GPF Interest Rate for 4th Quarter (2016-17) for Maharashtra State Employee.

Recently, Maharashtra Government has been announced GPF Interest Rates for 4th Quarter for Fin. Year 2016-17

It is announced for General Information that during the year 2016-2017, accumulations at the credit of subscribers to the General Provident Fund and other similar funds shall carry interest at the rate of 8% (Eight Per Cent) w.e.f. 1st January 2017 to 31st March 2017.  This rate will be in force w.e.f. 01st January 2017 as per notification dated 30th January 2017 of Maharashtra Government.

1. General Provident Fund (Madhyapradesh)
2. Patwarancha Provident Fund (Madhyapradesh)
3. Contributory Provident Fund (Madhyapradesh)
4. Compulsory Saving Scheme (Hyderabad)

Sd/-
(B.J. Gadekar)
Deputy Secretary,
Maharashtra Government

GPF Interest Rates for 4th Quarter

Read More

How to Compute Your House Property Income and Claim Deduction u/s. 24(b) ?

Income From House Property

While taking into account the loss from House Property, the DDO shall ensure that the employee files the declaration referred to above and encloses therewith a computation of such loss from house property. Following details shall be obtained and kept by the employer in respect of loss claimed under the head “ Income from house property” separately for each house property:

1. Gross annual rent/value
2. Municipal Taxes paid, if any
3. Deduction claimed for interest paid, if any
4. Other deductions claimed
5. Address of the property

The DDO shall also ensure furnishing of the evidence or particulars in Form No. 12BB in respect of deduction of interest as specified in Rule 26C read with section 192 (2D).

How to Claim Deduction of Interest on Borrowed Capital for Computation of Income From House Property [Section 24(b)]:

Section 24(b) of the Act allows deduction from income from houses property on interest on borrowed capital as under:-

• the deduction is allowed only in case of house property which is owned and is in the occupation of the employee for his own residence. However, if it is actually not occupied by the employee in view of his place of the employment being at other place, his residence in that other place should not be in a building belonging to him.
• the quantum of deduction allowed as per table below:

In case of Serial No. 3 above

1. The acquisition or construction of the house should be completed within3 years from the end of the FY in which the capital was borrowed. Hence, it is necessary for the DDO to have the completion certificate of the house property against which deduction is claimed either from the builder or through self-declaration from the employee.
2. Further any prior period interest for the FYs upto the FY in which the property was acquired or constructed (as reduced by any part of interest allowed as deduction under any other section of the Act) shall be deducted in equal installments for the FY in question and subsequent four FYs.
3. The employee has to furnish before the DDO a certificate from the person to whom any interest is payable on the borrowed capital specifying the amount of interest payable. In case a new loan is taken to repay the earlier loan, then the certificate should also show the details of Principal and Interest of the loan so repaid.

Read More

Relief allowed u/s. 54F to wife as she gifted one houe to here husband

Gift of house to spouse cannot be disregarded for the purpose of assessee's eligibility for deduction u/s 54F

Gift of house to husband prior to the date of transfer of the original capital asset(other than any residential house) cannot be disregarded for the purpose of reckoning assessee's eligiblity for deduction u/s 54F even if assessee along with her husband and spouse continue to reside in the same house even after the gift. Section 64(I)(iv) will not operate to nullify the gift and would operate only to club income from the gifted house in the hands of the donor spouse. The gift cannot be regarded as a sham merely because assessee along with her husband and spouse continue to reside in the same house even after the gift

Read More

Interest on Refundable Deposits of tenants is allowable u/s. 24, if it uses to repay housing loan.

Interest paid on refundable security deposits received from tenants is allowable under section 24(b) if deposits are used to repay loan taken for purchase of house property

Where assessee repaid interest-free loan taken to purchase immovable property from interest-bearing refundable deposits received from tenants, these deposits are "borrowed capital" within the meaning of section 24(b) and interest on such deposits are deductible u/s 24(b).

Source: www.taxmann.com

Read More

Tax Calculation for Salaried Employee on Income From House Property Head For Asstt. Year 2015-16.

