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My wife owns an apartment, for which she had taken a loan. The flat is vacant, as we live in my house in another city. Since it is vacant, is it necessary to show rental value to claim interest deduction of home loan? How is the value of rent calculated?
-Mahendran
As per the provisions of income tax law, the annual value of house property owned by the assessee is chargeable to income tax under the head, "Income from house property".
The annual value of the house property is taken as “nil” if the house is self-occupied or is lying vacant due to employment exercised by the assessee in the other city. In such cases, the deduction for interest paid on the housing loan is limited to ₹1,50,000 per annum.
If the flat owned by your wife is lying vacant and does not fall in either of the scenarios as explained in the above paragraph, the annual value shall be the maximum of the following as reduced by the actual municipal taxes paid:
--Rent received or receivable; or
--The sum for which the property might reasonably be expected to let.
The deduction for interest on the housing loan in such case would be the actual interest paid/payable during the year.
My brother has purchased a villa in Bangalore at a cost of ₹63 lakh. Registration is expected to take place around July 2014. Possession is expected around December 2014.
He made payment of ₹18.63 lakh before June 1, 2013, and the balance after that date. As the total value is ₹63 lakh, I request you to clarify the TDS applicability under Section 194IA.
-GR Rajan
The Finance Act, 2013, introduced a provision (Section 194IA) with effect from June 1, 2013, under which the purchaser of an immovable property (other than rural agricultural land) worth ₹50 lakh or more is required to deduct tax at the rate of 1 per cent from the consideration payable to a resident transferor.
A plain reading of the provision indicates that the tax is to be withheld on the payments made after June 1, 2013, if the consideration for transfer of property is more than ₹50 lakh. In your brother’s case, since the total consideration of the property is more than ₹50 lakh, provisions of Section 194IA will apply to him and he will be liable to deduct TDS.
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