Tax on rental income (sec 24 vs 194l)

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Raam

None

32 Points Joined March 2014

I have rented out the only residential property that I own in Bangalore to an NGO to run an orphanage as I had to relocate to a different city for business/profession. My understanding as per the Sec 24 of Income Tax Act, the Value of rental income should be NIL and I should not be liable for taxes on the rental income. Also, if I consider the the net value (Rent - Municipal Taxes - Standard Deduction - Mortgage ) the total income falls below the taxable limit.

However, the NGO is now stating that they need to deduct 10% via TDS from the rent paid to the landlord (me) as per 194l. But, my undrstanding of 194l is that the RESIDENT who is receiving the rent is liable for the 10% tax. Otherwise, it will be a double tax implication on the same income.

Please clarify if my understanding is correct that 194l does not apply to the landlord and as per Sec 24 - I am currently not liable for the taxes.

If 194l is applicable - please advise how would one get a certificate Form 15AA.

Thanks in advance for your response.

Replies (3)

Manoj Mehta

Head Of Department (Accounts & Finance)

1479 Points Joined March 2009

Dear Raam If you total Rental income is more than 180000rs. then the NGO have to deduct tax from the rent they pay to you.

Suppose total rental incom(Revenue) of the year is 190000rs than they will deduct tds of 10% of 190000= 19000 even if you are below taxable limits(200000). You can claim the refund of the same by filing your income tax return if your below taxable limit. Otherwise you have to take cerificate from your income tax officer for nil deduction of TDS or at lower deduction of TDS(Tax deducted at source).

I hope this will solve your problem

Regards