Buying for a property for my staff

Tax queries 373 views 3 replies

Raj K

B.Com

48 Points Joined March 2014

I want to purchase a property for my employee. The property will worth around Rs. 15 lacs.

My employee will live in the property but the property will remain in my name. I will have a contract made with the employee that he would pay me monthly installments against the property. I will not charge any interest from him neither there will be any fixed tenor to return the entire 15 lacs. I will also mention in the contract that I will transfer the property in his name whenever he will repay me the entire amount. The contract between me and my employee may run for 15 years.

Once he will have returned the entire amount, I will again invest the amount in a property in my name.

My question is that when my employee repays me a certain amount every month, will this amount be considered as my income and will this be taxable?

What will be the tax implications in this matter?

Replies (3)

Manoj Mehta

Head Of Department (Accounts & Finance)

1479 Points Joined March 2009

Dear Raj

I suggesy you to do it in another way so that your employee will be benifted and you will also not get any tax implication.

so what you do is show it as interest free loan to your dear employee and make the papers in his name putting a clause that if he is unable to pay you the amount the asset remains with the company/employer.

Benifit: employee get a deduction of principal amt payment of laon under section 80c. and tha amount which you will receive will also not get taxed in the same.

I hooe this will help you

Regards

Raj K

B.Com

48 Points Joined March 2014

Originally posted by : Manoj Mehta

Dear Sir

Many thanks for you valuable suggestion. However, I apologies that I didn't tell you earlier that the money which I want to give to my employee to buy a property is a part of capital gain money. I sold a property and since I need to save the capital gain tax, I need to invest the money in a property. That is why I was thinking of buying a property in my name. Can I give loan to my employee out of the capital gain money?

Regards

Dear Raj

I suggesy you to do it in another way so that your employee will be benifted and you will also not get any tax implication.

so what you do is show it as interest free loan to your dear employee and make the papers in his name putting a clause that if he is unable to pay you the amount the asset remains with the company/employer.

Benifit: employee get a deduction of principal amt payment of laon under section 80c. and tha amount which you will receive will also not get taxed in the same.

I hooe this will help you

Regards

Manoj Mehta

Head Of Department (Accounts & Finance)

1479 Points Joined March 2009

Dear Raj

In this situation i suggest you to buy a new property to save tax on capital gains.

There is no need to buy it in your employees name. if you do so then you have to give your tax on capital gain.

Also you have the option of depositing the amount in capital gain account scheme with banks.(should be done before filling of your income tax return).

if need any more help you can out a pm to me on the same.

Regards