Just, before a few days CBDT has issued a circular for Computation of Income and Income Tax Deductions from Salaries during the Fin. Year 2014-15 u/s. 192 of the Income Tax Act, 1961.  As per this circular Tax Calculation for Salaried Taxpayee on Income under the head of "House Property" clarify as under :

It is reiterated that the DDO can take into account any loss only under the head ―Income from house property. Loss under any other head cannot be considered by the DDO for calculating the amount of tax to be deducted.

Computation of income under the head “ Income from house property :
While taking into account the loss from House Property, the DDO shall ensure that the employee files the declaration referred to above and encloses therewith a computation of such loss from house property. Following details shall be obtained and kept by the employer in respect of loss claimed under the head ―Income from house property separately for each house property:
a) Gross annual rent/value
b) Municipal Taxes paid, if any
c) Deduction claimed for interest paid, if any
d) Other deductions claimed
e) Address of the property
f) Amount of loan, if any; and
g) Name and address of the lender (loan provider)

Conditions for Claim of Deduction of Interest on Borrowed Capital for Computation of Income From House Property [Section 24(b)]:
Section 24(b) of the Act allows deduction from income from houses property on interest on borrowed capital as under:-

1. the deduction is allowed only in case of house property which is owned and is in the occupation of the employee for his own residence. However, if it is actually not occupied by the employee in view of his place of the employment being at other place, his residence in that other place should not be in a building belonging to him.
2. the quantum of deduction allowed as per table below:

In case of Serial No. 3 above

• The acquisition or construction of the house should be completed within3 years from the end of the FY in which the capital was borrowed. Hence it is necessary for the DDO to have the completion certificate of the house property against which deduction is claimed either from the builder or through self-declaration from the employee.
• Further any prior period interest for the FYs upto the FY in which the property was acquired or constructed (as reduced by any part of interest allowed as deduction under any other section of the Act) shall be deducted in equal installments for the FY in question and subsequent four FYs.
• The employee has to furnish before the DDO a certificate from the person to whom any interest is payable on the borrowed capital specifying the amount of interest payable. In case a new loan is taken to repay the earlier loan, then the certificate should also show the details of Principal and Interest of the loan so repaid.

Read More

Resident assessee can claim losses incurred from house property located abroad in return filed in India

IT/ILT: An option is available to the resident-assessee to file return of income either under the Indian tax laws or under the treaty - If assessee files the return of global income in India, the Revenue is bound to give effect to such return - Therefore, losses from house property located abroad was to be included in the income of resident-assessee

Facts:

• The assessee filed his return of income after including losses from house property located abroad. He purchased this property in Australia which was already on rent. He obtained a loan from ANZ Bank, Australia ('ANZ') to purchase the property.
• The loss was computed under the head house property due to payment of interest to ANZ.
• During appellate proceedings, the CIT(A) referred to the decision of Apex Court in case of CIT v. PVAL Kulandagan Chettiar [2004] 137 Taxman 460 (SC) and held that as far as rent income from Australia was concerned, the assessee was required to file the return in Australia and such income could not be included in Indian income. Therefore, negative income could not be assessed in India.

The Tribunal held in favour of assessee as under:

1. In view of Section 5 of the Income-tax Act ('the Act') in case of a resident, income accruing or arising outside India had to be assessed in India. The Sec 90(2) of the Act clearly provides that wherever DTAA is applicable to assessee he has an option to apply either Indian Tax Laws or provisions of DTAA, whichever are more beneficial to him.
2. Therefore, the assessee had an option to file return of income under the Indian tax laws where DTAA was applicable.
3. In the instant case, the assessee had exercised the option of filing return under Indian laws, thus, the same could not have been refused simply because DTAA was applicable.
4. The decision in case of PVAL Kulandagan Chettiar (supra) was distinguishable because in that case the assessee was a resident of India and Malaysia. It was due to financial connection of the assessee with Malaysian property it was held that income from Malaysian rubber plantation was taxable only in Malaysia.
5. The assessee had right to file the return of global income in India and the Revenue was bound to give effect to such return. The CIT(A) was not correct in holding that income from house property in Australia was not assessable in India. Accordingly, the order of the CIT(A) was to be set aside and the Assessing officer was to be directed to include the loss from such house property in the hands of the assessee.

Source: www.taxmann.com

Read More

Is the amount taxable received after surrender of Tenancy Right ?

