In the meantime, the price range 2019 had many bulletins that can impact the individual taxpayer. One of the measures announced turned into the idea to exempt tax levy on notional or deemed rent from second house property. While making the assertion, Piyush Goyal, in his budget speech, said, “Currently, income tax on notional hire is payable if one has a couple of self-occupied residences. Considering the problem of the center class having to preserve households at places due to their task, children’s education, care of dad and mom, and many others. I am offering to exempt income tax levy on notional hire on a 2nd self-occupied residence.” As per the idea, a 2nd residence property can be treated as ‘Self-occupied belongings’ if it isn’t always allowed. As consistent with present-day laws, a 2nd house asset lying vacant (now not set free) or utilized by own family individuals is considered to be rented out. Tax must be paid on notional hire earned from these belongings.
However, there’s no readability among professionals regarding the applicability of this concept and, therefore, its tax implications. One extra thing that must be stated is that while extending the advantage of self-occupied belongings to a 2D residence, finances in 2019 have also confined the most deduction that may be claimed on the hobby paid on housing mortgage. According to tax professionals, according to intervening time price range 2019 proposals, from FY 2019-20, the deduction available at the interest paid at the housing mortgage for both the self-occupied homes has been limited to Rs 2 lakh. Previously, individuals with a 2D house may want to deduct the hobby paid on the housing mortgage without financial restriction.
However, the total loss from the house belongings that might be activated turned into limited to Rs 2 lakh in a monetary 12 months. Any unabsorbed loss thatcould not be claimed inside the existing economic year bcanbe carried forward for eight evaluation years for set-off with future income. Post Budget 2019 proposals, as each home can be treated as self-occupied. Consequently, any unabsorbed loss will not be allowed to be carried forward. The query now arises whether or not the second house of a taxpayer can be mandatorily dealt with as self-occupied or can still be treated as deemed to be let loose relying on whether or not conditions for being termed as ‘self-occupied as per section 23(2) are met or now not. Chartered accountants have differing opinions in this regard. Chartered Accountant Naveen Wadhwa, DGM, Taxmann.Com, says, “A taxpayer’s second residence can still be considered as deemed to be let out if it does not meet any of the conditions designated below Section 23(2) of the Income Tax Act.
As per section 23(2), the cost of the house shall be taken as nil (i.e., the residence is handled as self-occupied for tax functions) if the proprietor utilizes the stated pad for his residential purpose or it could not be occupied via the owner because of his employment, commercial enterprise or profession at some other region. He has to reside at such a different locations in a rented house/house no longer owned with his aid. If any of the conditions is satisfied via the character, then the second house will be dealt with as self-occupied property. However, this could also be interpreted as the taxpayer has two homes. If no circumstance is happy as referred to in Section 23(2) in recognizing the second residence, then the second house shall be considered as deemed to let-out assets.” Corroborating his views, Shalini Jain, Tax Partner, People Advisory Services, EY India, says,
“The Interim Budget 2019 seeks to provide a remedy to the class of taxpayers who must pay tax on second house property utilized by parents to stay in or lying vacant. Those taxpayers will no longer need to pay tax on notional rent on the second asset if it qualifies as a self-occupied house asset consistent with Section 23(2) of the Income-tax Act, 1961. As in step with the provisions of this phase, a house property may be considered self-occupied if the residential property is occupied by the taxpayer for his house, or it couldn’t be settled by using the taxpayer due to his employment, business, or career in some other vicinity. He had to reside in that different area in a belonging which he doesn’t always own.
Hence, if either of the situations is not satisfied for an asset that isn’t always rented out, such residence property could no longer be considered self-occupied – it would be considered deemed to be set free. However, if either of the two conditions is glad, the taxpayer will be required to disclose each home as self-occupied and would no longer have the option to recollect both of the houses as deemed to be let loose.” Jain similarly explains this with an instance. “Suppose Mr. A owns a home in Delhi that his own family occupies. Mr. A is working in Mumbai, dwelling in another residence he owns. Mr. A can claim the best one-house assets as the self-occupied and notional lease is taxable for the second residential property.
As consistent with the proposed provisions, Mr. A may recollect both houses as self-occupied. However, the proposed conditions shall be beneficial if homes are obtained from own assets, and there may be constrained or no expenditure attributable to interest on housing mortgage or if the yearly market rent (the price at which investments are expected to be let loose) is better than the quantity of usual hobby expenditure. This is because the hobby deduction problem of Rs 2 lakh, which currently applies to simplest one self-occupied house belongings, will henceforth observe to both self-occupied residences collectively.” Taking an exclusive view, Abhishek Soni, CEO, Tax2win.A tax-filing company says, “Currently, if an assessee owns a couple of residences, then the provisions of notional rent observe even on the second one vacant house or place occupied with the aid of, say, parents.
