Your Queries: Income Tax — Lease deed charges cannot be deducted from rental income for computing tax
By Chirag Nangia
I have rented a property to a bank. The bank has deducted lease renewal charges (stamp duty & advocate fees) from my rent. Can I deduct these charges from my rental income for computing my tax liability?
Income under head ‘house property’ is computed by deducting from the gross annual value, the municipal taxes paid. From the resultant amount, standard deduction of 30% and interest on borrowed capital (subject to limits and conditions) is allowed to be deducted. I-T Act also allows a taxpayer to adjust the amount for unrealised rent. However, it does not permit any other deduction. Thus, lease renewal charges shall not be allowed.
When we sell equity units of Tier II of the National Pension System (NPS), would it be taxed under the head ‘capital gains’ or ‘income from other sources’? And what would be taxed —only the gain element or the entire amount redeemed?
—Arvind M Gaggar
It has been clarified by the government that employees are free to withdraw part/ all of the tier II NPS anytime. This withdrawable amount does not constitute pension investment, and would attract no special tax treatment. It is advisable to include the entire withdrawal amount in income under head ‘other sources’ and offer the same for taxation at applicable slabs.
A client sold an agricultural property in Kerala and after three months deposited the money with SBI Capital Gains Savings scheme in 2018. Unfortunately, he expired and his spouse, also 80 years, could get the agricultural certificate from Kerala tahsildar in 2020. When we approached SBI to withdraw the amount, it insisted for I-T permission. What is the procedure for withdrawing the money?
To close the CGAS account, an application shall be required to be made in Form H by the nominee/ legal heirs in Form H. The approval of the Income Tax Officer (AO) who has jurisdiction of the depositor is also required at the time of making an application for closure of account. The details of the jurisdictional AO can be obtained under ‘My profile’ section of the income-tax e-filing portal.
The writer is director, Nangia Andersen Consulting. Send your queries to firstname.lastname@example.org