If you own more than one home, chances of tax leeway are high
The taxpayer has the right to change the selection of a house property that would be treated as ‘self-occupied’ and having ‘nil’ annual value, the Mumbai branch of the Income Tax Appellate Tribunal (ITAT) said, adding that the notional rent from such a house will not be taxable.
As a Times of India report explains, if the taxpayer has in his Income-tax (I-T) return declared a particular house property to be self-occupied, s/he can at a later stage during the actual tax assessment of his case substitute this with another house property owned by him, which perhaps is in a more posh location.
“By doing so, it may be possible for him to reduce the notional rent that has to be offered for tax and thus lower his I-T outgo,” the report has added.
Under the I-T Act, where an individual owns more than one house, he can only treat any one of his house properties as ‘self-occupied and having a nil annual value’. Annual value, in general terms, is the notional rent which the property would ordinarily fetch.
The other house properties, even if they are not given out on rent, are assumed to have been let out and I-T is payable on the notional rent. Certain deductions such as municipal taxes are permitted. Further, a standard deduction of 30% is allowed and I-T is payable on the balance component.
To mitigate I-T liability, taxpayers opt to choose that house property as ‘self-occupied and having a nil annual value’ which would otherwise have had the highest adjusted annual value and would entail a higher I-T outgo.
from Daily News & Analysis https://ift.tt/2kTqBzw
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