds of Rural Electrification Corporation Ltd (REC) for a interval of 5 years. How do I current this bond funding in my earnings tax return (ITR)?

    – Dilip Saksena

    It is assumed that you have supplied a flat which was held for a interval exceeding 24 months and due to this fact the helpful properties from the an identical would qualify as long-term capital helpful properties (LTCG). Further, it is assumed that you have already invested such LTCG in REC bonds, as specified by Section 54EC of the Income-tax Act, 1961 and all the alternative prescribed conditions (to avail the benefit of exemption) have been fulfilled.

    An explicit individual taxpayer having earnings beneath the capital helpful properties and by no means having earnings beneath the head ‘Profits or Gains from Business or Profession’ (PGBP), is required to file tax return in Form 2.

    For the goal of your query, it is assumed that you simply simply should not have any earnings beneath PGBP.

    The Income-tax Department has already notified Form ITR 2 for the fiscal yr 2023 (i.e., analysis yr 2023-24). In the acknowledged variety, LTCG might be required to be reported beneath associated schedules as below:

    Schedule CG: Capital Gains:

    Part-B, serial no. 1: This half covers reporting of LTCG from sale of land and / or setting up. Details regarding the date of sale and purchase, sale consideration, stamp value, exact and listed worth of acquisition, worth of enchancment, change payments, exemption claimed beneath half 54/54B/54EC/54F/54GB of the Act, and so forth. are required to be reported beneath respective fields.

    Part-D, serial no. 1: This half covers reporting of any deduction claimed beneath half 54/54B/54EC/54F/54GB of the Act. Details of exemption claimed beneath half 54EC is required to be reported beneath merchandise amount ‘c’, which contains reporting of date of change, date of investments in bonds and amount of funding, and so forth.

    Part F: In case after claiming eligible exemptions, if there could also be any taxable amount of LTCG, the small print about accrual/receipt of such capital obtain might be required to be reported beneath Part F, serial no. 6.

    Schedule Tax Payments:

    In case tax has been deducted at provide from the sale consideration by the consumer of the property, then relevant reporting of such TDS might be required to be carried out in serial no. C1 of the tax payment schedule. Details of such amount shall be accessible in Form 26AS / Form 16B, as issued by the consumer.

    In addition to the above, the funding in bonds might be required to be reported beneath Schedule AL – Assets and Liabilities, if related.

    Parizad Sirwalla is companion and head, world mobility firms, tax, KPMG in India.

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  • I wish to promote land. Can I declare tax exemption towards flat purchased final yr?

    I purchased a flat within the yr 2006 for which there isn’t any mortgage excellent. I bought one plot of land within the yr 1999 for Rs. 86,000/-. I purchased another flat for which cost was made within the yr 2015 however registered in my title in December 2021. Now I wish to promote the land for ₹ 64 lakh. How can I save tax on sale of the land? Can I declare exemption towards the flat registered in my title in December 2021? 

    Answer: Since you’ve held the land for greater than 24 months it has grow to be a long run asset and any revenue on sale are handled as long run capital positive aspects. One is entitled to avail exemption from cost of tax on long run capital positive aspects on sale of land in two methods and one can select both any certainly one of them or each the choices collectively. 

    Under the primary choice, underneath Section 54F, you may avail exemption on long run capital positive aspects on sale of any asset aside from a resident home supplied you make investments the sale proceeds for purchasing a home inside two years from sale of the asset. In case of reserving an underneath development property or self-construction of a residential home you get an prolonged interval of three years. However, the choice underneath Section 54F just isn’t accessible when you personal a couple of home, besides the home purchased for claiming the exemption.  Though you’ve registered the second home in December 2021 which is inside one yr however for the aim of acquisition of property, the registration dates again to the date of settlement which is 2015 and which is the yr wherein you’re stated to have acquired the second home. Since you’re already proudly owning two homes as of immediately, you aren’t eligible to avail the exemption underneath Section 54F. 

    The different choice to avoid wasting tax on long run capital achieve on sale of land/constructing is obtainable underneath Section 54EC by investing the long run capital positive aspects in capital positive aspects bonds of specified entities like National Highway Authority/ Rural electrification Corporation, Indian Railway Finance Corporation, Power Finance Corporation of India inside six months of date of sale of the belongings. Please observe one can make investments most fifty lakhs in a single monetary yr in addition to for claiming exemption in respect of a selected yr even when the interval of six months spills over two years.

