• Rental income calculation with TDS and Property Management fee

Hi,
I am currently employing a property management firm to manage my flat which I have rental of INR 55,000. Inline with Section 194I, my tenant is deducting 5% for TDS and then passing the rest (INR 52250) to the property managers. Property management firm then deduct their monthly fee including GST (INR 5841) and provide the remainder to me (INR 46409).

In this situation, I am assuming for my income tax assessment and filing - I need to state the net sum of the final amount I am receiving from property management for my property income. Is that accurate?
Asked 21 days ago in Income Tax

Gross rental of Rs.6.60 lacs (55k *12) would be taxable. Deductions allowed are municipal taxes on paid basis, interest on housing loan and standard deduction of 30%. No deduction of management fee would be allowed. Ask tenant to deduct entire TDS either in the month of March or when vacated whichever is earlier. TDS credit of Rs.33k would be available against final tax liability

 

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Vivek Kumar Arora
CA, Delhi
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No, that's not accurate. For tax assessment, you should report the full rental income of INR 55,000. The TDS and property management fees are then shown as deductions. The net amount (INR 46,409) represents your final take-home income, but you should still report the total rental income and claim the appropriate deductions for TDS and fees.

It's always advisable to seek expert consultancy instead of filing your ITR on your own. Our services can provide the professional guidance you need for accurate and efficient tax filing.

For detailed, personalized advice, consider a phone consultancy.

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Shubham Goyal

Shubham Goyal
CA, Delhi
238 Answers
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What is the rental agreement and between whom is this rental agreement made?

 

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Naman Maloo
CA, Jaipur
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1 ) If you are letting out the flat directly to the tenant, then the whole amount of Rs. 55,000/- p.m. will have to be      added as your rental income. The TDS will be given credit against your tax liability and you may need to pay more or claim refund depending upon your actual tax liability. For example, if the TDS is say, Rs  30,000/- and your tax liability is Rs. 25,000/-, you will get a refund of Rs 5,000/- after filing your Income Tax return. On the other hand if your tax liability is Rs 35,000/-, you need to pay the balance amount of Rs. 5,000/-.

2) The property management fee will not be allowed as a deduction in your rental income. You will get a standard deduction of 30% u/s 24 of the Income Tax Act. You can claim in addition, payments towards property tax and interest on your housing loan. 

3) You may plan the transaction in a different manner, if possible. You can let out your flat to the Property Management Company, which can sub- let it to the actual tenant. In that case, you will be offering to tax only the rent you've received from the property management company. 

4) If you are letting out as a business person, then you can claim input credit for the GST paid by you.

 

B Vijaya Kumar
CA, Hyderabad
1007 Answers
124 Consultations

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