Tax question

This query is : Open

Guest

Guest (Querist)

24 January 2013 Hi,

Our building is going under reconstruction and we are going to get 20,000 pm as rent for shifting until the new building is ready.

My queries are

1 Whether the amount received by us will be taxable???

2 If not taxable in my grand fathers hand since the flat is on my grand father name. One of his grand son ie my cousin brother has two flats an if we shift in my cousin's flat and pay him rent than he will be taxed for the rent received. Can the amout of rent money be given by my grand father as gift to my cousin to avoid tax??? how much money can be given as gift without being taxable .....

I am registered for CPT hence not aware of Income tax properly.

Please help and thanks in advance

CA Hiren Thakkar

CA Hiren Thakkar (Expert)
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24 January 2013 Hi,

Rs. 20,000 pm received by your grand father is not subject to tax since it is compensation for alternate accomodation and not income. its a Capital Reciept.

However, If you pay rent to your cosion, it will be taxable in his hands as Income from House Property subject to Deductions u/s 24.

Guest

Guest (Querist)

24 January 2013 Thanks Sir for clearing my query but my second question is if instead of paying rent to my cousin grand father gives money as gift to my cousin than will the gift be taxable and if not taxable than upto what limit???

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CA Hiren Thakkar

CA Hiren Thakkar (Expert)
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24 January 2013 Gifts received from relatives are not taxable. Hence, gift received by your cousin is not taxable.

However,If you are staying at His Flat and instead of paying rent, you are giving money as gift, then he will be requird to pay tax on Income from House Property (under deeming provision)

Guest

Guest (Querist)

24 January 2013 Thanks Sir for your answer. But we will stay in my cousins house and the gift will be given by my grand father who stays with my cousin and not with us. Will the Income tax people be able to find any nexus between the gift from my grand father and we staying in our cousins house?? My cousin has 2 house in his name in one he stays and other is vacant?? will he be taxed notionally or 1 extra house is exempt

CA AYUSH AGRAWAL

CA AYUSH AGRAWAL (Expert)
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24 January 2013 Dear Author,

The Amount received by You is Taxable in Your Grand Father hand only.
It Doesnt Amounts to Capital receipt.

Since Already Your Cousin Have Two Flates,Either You Pay Rent or Gift Whatever be, The Deemed Provision Will Comes in Existance and rent is Taxable as deemed Provison.

Guest

Guest (Querist)

24 January 2013 But Rent that my grand father received is for shifting till the new building is ready. What if the builder had given us accommodation till the new building is ready. Is there any exemption from notional income provision he has 2 flats in one he stays and one is vacant where we will shift?

CA AYUSH AGRAWAL

CA AYUSH AGRAWAL (Expert)
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24 January 2013 if builder gives you accomodation then nothing is taxable....but if he pays you 20000 per month then all amont is taxable..

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Guest

Guest (Querist)

24 January 2013 How does it make difference whether he pays us or gives us accommodation. We are not earning anything what he will pay us we will pay to someone else for accommodation. But if my cousin has 2 house and 1 is vacant that we use it or not he will be taxed? is there any way to legally avoid tax?