Reader's corner: Taxation

Kuldip Kumar, partner and leader, Personal Tax, PwC India, answers your questions

I am planning to buy a house worth Rs 80 lakh. I am taking a loan of Rs 50 lakh. My father is giving me Rs 15 lakh and his brother (my uncle) is giving me Rs 10 lakh. The remaining will be from my savings. What are the cautions I should take to answer a potential tax query on the sources of fund for the property purchase?

You have not mentioned whether the money taken from your father and uncle is a loan or gift. There is no specific section in the income tax return form to disclose the details of the property purchased. If you have income exceeding Rs 50 lakh then you are required to fill the Asset and Liability schedule to the return form. In that form when you disclose the house, do not forget to include the loans taken from the bank and your father and uncle (if it is loan). Nevertheless, tax authorities may do ask for the source of funding the house purchase. Therefore, you should carefully keep the relevant documents/ supporting papers explaining the loan from bank and gift from your father and uncle. If the money taken from your father and uncle is loan, the understanding should be in writing so that where questioned it would be easier for you to explain the transactions to the tax authorities. Even where the amount received from father and uncle is gift, it is recommended to have the gift deed in place. When tax authorities question, they may also seek confirmation from your father and uncle that they indeed gave you the money and what is their source of income.

My wife and I have a joint house which is given on rent. We get Rs 15,000 as rent every month. Since my wife is not working can this rent be shown as her income? Will she have to pay tax on it? 

You have not mentioned whether the house was entirely funded by you or you both contributed. In case you have funded the purchase of house, you will be still considered a deemed owner of that house, even though you made your wife the joint owner. The entire rental income will be taxable in your hands only. This would be so even though being the joint owner, your wife may be receiving the rent (for her share) directly into her bank account. However, income that your wife may earn further by investing the rental income will remain taxable in her hands only.

On the other hand, if the house is funded by both of you, then both of you will be liable to tax on your respective share in rent. The fact that she is not working does not mean that the entire rental income will be taxable in her hands by your choice. Further, the property/house is required to be disclosed in the return, if applicable. Since you are the joint holder, you should include such house details in your return as well. It is advisable to maintain the document evidencing your respective shares (title deed), sources of funds, rent agreement etc in case any questions are is asked by tax authorities. 

When I logged onto the Income Tax portal for linking my Aadhaar number to my account, it was already linked. How was this done? I have not submitted my Aadhaar number to the Income Tax department so far. 

This generally happens when you have mentioned your Aadhaar number while filing income tax return (ITR) of the last years. Earlier there was an option to link the Aadhaar with PAN on the IT website on a voluntary basis. If you have done so, the tax department has automatically linked your Aadhaar number with the PAN and hence, no further linking action is pending from your side. You can check your last year ITR and see the Aadhaar number disclosed. In case you have not mentioned the Aadhaar in your return, you can call the tax department at help line number and enquire about the same.  The  writer is partner and leader, Personal Tax, PwC India. The views expressed are the expert’s own. Send your queries to yourmoney@bsmail.in