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India Today
3 days ago
- Business
- India Today
What homeowners need to know about house property tax rules, explains tax advisor
The way you're taxed on your house property income may soon change, especially if you plan to shift to the new income tax regime. A key benefit many taxpayers currently enjoy might no longer be Bangar, Founder, shared a fact on LinkedIn, 'In FY23, 60 lakh taxpayers claimed Rs 77,808.7 crores of loss under house property head. With 95%-97% of taxpayers may opt for new tax regime, this benefit is going to go away.' advertisementSo, what exactly does the new regime say about income from house property? Let's break it down in simple OF HOUSE PROPERTY YOU'RE TAXED ON Under income tax rules, house properties are classified into three types. A Self-Occupied Property (SOP) is one that you use for your own residence. You can have up to two such properties, and their taxable value is considered you rent out a property, it is categorised as Let-Out Property, and the rental income you earn from it is you own more than two properties, any additional property is treated as "Deemed to be Let-Out", even if it's vacant. In such cases, tax is calculated based on notional rent."Self-Occupied Property (SOP): Used for own residence - Taxable value = NIL (max 2), Let-Out Property: Actually rented - Rental income is taxable, Deemed to be Let-Out: If you own >2 properties, max 2 considered as SOP and rest as deemed let out," Bangar IS HOUSE PROPERTY INCOME CALCULATED?To calculate your taxable income from house property, there's a simple two-step process. First, you find the Net Annual Value (NAV), which is the rent you earn or could earn after subtracting municipal taxes.'A 30% of standard deduction of NAV and interest on property are allowed on the NAV. That's your taxable income u.t.h. house property,' he then further explains, 'Loss (due to interest on loan, majorly) is not allowed under house property head in the new regime, whereas, it is allowed under the old regime of up to 2 lakhs.'OLD REGIME VS NEW REGIMEUnder the old tax regime, you can set off losses from house property (like high interest on home loans) against other income, up to Rs 2 lakh and can claim deductions under Section 80C for repaying the home loan under the new regime, these are not points out, 'While municipal taxes and standard deduction are allowed both under the new as well as the old regime, set-off of losses and Section 80C deductions are allowed only under the old regime.'RENT PAYMENTS AND TDS RULESIf you're paying rent of more than Rs 50,000 per month, you must deduct TDS at 2% under Section 194-IB of the Income Tax rule applies even if you're an individual or a Hindu Undivided Family (HUF) not engaged in any business or profession. The best part is, you don't need a Tax Deduction Account Number (TAN) to do this. The TDS should be deducted in the last month of the tenancy or the financial year, whichever comes earlier, stated HOME LOAN? HERE'S HOW YOU CAN SAVEIf you and your spouse or family member are co-owners and co-borrowers of a home loan, both of you can claim benefits, i.e, up to Rs 2 lakh each for interest under Section 24(b) and up to Rs 1.5 lakh each under Section 80C for the principalBanger adds, 'Must be co-owners & co-borrowers and pay EMIs for the property. These benefits are not available under the new regime.'WHAT SHOULD YOU DO?If you're a homeowner or planning to buy a house, it's important to understand these changes. While the new regime offers lower tax rates, it also takes away key deductions that help property owners reduce their taxable between the old and new tax regimes now depends not just on your salary, but also on how much you've invested in your home.- Ends advertisement
News18
18-07-2025
- Business
- News18
ITR Filing 2025: Claimed A Fake Deduction? You Could Face 7 Years Jail And 200% Penalty
Last Updated: Claiming a fake deduction in ITR filing may attract a penalty up to 200% and 7-year jail. Taxpayers should file ITR-U if they have claimed wrong deduction. ITR Filing 2025: In a widespread investigation, the income tax department has uncovered large-scale misuse of deductions by taxpayers. The tax department used data analytics and AI tools to identify fake or inflated claims such as false TDS filed via refund agents. The authorities identified fraudulent claims under popular sections like HRA (10(13A)), health insurance (80D), political and general donations (80G, 80GGC), and interest on education or home loans (80E, 80EE, 80EEB). Even 40,000 taxpayers used ITR-U (which we have given detailed information below) in last 4 months and over Rs 1,045 crore of wrongful deductions were reversed after being flagged by the IT department. Amid the ongoing tax season, it has become important to understand the consequences of fake claims to get the tax benefits and reduce the liability. Tax experts have warned that fake claims can attract harsh