    Balwant Jain is a tax and funding knowledgeable and might be reached on [email protected] and @jainbalwant on Twitter

     

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  • I’m promoting one flat and shopping for one other. Income tax guidelines defined

    I’ve two small residential flats. One was purchased in 2001 and we lived in that till 2017, then moved to a smaller flat purchased in 2016 by taking housing mortgage. Now we need to purchase an even bigger home for self-usage and thus planning to promote our outdated 2001 flat in March 2022. The tentative Long Term Capital Gains (LTCG) on our outdated flat is about 65 Lakh (after indexation) and new flat will value us 160 Lakh. Please inform me whether or not I can take benefit of this capital acquire to purchase new home for private utilization? Please word I already personal one flat on the date of sale of the outdated flat. I’m a pensioner.

    Since you might have offered the outdated flat after holding for greater than 24 months the earnings arising on sale of this flat are taxable as long run capital acquire. The tax legal guidelines have provisions for permitting exemption from tax on long run capital positive factors if funding is made sure specified belongings. As per Section 54 of the Income Tax Act, an Individual and an HUF can declare exemption from long run capital positive factors arising on sale of a residential home by investing the listed capital positive factors for purchasing one other residential home inside specified interval. The exemption is out there if the funding is made inside two years for purchasing a home. In case of self-construction of a home or reserving of an below building home an extended interval of three years is out there. The long run capital positive factors which aren’t so invested by the due date of submitting of the Income Tax Return (ITR), the unutilised quantity is required to be deposited in an account below capital positive factors account scheme and which can be utilized for making fee for buying the residential home inside the specified time interval. In case the quantity shouldn’t be utilised inside prescribed interval, the identical turns into taxable within the 12 months during which the interval so expired.

    There are not any restrictions on the variety of residential homes you’ll be able to personal on the date of sale of the property to be eligible for claiming exemption below Section 54. 

    Since you might be planning to speculate greater than the listed long run capital positive factors, you’ll not have any tax legal responsibility. However in case full long run capital positive factors aren’t invested, the exemption will probably be accessible to the extent of funding and on the steadiness you’ll have to pay tax at flat price of 20%.

    So in case you promote your flat by thirty first March 2022, you’ll have to purchase the brand new flat by thirty first July, 2022 which is your due date for submitting of your ITR. In case you aren’t ready to take action you’ll have to deposit the unutilised cash within the capital positive factors account. If attainable, I’d advise you to execute the settlement within the subsequent 12 months in order that you’ll have longer interval until thirty first July 2023 accessible to you for investing the LTCG.

    Balwant Jain is a tax and funding skilled and might be reached on [email protected] and @jainbalwant on Twitter.

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  • Can I make investments mutual fund earnings in flats to avoid wasting revenue tax? 

    Question: As talked about by you in your article, the Long Term Capital Gains (LTCG) arising out of sale of any capital asset aside from a residential home could be claimed as exempt below Section u/s 54F if the sale proceeds are invested in a residential home property, topic to the cut-off dates talked about therein. This part is silent as to what sort of Long Term Capital Assets are is envisaged when it says “the capital gain arises from the transfer of any long-term capital asset, not being a residential house ”  I’ve a sizeable LTCG from debt mutual funds over the past monetary 12 months and likewise going to have the identical within the present monetary 12 months additionally. In view of the above, I’m eager to know if I can reinvest the LTCG earned from a debt fund in a residential flat throughout the subsequent 2 years. I additionally need to know if I can declare the refund for the tax paid on LTCG for the AY 2021-22 in future.  – P. Acharya

    Answer: For the aim of claiming exemption below Section 54F all of the capital belongings besides a residential home are lined, for which a separate exemption below Section 54 is accessible. So exemption for long run capital features on sale of all of the capital belongings together with debt funds could be claimed below Section 54F by investing in a residential home property inside specified cut-off dates. 

    Please observe that for the aim of claiming exemption from long run capital features on sale of a residential home property you’re required to speculate solely the quantity of capital features computed, after making use of the fee inflation index to the residential home property below Section 54 whereas for claiming exemption in respect of long run capital features arising on sale of any asset aside from a residential home property below Section 54F, you’re required to speculate not the quantity of the capital features however entire of the quantity of web sale consideration acquired. So in case you want to avail the exemption below Section 54F, you’ll have to make investments the redemption proceeds of the debt funds in a residential home property.

    In case you have got already paid taxed in your long run capital features, there isn’t a provision below the regulation to assert a refund of such tax even for those who purchase a home throughout the specified time interval. However in case you’re planning to purchase/assemble a home property throughout the prescribed time restrict, you possibly can deposit, the quantity to be invested, in a checking account to be opened below Capital Gains Scheme Account with authorised financial institution and declare the exemption whereas submitting the ITR to be filed for evaluation 12 months 2021-2022. Even in case you have got already filed the ITR, you possibly can revise the ITR and declare the refund for those who deposit the quantity within the above account by thirtieth September 2021 the prolonged due date for submitting of ITR for monetary 12 months 2020-2021.

    Balwant Jain is a tax and funding professional and could be reached on jainbalwant@gmail and @jainbalwant on Twitter

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