I dwell in Sydney and wish to hire out a flat in Delhi to a different NRI for 2 months. The hire will come to my NRO (non-resident bizarre) account. What can be my tax legal responsibility? 

—Title withheld on request


Rental revenue from the property located in India is taxable within the arms of the proprietor of the home. The taxable rental revenue is calculated  as follows: 

Gross Annual Worth much less municipal taxes offers the web annual worth (NAV). Cut back customary deduction of 30% of NAV and curiosity on housing mortgage from this, which is able to then be the taxable rental revenue. 

Gross Annual Worth is larger of the next: 

-Quantity at which the property may fairly be anticipated to be let loose; or 

-Precise hire obtained or receivable. 

In different phrases, Gross Annual Worth compares the precise hire obtained or receivable with the anticipated hire that the property would fetch. 

If there may be loss beneath the top ‘Revenue from home property’ from let loose property on account of curiosity expenditure on housing mortgage being larger than NAV much less 30% customary deduction, such loss could be set off in opposition to revenue beneath different heads of revenue solely to the extent of 2 lakh and steadiness could be carried ahead as much as 8 years for set off in opposition to future revenue from the home.

Additionally, any reimbursement of the principal quantity in opposition to a housing mortgage taken from eligible lenders for the acquisition of such property can also be eligible for deduction beneath Part 80C (most deduction beneath this part is 1.5 lakh). However this deduction is just not obtainable if the person opts for good thing about a decrease tax charge beneath the brand new tax regime beneath Part 115BAC. 

When you wouldn’t have some other revenue in India or whole taxable revenue after contemplating taxable rental revenue for 2 months is beneath 2.5 lakh, there can be no tax legal responsibility in India. In case your whole taxable revenue exceeds 2.5 lakh, you may be liable to pay tax in India and file Revenue Tax Return in India. Additional, as you qualify as a ‘Non-Resident’ of India, the NRI tenant might deduct revenue tax at supply on the charge of 30% (plus relevant surcharge and well being and training cess) earlier than fee of hire in your account. 

If such rental revenue can also be taxable beneath home tax legal guidelines in Australia, you might declare credit score for taxes paid in India beneath the India-Australia Double Tax Avoidance Settlement (DTAA) within the resident nation i.e. Australia. 

Sonu Iyer is tax accomplice and folks advisory providers chief, at EY India.

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