I am a retired government employee aged above 70 years. My son, who is employed in Chennai, regularly sends me about Rs 50,000 p.m., which is sufficient for me to meet my expenses as I am staying in my own house at Panipat. I also have some income from interest and pension. Is the yearly amount of Rs 6,00,000 received from my son subject to tax?
— Raj Gupta
The amount of Rs 6 lakh received by you from your son towards meeting your household expenses will be treated as a gift to you. The amount of gift received from your son is not taxable under the provisions of the Income-tax Act 1961 (the Act). Further, there are no gift tax implications as presently no gift tax is levied in India.
I am living in a rented accommodation and paying Rs 7,400 rent per month. My landlord also shows this income in his IT return. As per my employer, since they don't give HRA, they can't include it in my savings. Is the employer right or is there any other way to do so?
— Vijay Thakur
The facts in the query indicate that you are not in receipt of house rent allowance and are being paid a consolidated salary. It is on account of this reason that the employer is not reflecting the amount of house rent allowance in form 16A which is required to be issued to you by the employer. In such a case, you can claim deduction of rent paid if you comply with the following conditions:
- The rent paid is in excess of 10% of your total income before allowing any deduction under this section;
- The rent paid is in respect of accommodation occupied for the purposes of your own residence and a declaration in form No. 10BA is filed for availing such deduction.
- The deduction can be claimed only in cases where any residential accommodation is not owned by the assessee or by his spouse or minor child or by Hindu Undivided Family of which he is a member.
However, the deduction in respect of rent paid will be denied only where the assessee, his spouse or minor child or the Hindu Undivided Family of which he is a member, owns any residential accommodation at the place where the assessee resides or performs the duties of his office or employment or carries on his business or profession.
- The allowable deduction is limited to 25% of the total income or Rs 2,000 per month, whichever is less.
I am an NRI and considering purchasing a house in Gurgaon. I am aware that there are tax breaks available for Indian residents, but I want to know is there any similar scheme available for NRIs (I hold Indian passport)? I will finance part of my purchase through home loan from an Indian bank, what do I need to do in order to qualify for tax breaks, if available? — Ramesh Talwar
The following major tax incentives are available in respect of a house property purchased/constructed in India:
- In computing the total income of an individual, for an assessment year a deduction of a sum not exceeding Rs 1.50 lakh is allowable in respect of the repayment of amount borrowed by the assessee from a bank or other specified entity for the purposes of construction/purchase of a house.
- Interest paid on amount borrowed for the construction or acquisition of a house property is allowed as a deduction against income from house property. Such deduction in ordinary course is limited to Rs 30,000 in case of a self-occupied house. However, a higher deduction of Rs 2,00,000 in case of a self-occupied house is allowed if the amount is borrowed after April 1, 1999 and such acquisition or construction is completed within three years from the end of the financial year in which the amount was borrowed. The above limit is not applicable if the house is let out.
- The house tax paid in respect of the property is allowed as a deduction from the annual letting value.
- A statutory deduction of 30% of the annual letting value arrived at after the deduction of house tax paid is allowed to cover expenses in respect of the maintenance of the house and collection charges etc.
You will have to file your tax return in India declaring your total income, including income arising from the house property, so as to claim such deductions. The return can be filed online.