penalties. Under Section 270A, taxpayers may face a 200% penalty on tax due for misreporting, 24% annual interest under Sections 234B and 234C, and even prosecution up to seven years under Section 276C in case of willful evasion. Income-tax is raiding individuals for deduction claimsThey're cracking down on fake HRA, donation deductions, etc. using AI Over 40,000 taxpayers reversed fake deduction claims worth ₹1,045 crores🤯 Claimed fake deductions? Here's what income tax did and can do to you🧵👇 — (@TaxBuddy1) July 15, 2025 What Should You Do? If you feel you've claimed a wrong deduction, you can file ITR-U. It allows you to fix errors, add missed income and withdraw false claims. Taxpayers are advised to avoid third-party refund agents and instead file their returns honestly, cross-checking details with their AIS/Form 26AS. The ITR-U facility remains available for up to five years to help rectify any errors or voluntarily withdraw incorrect claims. view comments First Published: Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
India Today
07-07-2025
- Business
- India Today
House rent above Rs 50,000? Here's the TDS rule you need to know
If you're paying more than Rs 50,000 a month in rent, there's a tax compliance rule that's easy to miss, but costly to ignore. Under Section 194-IB of the Income Tax Act, even salaried individuals are required to deduct tax at source (TDS) before paying rent and deposit it with the rule is often misunderstood as applicable only to businesses or those under tax audit. But it also covers individuals, including salaried tenants. Anyone paying rent above the Rs 50,000 threshold in a financial year must deduct 2% TDS and file the necessary deduction must be made once during the year—either in March or the final month of the tenancy, whichever comes earlier. The tenant is then required to file Form 26QC and provide Form 16C to the landlord. Non-compliance can trigger serious consequences. According to a tax compliance platform, one salaried individual named Abhishek paid Rs 55,000 per month in rent but failed to deduct TDS. As a result, he was issued a penalty of Rs 1,00,000 by the income tax department.'Abhishek, a salaried person, was asked to pay a penalty of Rs 1,00,000 by income tax. His mistake? He paid Rs 55,000/month in rent but didn't deduct TDS. Even salaried people need to deduct TDS at times,' stated in a LinkedIn case, also highlighted by the platform, involved Rohan, a salaried employee who had been paying Rs 60,000 in rent since April 2022. He failed to deduct and deposit TDS for two consecutive financial years. When he finally complied in April 2025, he ended up paying Rs 37,000 in late fees and interest—more than the TDS amount obligations are often overlooked in personal financial planning. Yet failure to comply can lead to a late fee of Rs 200 per day under Section 234E, capped at the amount of TDS due. Interest accrues at 1% per month for failure to deduct and 1.5% for failure to deposit, under Section 201(1A). Penalties between Rs 10,000 and Rs 1,00,000 can be levied under Section 271H, and prosecution is also possible under Section 276B, carrying a jail term of three months to seven 194-IB is one of several personal-payment-related TDS provisions. Under Section 194-IA, buyers must deduct 1% TDS on property purchases exceeding Rs 50 lakh. Section 194M requires individuals to deduct 2% TDS on personal payments exceeding Rs 50 lakh made to contractors, professionals or agents. Meanwhile, Section 194S applies to peer-to-peer crypto transactions conducted outside exchanges, mandating a 1% authorities have been tightening scrutiny on high-value personal payments. As examples show, routine transactions like paying rent can easily invite penalties if compliance is tenants living in high-rent homes, the line between a routine payment and a tax lapse can be thinner than it seems, and ignoring it can invite penalties that quickly snowball.- Ends
India Today
04-07-2025
- Business
- India Today
EPF, NPS can build Rs 12 crore retirement fund. Tax expert breaks it down
A tax-free salary today and a Rs 12 crore retirement corpus tomorrow. That's the financial outcome tax expert Sujit Bangar says is possible using just two tools: the Employees' Provident Fund (EPF) and the National Pension System (NPS).For salaried individuals earning up to Rs 14.65 lakh annually, Bangar believes this combination offers the best of both worlds: zero tax under the new regime and long-term wealth a recent LinkedIn post, Bangar, who is the founder of shared a straightforward calculation. Take a 30-year-old earning Rs 75,000 a month. If this person contributes Rs 12,500 each to EPF and NPS — a figure that includes both employee and employer shares — and increases both salary and investments by 8% every year, the results can be substantial. Over a 30-year period, the EPF contribution would grow into a corpus of Rs 4.74 crore, while the NPS investment would reach Rs 7.42 that's a retirement