Readers' Corner: Taxation

I want to know whether the provisions of deemed let-out of house property will be attracted if my partnership firm has invested in one or more house/s. What will be the case if I am involved in buying and selling of real estate property?

The provisions would also apply to the partnership firm. However, the firm is using the said property for carrying out its business or profession, the annual value of the property will not be considered taxable and it deemed let-out provision will not apply.

If a person is engaged in the business of buying and selling of real estate properties, these will be considered stock in trade and the income from sale of stock in trade will be taxable as income from business and profession. The gain/loss from sale of such properties will not be considered as capital gain as stock in trade is excluded from the definition of capital asset. Rental income from house property will continue to be taxed as income from house property.

Will the lump sum money and monthly rent that we will be getting from the builder for redevelopment of our housing society be subject to tax? Is there any way to reduce the tax?

There are conflicting judgments on this subject, wherein some have considered the amount received to be taxable as capital gain, while others have considered the same as non-taxable. Further, these judgments available are at the tribunal level and no ruling has come from any high court as yet. One would need to examine the complete facts and underlying documentation to understand how the arrangement of redevelopment has been set up to comment on the taxability of the payments received.

Is the service tax paid on insurance also included for tax exemption, or is it only the premium amount?

The whole amount paid to effect or to keep in force an life insurance policy is allowed as a deduction under section 80C of the Income Tax Act, 1961. The amount inclusive of service tax will be considered for claiming the deduction.

My parents are retired senior citizens and get pension every month. They also get interest from fixed deposits. Their chartered accountant has advised them to pay advance tax. Is it required?

A resident senior citizen (aged 60 or more) who does not have any income from business and profession is not required to pay advance tax. The tax liability would need to be paid at the time of filing their tax return. One needs to be careful of the tax residential status of a senior citizen, as the exclusion is only applicable for a resident. If a senior citizen is a non-resident then advance tax is required to be deposited if the estimated tax liability of the year exceeds Rs 10,000 after adjusting tax deducted at source.

I am migrating to Australia. If I send money to my parents every month from there, who will be taxed for this?

If you send money to your parents every month in India from Australia, there is no taxation in India on the remittance either in your hands or in the hands of your parents. Gift from close relatives is not taxable in the hands of recipients. However, your parents are required to report any such remittances received by them in excess of Rs 1,00,000 in a financial year under the Foreign Contribution (Regulation) Act, 1976, within the prescribed timelines and in the prescribed format.

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

The views expressed are the expert's own. Send your queries to yourmoney@bsmail.in