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Tax Talk

SANJIV CHAUDHARY | Updated on July 27, 2013 Published on July 27, 2013

I have taken my aunt’s flat on rent for Rs 16,000 a month. She is a senior citizen and apart from a pension of Rs 2,000 a month, she has no other source of income. I am a salaried employee and wish to avail tax benefits on House Rent Allowance. Do I have an obligation to deduct TDS while paying rent to my aunt?

Charulata

According to the Income Tax Act, if the rent paid during a financial year (April 1 to March 31) exceeds Rs 1,80,000, then the tax is required to be deducted at source at applicable rates. However, an individual is liable to deduct the tax at source only if he is carrying on a business or profession and his gross receipts/ income exceeds specified limits. As you are a salaried individual and you do not have any income from business or profession, you are not liable to deduct tax at source on the rent paid to your aunt.

My wife is a homemaker. She earned interest on fixed deposit of Rs 2 lakh. She has LIC and Mediclaim premium of Rs 10,000. Please advise whether it is mandatory for her to file tax return.

Aditya Sharma

According to the Income Tax Act, 1961 (the Act), an individual is required to pay income tax in case the taxable income during the financial year (FY) exceeds the minimum exemption limit prescribed for that FY. Further, the individual is also mandatorily required to file the personal tax return for the said FY within the prescribed due dates.

In case of an individual below 60 years of age, income exemption threshold for FY 2013-14 is Rs 2 lakh. Interest earned by your wife amounting to Rs 2 lakh in the FY constitutes taxable income under the Act. Further the premium paid towards LIC and medical amounting to Rs 10,000 qualify as eligible deductions from such taxable income under section 80C and 80D of the Act. Accordingly, her total income for the FY would be Rs 1,90,000. As her income does not exceed the minimum threshold limit of Rs 2 lakh, she would not be mandatorily required to file her tax return. However, in case any tax has already been deducted at source by the banker, then she can claim a refund for the same from the tax department by filing an income tax return.

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Published on July 27, 2013
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