Can I receive Rent on the name of HUF to save Tax

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  1. Rakeshchetal

    Rakeshchetal New Member

    Sir,

    I own a house on my name and the rent proceeds of the same are being deposited in the name of an HUF whose karta is me myself. Kindly clarify if this rent income is to be included in my individual income for purpose of tax calculation or the same can be considered as income of HUF. Also in case it is not considered as income of HUF , kindly suggest a way out to save this rental income from income tax.

    Thanks
    Rakesh
     
  2. rudrabose

    rudrabose Active Member

    Dear Rakesh

    As the property is in your name, the rental income would be taxed in your hands and not in the hands of huf.
     
  3. rudrabose

    rudrabose Active Member

    While computing tax on such rental income, 30% Std deduction wld be allowed and deduction for payment of municipal taxes as well as Deduction for intersst on home loan wld be allowed.

    Apart from these deductions, deduction under chapter vi-a i.e under Section 80C, 80D, 80E, 80G etc wld be allowed.
     
  4. Ankita Arora

    Ankita Arora New Member

    The charging section 22 of income tax act, 1961 in relation to income for house property clearly states that the annual value of house property of which assessee is the owner, shall be charged to IFHP.
    As per section 27, the person in whose name property is registered is the owner.
    However, in cases where the substantial right is being transferred, including right to receive rent, the transfree can be regarded as Owner of the property.
    Even, the non existence of registered document cannot refrain transfree from being called as owner, as per the judgement of CIT vs. Podar Cement (P) Ltd. (1997) 226 ITR 625 (SC).
    Therefore, If the owner of property gives a substantial rights to HUF to receive rent, then IFHP would be chargeable under the hands of HUF.
     
    gaurav_kumar likes this.
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