The tenancy right is a capital assets and surrender of tenancy right for Rs. 80 Lacs would yield Long Term Capital Gain (LTCG).

The benefit of 10% tax rate without indexation is available only on transfer of listed securities or unit or zero coupon bonds. The benefit is not available to LTCG arising from transfer of tenancy right or any other capital assets.

The important question that remains here is about the tax-ability of such amount. 

Tax-ability, tax saving options & other implication would depend upon multiple factors and documents. Apparently, it appears that the amount would be taxable in the hands of the firm as the tenancy right belongs to firm.

MEMORANDUM OF AGREEMENT

1. Date: _____________________

2. Place: ____________________

3. Parties:

3.1 _____________________, son of _________________, by faith – _____,  by Nationality – Indian, by Occupation - ________, residing at _______________________________________.

(Tenant/First Party, includes successors-in-interest and/or assigns)

AND

3.2 ____________________, son of _________________, by faith – _____, by Nationality – Indian, by Occupation - ________, residing at ______________________________________.

(Landlord/Second Party, includes successors-in-interest and/or assigns)

Tenant, Landlord collectively Parties and individually Party.

NOW THIS MEMORANDUM OF AGREEMENT WITNESSES AS FOLLOWS:

4. Background:

4.1 Ownership of the Second Party: The Second Party is the sole and absolute owner of and/or otherwise well and sufficiently entitled to the land and building situate and lying at the Premises known as ____________________________________ (Said Premises).

4.2 Tenancy of the First Party: The First Party is a monthly tenant in respect of a _______ [character of use] room having an area of _______ Sq. ft. be the same a little more or less on the ______ floor of the building in the Said Premises [Tenanted Portion] , at a monthly rental of Rs. __/- (Rupees _____________) only, payable according to English calendar month. The Tenanted Portion is described in the 1st Schedule below.

4.3 Proposal and Acceptance: The Landlord has now approached the Tenant to surrender the tenancy and all other rights incidental thereto due to some exigencies and the Tenant has agreed to surrender the tenancy and all other rights in the Tenanted Portion as well as to vacate the same by delivering khas and peaceful possession of the Tenanted Portion to the Landlord, subject to payment of a sum of Rs. _______/- (Rupees _______________) only (Consideration) by the Landlord to the Tenant towards the reimbursement the cost for shifting and rehabilitation.

4.4 Mutual Understanding & Recording of the Terms: The Parties upon negotiation have amicably arrived at the terms and conditions for such surrender of tenancy and conclusive and comprehensive terms and conditions superseding all previous documents and understandings, if any, are now being recorded by this Memorandum.   

NOW IT IS HEREBY AGREED AND DECLARED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS:

1. Surrender of the Tenancy: The Tenant doth hereby agree to surrender his tenancy in respect of the Tenanted Portion, described in the 1st Schedule below in favour of the Landlord, upon payment of the Consideration by the Landlord.

2. Payment of the Consideration: The Landlord shall pay to the Tenant a total sum of Rs.__________/- (Rupees ____________) only towards the cost of shifting and rehabilitation charges and/or compensation for the inconvenience suffered by the Tenant to vacate the Tenanted Portion in favour of the Landlord in the manner specified in the Payment Schedule, described in the 2nd Schedule below.

3. Advance Payment: The Landlord at or before hereof has paid to the Tenant a sum of Rs.__________/- (Rupees ______________) only as an advance and part payment of the Consideration and the Tenant doth hereby as well as by the receipt and memo hereunder written, admit and acknowledge thereof.

4. Effective Date: The Tenant shall cease to have all his right, title and interest in the Tenanted Portion including the right of his monthly tenancy on and with effect from __________ (Effective Date).

5. Delivery of Possession: Within __________ from the date hereof the Tenant shall vacate and hand over peaceful and khas possession of the Tenanted Portion to the Landlord and shall obtain written receipt and acknowledgement thereof from the Landlord.

6. Release from the Liability: Both the Parties release and discharge each other from all liabilities arising under the Tenancy or any variation of the terms of the tenancy with effect from the Effective Date.

7. Representation & Warranty:

7.1 By the Tenant:

7.1.1 After the Effective Date the Tenant shall have no right, title and interest in and over the Tenanted Portion whatsoever and responsibility towards the Landlord, as well as no other or further claim and/or demand from the Landlord, save as specifically stated herein.

