The Hindu Business Line : Taxability of rent from co-owned property

If two persons are co-owners of a property that is rented and each person gets less than Rs 7,000 as income, can the tax be deducted by the tenant company?

As I understand, if rental income is less than Rs 10,000 per person, then no tax should be deducted at source.

Biya, email

The proviso to Section 194-I makes it clear that if the rent credited to the account of a person is not more than Rs 1,20,000 in a financial year, tax is not deductible.

Your question says each co-owner gets less than Rs 7,000. Therefore, receipt by him or credit in his favour does not exceed Rs 1,20,000. Therefore, the company is not required to deduct tax at source.

Clarity on TDS

I am working in an IT company. I am not clear about the term TDS, that is, when one has to declare this? While filling returns, I submit Form 16 which was given by the employer. Along with this, I also have fixed deposit through my salaried account. But the FD interest that I earn is less than 10,000 a year. So, should I declare the FD interest while filling returns. Please clarify.

Anoop Garg email

TDS means tax deducted at source. It is a form of advance payment of tax. Tax has to be deducted at source for specified types of payments. Salary and interest are two instances. Since tax is deducted from your income, to that extent you have discharged your tax liability.

In your income-tax return, you have to declare your income from salary as well as the interest of Rs 10,000, which is taxable under ‘income from other sources’. Then you compute the tax liability. Having found the tax liability, you are going to say how you have paid it. Well you would say I have paid through TDS.

If this is not sufficient, you have to pay either advance tax or self-assessment tax before you file your return together with interest for short/non-payment of advance tax as per the prescribed schedule.

Employees who do not pay tax on their salary by investing more than the sufficient amount under Section 80C are often thus able to protect their small ‘other incomes’ such as, in your case, the interest from tax liability.

As regards TDS certificates, well you don’t have to attach them.

The department is fully geared to verify your claim of tax having been paid through TDS without calling upon the taxpayers to produce the TDS certificates. You have only to give the identity of the person who has deducted tax at source

Taxability of cash gift

I have gifted Rs 1 lakh each to my wife and minor daughter in whose names the amounts are invested. Who would be liable to tax?

M. S. Gohil, Mumbai

Though the gifted amounts themselves would not be treated as income of the recipients being your relatives, the income therefrom would be taxable in your hands. Income of a minor child subject to a couple of exceptions which do not apply to the facts of the case is taxable in the hands of its parent, father or mother whoever has a greater income.

I take it that your income is greater than that of your wife. And as to the income earned by your wife from the amount gifted by you, it is straightaway added to your income. Should your wife have mixed your gift with her own funds and made investments out of the common pool thus created, then the income to be clubbed with yours would be found out by applying the respective ratios — the ratio that the gift bears to her own sources.

I have a few queries regarding IPO (initial public offering) and IPO allocations. Is allotment based on some directive from the Securities and Exchange Board of India (SEBI) or is it company dependent? My understanding is that only private limited companies can go public, Is it true? (that is, no proprietor and partnership firms can go public).Will an IPO be allocated to people who have bid below the offer price?

Rixon, email

Allotments are based on the basis of SEBI investor protection guidelines. Neither a private company nor an individual nor a firm can go public. Only a public company can go public. A private company as well as a sole proprietor, or for that matter a firm, must first convert into a public company. Those who bid outside the price band would not make the grade for allotment.

S. MURLIDHARAN

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