Your taxes

I have taken a housing loan from a bank. Now I plan to repay the housing loan by taking a loan from my Hindu Undivided Family (HUF), where I am the Karta (patriarch). I plan to pay interest to my HUF. Can I claim a deduction on the interest paid to my HUF under Section 24(b)?

Santhosh H

A deduction of interest payable on the home loan can be claimed under the head, “Income from house property”. According to the provisions of Section 24 of the Income Tax Act, 1961, a deduction of interest payable − up to a maximum of ₹1,50,000 − can be claimed during a year in the case of self-occupied properties where the house was purchased or constructed within three years from the end of financial year in which capital was borrowed. In case the property is let out or deemed to be let out during the year, interest actually payable during the year can be claimed from the annual rental value of the house property. The deduction will be subject to a certificate from the lender specifying the interest payable during the year on the capital borrowed.

In your case, you can claim deduction of interest paid to your HUF provided that you obtain a certificate from the HUF specifying the interest payable during the year. Please note that the HUF would need to report the interest earned as income in its income tax return.

I have given my house on rent to a company, for which I will receive ₹1,95,000 for the year ending March 31, 2015. The company wants to deduct TDS at 10 per cent on the total sum. Kindly clarify whether TDS is applicable on the total sum or on the sum exceeding the limit of ₹1,80,000.

-DRG Sarma

As per the Income Tax Act, 1961, any person that is not an individual or a Hindu Undivided Family and is responsible for paying rent for the use of land and building to a resident shall deduct tax at source at the applicable rates at the time of credit of such income to the account or at the time of payment, whichever is earlier, provided the rent paid during a financial year (April 1 to March 31) exceeds ₹180,000.

In your case, the company to whom you have given your house on rent shall deduct tax at 10 per cent on the total sum of rent paid of ₹1,95,000. The credit of the tax deducted at source can be claimed by you at the time of filing of your income tax return. In case you want the tax to be deducted at a lower rate, you will have to approach your income tax officer for the necessary certificate in this regard.

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