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Income Tax returns: Is rental income from property taxable in hands of homeowners?
October, 09th 2017

As per the Income Tax Law the rental income would be taxable in the hands of owner of the house property.

I have a let out property in joint names of me and my spouse. The loan taken in joint names and paid by me in full. All along the income/loss from HP was included in my return and assessed accordingly. Now that the loan is fully repaid by me, as part of tax planning, I intend to have the income declared by my spouse in her return as she doesn’t have any other source of income. What preparatory steps required before implementing this?

– Mohit Chand

From the above query we understand that the entire housing loan is repaid (no loan outstanding) and currently you are planning to reflect only the rental income in the hands of your spouse. As per the Income Tax Law the rental income would be taxable in the hands of owner of the house property. Even if sufficient proofs like spouse’s bank statements which reflects the credit for the rental income as well as the lease agreement in the name of spouse, the tax officer may still require you to substantiate the reason for not declaring the 50% of rental income in your hands since you are the co-owner of the house property.

My employer has deducted an amount of Rs 20,000 from salary during the financial year 2016-17. But the Form 26AS (Tax Credit) shows the receipt as Rs 15,000 thereby there is shortfall of Rs 5,000 in transmission to income tax department. Since my income was not taxable, the employer has shown the entire amount of Rs 20,000 as refundable in the Form 16 given to me. I have made a claim of Rs 20,000 as refund in my ITR for the A-Y 2017-18. Kindly advise me?

—S K Srini

It could be possible that the you might not have downloaded the latest Form 26AS in which case the same might not reflect the taxes paid by the employer in the last quarter. Hence it is suggested that you could download the latest 26AS and if the entire taxes of Rs 20,000 is not reflecting, then the employer needs to revise their quarterly returns to reflect the correct taxes. Currently, since the 26AS is reflecting the credit only to the extent of Rs 15,000, there will be some challenge in getting the balance refund till the time quarterly returns are revised and the entire taxes appears in 26AS

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