FYI: Even if your 2nd house is vacant; you have to pay taxes: IT dept


swatkats

Well-Known Member
Veteran
Under the I-T Act, if a person has more than one property, one of them may be treated as given on rent even if it is vacant

Explaining the case, Rakesh Bhargava, director, Taxmann, said an income tax (I-T) officer has made an addition of Rs 860,445 to Tendulkar’s total income of Rs 61.2 crore (Rs 612 million) for the financial year 2012-13.

This was based on his calculation of rental income from two properties, at Sapphire Park, amounting to Rs 60 lakh (Rs 6 million) and Treasure Park, amounting to Rs 80 lakh (Rs 8 million). The properties are in Pune.

Under the I-T Act, if a person has more than one property, one of them may be treated as given on rent even if it is vacant.

Tendulkar had rented out Treasure Park for nine months at Rs 15,000 a month. The assessing officer accepted it and computed income from house property on the other flat.

However, Tendulkar claimed that the Sapphire Park property was vacant for the whole year and claimed vacancy allowance, declaring income from the flat as nil. Vacancy allowance is a deduction from tax.

The officer asked Tendulkar to give reasons for not charging rental income on the flat.

The cricketer replied that he could not find a tenant and showed letters to builders seeking one.

The officer rejected the explanation, and claimed that the income offered by the cricketer was too low.

He estimated the rental income at the rate of 6 per cent of the value of both the flats aggregating to Rs 860,445.

The cricketer went to the commissioner (appeals) against the ruling, but the officer’s order was upheld.

The commissioner said Tendulkar’s letters to builders did not have any supporting evidence. However, he reduced the additional income to Rs 126,000.

Tendulkar then appealed to the Mumbai Bench of the I-T Appellate Tribunal, which set aside the commissioner’s order.

Bhargava said vacancy allowance has been interpreted differently. Some courts have allowed it only if the property is actually let out; others have allowed it when the plaintive has been able to prove the intention of letting out the flat.

“This is another positive ruling for the taxpayer,” he added.


Source: http://www.rediff.com/business/repo...-tax-relief-on-his-pune-property/20180815.htm
 

swatkats

Well-Known Member
Veteran
Did you read the article? The tribunal set aside the order.
Under the I-T Act, if a person has more than one property, one of them may be treated as given on rent even if it is vacant

a. Self-Occupied House Property

A self-occupied house property is used for one’s own residential purposes. This may be occupied by the taxpayer’s family – parents and/or spouse and children. A vacant house property is considered as self-occupied for the purpose of Income Tax.

If more than one self-occupied house property is owned by the taxpayer, only one is considered and treated as a self-occupied property and the remaining are assumed to be let out. The choice of which property to choose as self-occupied is up to the taxpayer.

https://cleartax.in/s/house-property

Not everytime. You have to provide proof that you couldn't find a tenant .

Its not about the article, i want to emphasize on the IT rule! :facepalm:
 
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Lord Nemesis

Overlord
Veteran
Not everytime. You have to provide proof that you couldn't find a tenant .

Its not about the article, i want to emphasize on the IT rule! :facepalm:

Yes, the basis of it is that you can potentially get income by renting out the flat which would also mean that govt can get tax revenue on that income. So, the govt thinks that you choosing not to get that income should not be a reason for them to loose that tax revenue. This is why they collect tax on rent for an empty flat. Not many people know about this rule though.
 

swatkats

Well-Known Member
Veteran
It's called sarcasm. But this was only highlighted because Sachin Tendulkar is a celebrity
Forget celebrities.


We have Aadhaar now, now they will ask to link all home records with Aadhaar and track who lives where.

India needs a Snowden ASAP!
 

mathewvp

Well-Known Member
Disciple
Yes, the basis of it is that you can potentially get income by renting out the flat which would also mean that govt can get tax revenue on that income. So, the govt thinks that you choosing not to get that income should not be a reason for them to loose that tax revenue. This is why they collect tax on rent for an empty flat. Not many people know about this rule though.


By that logic, can the govt. tax unemployed people under the pretext that the govt. is losing revenue on the tax they would be paying if they were working?
 

Lord Nemesis

Overlord
Veteran
Well, this particular govt might bring that too soon enough if they continue to remain in power. At the very least, Arun Jaitley would have wet dreams about doing that.

After all, Unemployed people could potentially sell samosas or chai and make a fortune as our PM was so keen to point out. So, they might as well start taxing them based on what they could have earned. After all, why should govt have to lose revenues just because an unemployed person is unemployed. It is only the politicians with thousands of crores of black money and their business friends that should have a right to evade taxes.
 

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