Hi,

I'm US citizen.

I have NRO account and my apartment rent(India) of Rs20,000 is deposited every month.

From that account,Rs10,000 per month is invested into the mutual funds.

I have PAN card.

Do I need to pay tax on the rent ?

If so,at what % and is there any limit over which I need to pay ?

Any tax deductions for the mutual fund investment ?

I don't have TAN .

What to do ?Please advise.

Thanks

 In general terms rental income earned by you will be taxable subject to permissible deductions and crossing the taxable income limit.

However in your case there is no tax due as detailed below:

12 months' rental income  12*20000 = 240,000

Less: 30% statutory allowance         =  72,000

Taxable income                              = 168,000

Income upto Rs.180,000 is not taxable in case of an individual.Hence you are not liable to any income tax.I am assuming your income by way of interest earned on NRO A/c is negligible. The same is part of taxable income otherwise. Please also note that you can deduct municipal taxes,if any,paid by you (not by the tenant) during the year from gross rental income before applying 30% statutory allowance.

On tax deductions for investment in mutual fund: Equity Linked Savings Schemes (ELSS) qualifies under Section 80C of the Income Tax Act (upto Rs. 1 Lac) for tax deductions. Section 80C also offers tax benefits for other investments like life insurance premium, contribution to PF/PPF, NSC, infrastructure bonds, etc.

Kekin

Hi Kekin,

Thanks a lot for the detailed reply.

Thanks again,

Padma