fund of Rs 12.16 crore, most of it makes this strategy more appealing, according to Bangar, is how it aligns with the tax rules under the new income tax contributions of up to 12% of basic salary in EPF and up to 14% in NPS are tax-exempt. When structured correctly, these exemptions can effectively eliminate any tax liability for those with annual salaries up to Rs 14.65 in Bangar's view, offers stability and predictable growth. It earns 8.25% interest annually, and the maturity amount is tax-free after five those who want to increase their fixed-income exposure, additional contributions can be made through the Voluntary Provident Fund. NPS, meanwhile, brings flexibility and higher return potential. It allows investors to choose between an equity-heavy or age-based investment mix. Historically, NPS returns have ranged between 9 to 11%.At the time of retirement, 60% of the corpus can be withdrawn without tax, while the remaining 40% is used to purchase an annuity that provides monthly maximise the benefits, Bangar suggests starting with a higher equity allocation in NPS during early working years and gradually shifting to debt as retirement approaches. He also recommends using the Systematic Lump Sum Withdrawal option post-retirement to avoid large tax he cautions that neither product is a one-size-fits-all solution. EPF has limited liquidity, which means it shouldn't be relied on for short-term financial needs. NPS, by design, requires that 40% of the retirement corpus be locked into an annuity, which cannot be withdrawn during the retiree's lifetime. These tools are best used as part of a long-term strategy, not for meeting every investment for those focused on tax efficiency and retirement security, the case for EPF and NPS is strong.(Disclaimer: This article is for general informational purposes only and does not constitute financial advice. Readers are encouraged to consult a certified financial advisor before making any investment or financial decisions. The views expressed are independent and do not reflect the official position of the India Today Group.)- EndsMust Watch
Economic Times
02-07-2025
- Business
- Economic Times
Think market income below Rs 12 lakh is tax free? TaxBuddy founder warns how this common mistake could attract big tax notice
Many Indian retail investors are surprised to learn that earning under ₹12 lakh in the stock market doesn't guarantee tax exemption. Confusions arise from overlooking how different income types are taxed, such as intraday trading, F&O, STCG, and LTCG. Understanding income classification is crucial for accurate tax calculation and avoiding unexpected notices. Tired of too many ads? Remove Ads Breakdown of the investor's income ₹3 lakh in intraday losses ₹2.5 lakh from futures and options (F&O) gains ₹3.5 lakh in short-term capital gains (STCG) ₹4 lakh in long-term capital gains (LTCG) The total profit was under ₹12 lakh. However, that did not make it exempt from tax. Tired of too many ads? Remove Ads Tax confusion is common Retail investing surge meets tax surprises A growing number of retail investors in India are discovering that earning less than ₹12 lakh from stock markets does not automatically mean a tax exemption. According to Sujit Bangar, founder of investors often get caught off guard because they overlook how each type of income is taxed under different a recent example, Bangar highlighted the case of a full-time investor who earned ₹7 lakh from the market. Expecting zero tax, the investor instead received a tax notice demanding ₹74, investor's earnings included:How tax rules treat different incomesTax laws treat each income type separately:Intraday trading: Treated as speculative business income, taxed at slab rates, and losses can only be adjusted against speculative profits. Losses can be carried forward for four and Options (F&O): Classified as non-speculative business income, taxed at slab rates. Losses have broader set-off options and an eight-year carry-forward capital gains (STCG): Taxed at a flat rate of 20% under Section 111A. STCG losses can offset both STCG and capital gains (LTCG): Only ₹1.25 lakh is exempt under Section 112A. Any amount above that is taxed at 12.5%. No indexation benefits or Section 87A rebate confuse low income with low tax,' Bangar said in a detailed LinkedIn post. 'Understand how each income is classified—and taxed.'He pointed out that the investor's mistake was not the profit amount but how the gains were treated under tax law. 'What got him in trouble wasn't profit—it was classification.'Bangar's post comes at a time when millions of Indians are entering the stock market through trading apps, often without full knowledge of tax laws.'Tag someone who trades but thinks ₹12L = 'tax-free zone,'' Bangar wrote. His message underlines the importance of understanding tax rules before new and existing investors, the key takeaway is this: knowing how your income is classified matters more than how much you earn.
