Treatment of Rental Income, Income Tax

[Srinivasan Krishnan]

Hello

I am writing to seek expert opinion on claiming tax benefits through income derived from house rentals

I am an Income tax assesse, salaried class at 30% bracket working in a private sector. I do not have an HRA. I own an apartment in Chennai and I am renting out the apartment for ₹ 20000 per month from April 2016 onwards. The apartment I own is solely in my name only. Subsequently I am moving into a larger house which I am taking on rent and I will be paying a rent of ₹ 40000 per month + maintenance

I also have a consultancy (proprietary concern) firm that is defunct now. I am writing to seek views and expert opinion from the members of the forum on the following

1. Can I write an unregistered will in the name of my mother transferring the apartment that I currently own which I will rent out for ₹ 20000 / month and collect the rental income in my mother’s name. Since my mother does not have any income the rental income will be tax free

2. Alternately, Can I include the apartment I will be renting out for ₹ 20000 / month and the apartment I will be renting in for ₹ 40000 / month to my consultancy business to claim tax benefits, where I claim the rental income of ₹ 20000 as income received by the consultancy and at the same time I show an expenditure of ₹ 40000 + maintenance per month towards renting in an apartment to stay as expenditure. I have no other income in my consultancy business at this point of time

Please advise me what is the best way for me to optimise and pay no taxes

I look forward to hearing from you

Regards

Srinivasan Krishnan

Posts / Replies

[Ganeshan Kalyani]

As per Income Tax Act, each source of income shall be taxed under separate heads of income as provided therein. The business income is taxed under 'Income from Business or Profession', income from house rent under 'income from house property', salary income under 'income from salary'. Hence one cannot club the income under one into another heading as you have proposed in your query. Hence the rental income of ₹ 20,000/- p.m. you will be receiving will be considered for taxe under heading 'income from house property'. Thanks.