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Tax planning on rental income from shopping mall

Vinod (CA in Practice) (445 Points)

05 February 2013

Dear friends,

In the process of my effort to reduce the tax liability of a shopping mall owned by an individual, the following doubts came in to my mind:

1. Is it legally possible to offer income under the head PGBF instead of house property income ?

2. If not, if he form a a partnership firm (with 8 partners), is there any chance of taxing the income in each of the partners' hands instead of as income of the firm (so that each of them can claim Rs.2L as basic limit ?

3. If the above 2 options are impossible, can we split this mall to 8 different entity so that each one is under one proprietor ?

Please share your views..

Thanks in advance..

vinodaca74 @ gmail.com

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Vinod (CA in Practice) (445 Points)
Replied 05 February 2013

One possibility :

If the owner lease out the mall to his wife and 7 children (all above 18 years old), for a relatively small amount, he can reduce his income to the extent of lease rent received from his wife and children. Also, he can claim 30% and interest on loan as deduction u/s 24. At the same time, each of the lessees can claim the lease rent as deduction u/s 57 (considered as income from other sources because the property is not owned by them. Each of them can also utilise the basic exemption limit of Rs. 2 Lakhs. Hence the overall tax liability will be much lower than that payable if shown under the ownership of one individual.

Am I right ? Please share your views..

Thanks in advance..

vinodaca74 @ gmail.com