Tax on Rental property

Last post 02-22-2012 9:07 AM by padmajam. 2 replies.
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  • 02-08-2012 4:56 PM

    • padmajam
    • Not Ranked
    • Joined on 02-09-2012
    • Posts 2
    • Points 25

    Tax on Rental property

    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

    • Post Points: 20
  • 02-22-2012 4:30 AM In reply to

    • Kekin
    • Top 25 Contributor
    • Joined on 05-28-2011
    • Posts 38
    • Points 370

    Re: Tax on Rental property

     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

    • Post Points: 20
  • 02-22-2012 9:07 AM In reply to

    • padmajam
    • Not Ranked
    • Joined on 02-09-2012
    • Posts 2
    • Points 25

    Re: Tax on Rental property

    Hi Kekin,

    Thanks a lot for the detailed reply.

    Thanks again,

    Padma

    • Post Points: 5
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