Kindly clarify my doubts regarding TDS and GST on rent received from commercial buildings. My mother who is a senior citizen and my two sisters jointly own commercial buildings (ancestral). They together receive Rs 28,000 per month from the properties. Will the tenants be required to cut tax deduction at source (TDS) from the rent paid?
And do we need to collect GST from these tenants?
– Arvind Chari
Please note that as per income tax laws, if an individual pays rent to a resident exceeding `50,000 for a month or part of the month during the financial year, then such an individual is required to deduct TDS of 5% on such income. Hence in your case, since the rental income does not exceed `50,000 per month, there is no requirement for your tenant to withhold the taxes.
With respect to the GST, if your aggregate turnover (as per the law), including the rental income received, is less than `20 lakh then GST would not be applicable (assumed that the property is located in the same state).
l Due to old age I have decided to sell all the shares purchased during the last 12 years and donate a part of the proceeds free of long-term capital gains tax to a charitable institution. What is the income tax liability?
The sale of shares is chargeable under the head ‘capital gains’. Assuming that the shares are held for 12 years, the gains arising on the sale of shares would be long-term capital gains. However, the rate of capital gains tax would depend on the nature of shares held. If the shares are listed equity shares and if security transaction tax is paid both on purchase and sale then the proceeds received on the sale of shares would be exempt from tax. Else, the long term capital gains would be taxable at 20% (plus applicable surcharge and education cess).
Further, with respect to the donation that you are planning for, the amount contributed shall be eligible for deduction to the extent of 50% or 100% depending upon the organisation for which donation is made, subject to the maximum of 10% of total income.
The author is tax partner & India mobility leader, EY. Send your queries to firstname.lastname@example.org