Your Taxes

My daughter was having a salary income and filing income tax return till AY2008-09. Later, she relocated to Australia and took up a job there and became an NRI. She became an Australian citizen last year. She is being regularly assessed by the Australian Income Tax authorities. She owns a flat at Bengaluru jointly with her husband since 2009.

She is not getting any rent from this flat as it is occupied by me and my wife (that is, parents of my daughter). She has also booked another flat in Bengaluru for which payments are being made in instalments and possession of the flat is expected only in the year 2019. With this background, I seek your replies on the following:

a) Whether the IT department is required to be informed of non-filing of return since AY2008-09.

b) Whether flat, occupied by me as parent without any rent, is to be considered for fair rent value for assessing her Indian income. The fair rent value/market rent is approximately ₹15,000 per month and she does not have any other income.

KR Nataraj

According to the provisions of the Income Tax Act, every person whose total income or the total income of any other person in respect of which he/she is assessable during the previous year exceeded the maximum amount, which is not chargeable to income tax, is required to furnish an income tax return. Based on the limited facts provided by you, we understand that your daughter’s total income during the relevant years, when she became NRI, was less than the maximum amount not chargeable to tax in those respective years. Hence, she was not required to file her tax return for those tax years. There is no requirement to formally communicate the same to the tax department.

The annual value of house property of which the assessee is the owner is chargeable to income tax under the head “Income from house property”.

However, the annual value of the house property is nil where the house property cannot actually be occupied by the owner owing to his employment at any other place and the owner is living in a house not owned by him/her. This provision is applicable in case of only one house property owned by the assessee which she is not able to occupy due to her employment abroad. In a case where the assesse owns more than one house property, this provision shall apply only in respect of one of such houses.

Accordingly, since your daughter owns only one house property where you are residing, the annual value of such house property shall be nil.

Please note that the flat booked by her in Bengaluru is not a house property till she obtains possession of the same. Hence, its annual value is not taxable under the head “Income from house property” till the time its possession is obtained.

The writer is a practising chartered accountant. Send your queries to taxtalk@thehindu.co.in

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