Every month, I collect rent from commercial property and residential flats. Currently, all is put in my personal account. 1) I want to know whether I can create a company to collect the rent on my behalf so that I can put expenses in it, and total taxable income becomes less? 2) If yes to above, what type of company will be better? and is there a way to avoid double taxation, i.e taxes at the company level and when I transfer money to my personal account (in what manner can this be done, salary, director bouns etc).
Hi,
- If it is your business then it can be treated as business income.
- If the income is below 2 Cr then you can claim the benefit of presumptive taxation u/s 44AD and pay tax on 6% or 8% of total gross receipts.
- In case of company, tax is levied at flat rate i.e @30% and in case of individual, tax is charged at slab rates.
- Presumptive scheme is not available to companies.
Thanks
Hii
Under income from house property head you can claim 30% standard deduction and can claim munciple taxes paid and home loan interest if any
this income can’t show as business income
but if you have income like pg or commercial rent such as Co working space then you can show the same as business and claim all business expenses
for above purpose making company is not required
income clubbed in your hand even if you collect the same in the name of company or any other name
for more clearly you can book phone consultation
The income from any property is treated as income from house property and in that case you can only claim 30% standard deduction and interest expense and no other expense.
However if you have some commercial properties in your name and it's your business to provide them on rent then you can show such rent income as your income and can hire a salaried employee and claim his salary as expense.
Other than that if you are an individual then creating a company or any firm won't help.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you
Hi,
There are various options such as creating company, creating partnership firm and using the sublet option. Each option will depend upon various things such as your current rental income, effective tax rate applicable to you., Who owns all the properties etc.
Further, these kind of aggressive tax planning may also result into some questions from income tax department. It is highly advisable to do a cost benefit analysis of each option and then take a call.
Dear Sir,
Hope you are doing well !!
It is advisable to discuss the same with a practising CA (For tax planning) and CS (For company structure) personally.
