I am 60 and receive a pension of about ₹4.7 lakhper annum. I receive rent of ₹3 lakh per annum by letting out a house I own in another city. Now, can I take the 30 per cent deduction on rent amount and opt for the new tax regime? In such a case, my total income will be ₹6.8 lakh and hence no tax would be payable. Is my calculation correct?
You may note that a deduction of 30 per cent from the rental income is allowed under the New Tax Regime as well.
Further, as per Section 87A of the Income-tax Act, 1961, (‘the Act’), where the total income of a resident assessee is chargeable to tax under section 115BAC of the Act (i.e. new tax regime), and the total income does not exceed ₹7 lakh, a rebate of amount equal to 100 per cent of the tax or ₹25,000, whichever is less, is allowed from the tax payable. It is pertinent to note that the option to switch to New Tax Regime is allowed only while filing original tax return, i.e. prior to July 31.
Thus, assuming you shall qualify as a Resident of India during the relevant financial year 2023-24 and basis the limited information available, your total income shall be ₹6,80,000 from pension and rental income (after taking a benefit of 30 per cent deduction against the rental income). Since your tax liability shall be less than ₹25,000, a complete rebate for the same shall be allowed and hence you will have no tax payable.
The author is a practising chartered accountant
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