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Compliance Portal: Tax Liability for House Property

by | Apr 25, 2024 | Income Tax | 0 comments

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Important Keyword: House Property, Tax Liability, E-Verify, Income from House Property, Income Tax Compliance.

Compliance Portal: Tax Liability for House Property

Navigating income tax verification and taxation related to house property can be complex, but essential for taxpayers to ensure compliance with regulations.

Here’s a simplified guide to help taxpayers comprehend these processes:
  1. Income Tax Verification Issues: Taxpayers may encounter verification issues from the Income Tax Department (ITD) via SMS, calls, or emails. These issues typically arise due to:
    • Non-filing of Income Tax Returns (ITRs) for the given assessment year, leading to potential tax liabilities.
    • Mismatch in details provided by taxpayers and information received by the ITD for that assessment year.
    • Reporting of significant transactions during a financial year that appear abnormal compared to the taxpayer’s profile.
  2. Calculation of Income from House Property: Income from house property is calculated based on the annual value as per Section 23(1) of the Income Tax Act. The annual value is determined by:
    • Actual rent received or receivable for the property.
    • Fair market rent of the property if it were let out.
  3. Response Submission for Verification Issues: Taxpayers facing verification issues must submit a response promptly. Responses are to be submitted online through the compliance portal provided by the Income Tax Department (ITD).
Verification issue in the computation of tax liability on House Property
CodeDescriptionResponse
A1Total receipts as per taxpayer pertaining to the above informationAmount
A2Less: Amount relating to another year/PAN PAN year-wise list
A3Less: Amount covered in other informationAmount
A4Less: Exemption/Deduction/Expenditure/ Set off of LossExemption/Deduction wise list
A5Income/Gains/Loss (A1-A2-A3-A4)Computed

In the realm of income declaration, understanding the intricacies of property-related receipts is vital for taxpayers.

Here’s a simplified guide to help taxpayers comprehend these processes:
  1. Total Property Receipts (A1): Taxpayers need to declare the gross value of the property that can be let out. If no rental payment has been received, they can indicate the amount as 0, but suitable remarks should be provided.
  2. Income Related to Another Year/PAN (A2): If part of the income or receipts pertains to another person’s PAN or another assessment year, taxpayers must provide details accordingly in the PAN table.

3. Rectification of Repeated Coverage (A3): In case of any mistakenly covered amounts, taxpayers should mention them under the Remarks section of the previous table to nullify any repetition.

4. Exemptions, Deductions, and Expenditures (A4): Taxpayers must list all available allowances that are exempt, such as:

  • Amount of rent that cannot be realized under section 23.
  • Tax paid to local authorities as per section 23.
  • Deduction under section 24(a) at 30%.
  • Interest payable on borrowed capital under section 24(b).
  • Set off of Loss.
  • Others.

5. Self-Computation of Income (A5): Calculate the income from house property chargeable to tax using the formula A5 = (A1 – (A2 + A3 + A4)). If the computed income exceeds the minimum threshold of Rs. 2.5 lakh, taxpayers should ensure to file their Income Tax Returns (ITRs).

By understanding these concepts and accurately completing the income declaration, taxpayers can ensure compliance with tax regulations and contribute to a transparent and efficient tax system. It’s essential to fulfill these requirements diligently to avoid any potential discrepancies or penalties associated with property-related income.

Read More: Compliance portal: Tax liability from Sale of Immovable property

Web Stories: Compliance portal: Tax liability from Sale of Immovable property

Official Income Tax Return filing website: https://incometaxindia.gov.in/

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