Taxation: Homi Mistry

I co-own a residential property in Chembur (Mumbai) with my mother. It is currently under home loan. I plan to take up a job in Gujarat and buy another residential property there. However, my parents will continue to reside at Chembur. The Gujarat property will also be on loan, but wholly owned by me. I understand that if there are two properties on a person’s name, he\she has to pay tax on rental income from one property. Will the same be applicable in my case, too? Which is the best way to avoid such a tax? Please advise.
The information provided by you is limited. However, since you own one property and plan to buy another, the annual value of one will be nil, from which you can deduct interest up to a maximum of Rs 1,50,000 per annum, subject to the fulfilment of the prescribed conditions.

In respect of the other property, the annual value will be determined as if the house has been let out, which will be the sum for which the property might reasonably be expected to let out from year to year, and from which taxes levied by the local authority can be deducted. On the resultant figure, a deduction can be claimed for 30 per cent of the annual value and for interest payable on the loan.

I spent over Rs 2 lakh through my credit card the last financial year. According to my chartered accountant, I should attach my credit card bills when I file my returns. Why should I do so?
There is no need to attach any credit card bill when you file your returns. Payments made in respect of a credit card aggregating Rs 2,00,000 or more in a year have to be reported in the tax return.

I have been working for two years. I missed filing my tax returns last year. Can I file returns for both the years together? What is the process? Also, I had not claimed deductions for any of my investments last year, and I do not plan to do the same this year, too. Will I face any penalties later?
You can file returns for the last financial year, that is, assessment year 2009-10, now. However, tax authorities may levy a penalty of Rs 5,000, unless you prove that there was a reasonable cause for not filing your last year’s tax return by March 31, 2010.

The return can be filed at the income tax office where you are assessed, or alternatively, you can electronically file the return and subsequently, furnish the ITR-V to the Income Tax Department in Bangalore by ordinary post within 30 days of e-filing your return. The same procedure can be adopted for the financial year 2010-11 also. In case you had not claimed any deduction on investments last year and do not plan to claim any deduction this year, the question of any penalty being levied will not arise.

The writer is a tax partner at Deloitte, Haskins & Sells. Send your queries at yourmoney@bsmail.in