I’m non-resident Indian, personal flats which might be lease out. How earnings will probably be taxed

I’m a non-resident Indian residing overseas for previous 20 years. I’ve 2 flats at completely different places in India. One flat is in my title and one other one is in my spouse’s title. Both the flats are set free. We obtain lease amounted to 25K for each month for every flat. We have PAN. Is it essential to file earnings tax returns yearly? Is this rental earnings taxable?

You are usually not required to file an ITR simply because you’ve gotten a PAN. You should file your ITR in case your earnings which is taxable in India exceeds the essential exemption restrict otherwise you fulfill any of the non-income primarily based standards which require you to file an ITR even when your earnings doesn’t the essential exemption.

I presume that each the flats owned by you and your spouse respectively had been purchased by you and your spouse out of your respective assets and due to this fact the rental earnings in respect of those flats is taxable in your respective fingers. 

I presume that you simply would not have every other earnings taxable in India and the taxable earnings in respect of leases for every flat involves Rs. 2.10 lakhs after deducting 30% as normal deduction beneath Section 24, from the annual rental of Rs. 3 lacs. Since that is under the exemption restrict of Rs. 2.50 lakhs you aren’t required to file your earnings tax return until you might be hit by different circumstances requiring you to file an ITR in India. 

In case each the flats had been bought by you out of your funds and one is held in your spouse’s title only for the title sake, earnings in respect of each the flats shall turn out to be taxable in your hand on account of clubbing provisions and because the earnings of each the flats taken collectively will exceed the essential exemption restrict and you’ll have to pay tax and file your earnings tax return right here in India. This rental earnings may turn out to be taxable in nation of your residence.

Please word that since you’re a non-resident, your tenant is required to deduct tax from the lease being paid to you beneath Section 195 with out there being any threshold exemption. Please disclose your residential standing to your tenants to be totally compliant.

Balwant Jain is a tax and funding professional and might be reached on jainbalwant@gmail.com and @jainbalwant on twitter.

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