7.1.2 Upon delivery of the possession of the Tenanted Portion to the Landlord, the Tenant shall hand over vacant and peaceful possession of the Tenanted Portion after removing all his goods and belongings and thereafter shall have no right to enter into the Tenanted Portion and/or in the Said Premises.

7.1.3 The Tenant has paid and cleared all electricity bills, telephone bills and all other utility bills and there is no arrear in respect thereof.

7.1.4 The Tenant has not created any interest over his monthly tenancy and/or has not done any act or deed which may prejudicially affect the right of tenancy.

7.2 By Purchaser:

7.2.1 Upon execution hereof the Landlord shall have no other or further claim and/or demand whatsoever from the Tenant save and except as specifically stated herein.

7.2.2 The Landlord shall pay the Consideration to the Tenant in terms of the Payment Schedule below.   

8. Interpretation:

8.1 Number: Words denoting the singular number include, where the context permits and requires, the plural number and vice-versa.

8.2 Headings: The headings in this Memorandum are inserted for convenience only and shall be ignored in construing the provisions of this Memorandum.

8.3 Definitions: Words and phrases have been defined in this Memorandum by bold print and by putting them within brackets. Where a word or phrase is defined, other parts of speech or grammatical forms of that word or phrase shall have corresponding meaning.

1st Schedule

(Tenanted Portion)

……………………………………….................................……

2nd Schedule

(Payment Schedule)

…………………………………………………………………..

9. Execution and Delivery:

9.1 In Witness Whereof the Parties have executed and delivered this Memorandum on the date mentioned above.

____________________        ____________________

     [Tenant]                                   [Landlord]

       

Witnesses:

1. Signature: _________________________

Name:

Father’s/Husband’s Name:

Address:

Read More

Deduction of Interest on House Loan u/s. 24(b) for Asstt. Year 2014-15.

With reference to circular issued by Income Tax Department No. 8/2013 dated 08.10.2013, deduction of House Loan Interest claiming condition u/s. 24(b) are as follows:


Section 24(b) of the Act allows deduction from income from houses property on interest on borrowed capital as under:

1. the deduction is allowed only in case of house property which is owned and is in the occupation of the employee for his own residence. However, if it is actually not occupied by the employee in view of his place of the employment being at other place, his residence in that other place should not be in a building belonging to him.
   
   
2. The quantum of deduction allowed as per table below:

Sl No	Purpose of borrowing capital	Date of borrowing capital	Maximum Deduction allowable
1	Repair or renewal or reconstruction of the house	Any time	Rs. 30,000/-
2	Acquisition or construction of the house	Before 01.04.1999	Rs. 30,000/-
3	Acquisition or construction of the house	On or after 01.04.1999	Rs. 1,50,000/-

In case of Serial No. 3 above

1. The acquisition or constructing of the house should be completed within3 years from the end of the FY in which the capital was borrowed. Hence it is necessary for the DDO to have the completion certificate of the house property against which deduction is claimed either from the builder or through self-declaration from the employee.
2. Further any prior period interest for the FYs upto the FY in which the property was acquired and constructed shall be deducted in equal installments for the FY in question and subsequent four FYs.
3. The employee has to furnish before the DDO a certificate from the person to whom any interest is payable on the borrowed capital specifying the amount of interest payable. In case a new loan is taken to repay the earlier loan, then the certificate should also show the details of Principal and Interest of the loan so repaid.

Read More

Conditions for Claim of Deduction of Interest on Housing Loan under section 24(b) for Asstt. Year 2014-15

Section 24(b) of the Act allows deduction from income from houses property on interest on borrowed capital as under:

1. the deduction is allowed only in case of house property which is owned and is in the occupation of the employee for his own residence. However, if it is actually not occupied by the employee in view of his place of the employment being at other place, his residence in that other place should not be in a building belonging to him.
   
