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Is the amount paid towards water tax and seweragetax every year to the municipality or corporation allowed to be deducted from rental income from house property for income tax purposes —while arriving at taxable rental income?
V.K. Ramadesikan
While computing the taxable house property rental income, deduction can be claimed for municipal taxes paid during the year. In order to be eligible to claim the deduction, the following conditions need to be fulfilled:
The cost of municipal taxes should be borne by the property owner (that is, if these taxes are recovered from the tenant, deduction is not permitted) and such taxes should be paid during the year. Municipal taxes that are due but not paid during the tax year cannot be claimed as a deduction. If water and sewerage taxes are paid to separate board and not levied by municipality or corporation, the same cannot be construed as municipal taxes.
I am a resident senior citizen above 60 years, with no income stream. Recently, I sold land and building that was purchased before 2000-2001. The long term capital gains after indexation was ₹14 lakhapproximately, which would be my only income in the Assessment Year 2024-25. Since I have no other income, I can avail of the basic exemption limit and my tax liability would be around ₹1.35 lakh. However, my Chartered Accountant paid advance tax of around ₹2.95 lakh which seems to be a mistake as he didn’t take into account the basic exemption limit. Can I claim ₹1.60 lakh additional tax paid by mistake?
Nishant
As a resident individual over 60 years of age, you are not required to pay advance tax — provided you were not carrying on any business or profession during the tax year. Since you have no other income, long term capital gains will be reduced by the basic exemption limit (₹3,00,000 for senior citizens) and the balance of ₹11,00,000 alone will be subject to tax. Upon successful processing of your tax return, excess tax paid by you would be refunded. It is essential that the bank account mentioned for refund should have been pre-validated in the income tax portal.
The author is Partner, Deloitte India
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