   
2. The quantum of deduction allowed as per table below:

Sl No	Purpose of borrowing capital	Date of borrowing capital	Maximum Deduction allowable
1	Repair or renewal or reconstruction of the house	Any time	Rs. 30,000/-
2	Acquisition or construction of the house	Before 01.04.1999	Rs. 30,000/-
3	Acquisition or construction of the house	On or after 01.04.1999	Rs. 1,50,000/-

In case of Serial No. 3 above

1. The acquisition or constructing of the house should be completed within3 years from the end of the FY in which the capital was borrowed. Hence it is necessary for the DDO to have the completion certificate of the house property against which deduction is claimed either from the builder or through self-declaration from the employee.
2. Further any prior period interest for the FYs upto the FY in which the property was acquired and constructed shall be deducted in equal installments for the FY in question and subsequent four FYs.
3. The employee has to furnish before the DDO a certificate from the person to whom any interest is payable on the borrowed capital specifying the amount of interest payable. In case a new loan is taken to repay the earlier loan, then the certificate should also show the details of Principal and Interest of the loan so repaid.

Read More

Condition to Claim Deduction of House Loan Interest u/s. 24(b) for Asstt. Year 2014-15

There are two main benefits which are available under Income Tax Act, 1961 in relation to Purchase or Construction of House Property which are described as under:

1. Deduction of Interest on Capital borrowed for purchase or construction of House Property under Section 24 (b) of the Income Tax Act, 1961. (Interest paid by house owner on housing loan)
2. Principle amount paid towards Housing loan for  purchase or construction of House Property under Section 80 C of the Income Tax Act, 1961.
3. The amount stamp duty/ Registration charges paid while acquiring property will be allowed deduction U/s 80C.

Section 24(b) of the Act allows deduction from income from houses property on interest on borrowed capital as under:-

1. the deduction is allowed only in case of house property which is owned and is in the occupation of the employee for his own residence. However, if it is actually not occupied by the employee in view of his place of the employment being at other place, his residence in that other place should not be in a building belonging to him.
2. The quantum of deduction allowed as per table below:

Sl. No.	Purpose of borrowing capital	Date of borrowing capital	Maximum Deduction allowable
1	Repair or renewal or reconstruction of the house	Any time	Rs. 30,000/-
2	Acquisition or construction of the house	Before 01.04.1999	Rs. 30,000/-
3	Acquisition or construction of the house	On or after 01.04.1999	Rs. 1,50,000/-

In case of Serial No. 3 above

• The acquisition or constructing of the house should be completed within 3 years from the end of the Fin. Year in which the capital was borrowed. Hence it is necessary for the DDO to have the completion certificate of the house property against which deduction is claimed either from the builder or through self-declaration from the employee.
• Further any prior period interest for the Fin. Years upto the Fin. Year in which the property was acquired and constructed shall be deducted in equal installments for the FY in question and subsequent four Fin. Years. 
• The employee has to furnish before the DDO a certificate from the person to whom any interest is payable on the borrowed capital specifying the amount of interest payable. In case a new loan is taken to repay the earlier loan, then the certificate should also show the details of Principal and Interest of the loan so repaid.

Interest Paid towards housing loan:
     The house property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount payable towards interest on borrowed capital is allowed as deduction under u/s 24(b) of Income tax act.

1. We have to note here Interest payable on barrowed capital is allowed (Interest paid is irreverent here).
2. In case of under construction property, Interest will aggregated from the date of borrowing till the end of the previous year prior to the previous year in which the house is completed and allowed in five successive financial years starting from the year in which the acquisition or construction was completed.
3. In case Assesses is owner of more than one residential property, he may exercise an option to treat any one of the houses to be self occupied and the other houses will be deemed to be let out and annual value of such house will be determined as per Section 23(1)(a) of the Income Tax Act, 1961.

Principle Amount paid towards Housing Loan:
     Any payment made for purchase or construction of a residential house property which is chargeable to tax under the head “Income from House Property” towards any installment or part payment due to any Bank, Financial Institution, Company or Co-Operative Society towards the cost of the house property allotted to him is allowed as deduction U/s 80 C of the Income Tax Act, 1961 to the extent of Rs. 1,00,000 along with other Specified Investments mentioned under Section 80 C of the Income Tax Act, 1961.

Stamp Duty and Registration Charges for a home:
     The amount you pay as stamp duty or registration fee  when you buy a house  can be claimed as deduction under section 80C in the year of purchase of the house.

Read More