ax Query: Can You Split Rental Income With Your Wife to Reduce Your Tax Outgo?
l My wife and I have a commercial property which is on rent. I am retired and my total income including rent is about Rs 10 lakh a year. Do I have to pay tax on the rent received and can I split the rent between me and my wife to save tax? —Shubham Gupta
You can split the rental income with your wife to optimise your tax liability only if she is a legal co-owner of the property and has financially contributed to its purchase. The law allows co-owners to be taxed individually on their respective share of rent, if their ownership shares are definite and ascertainable. However, if you paid the entire purchase consideration yourself and merely added your wife’s name to the property deed for convenience, you are deemed to be the sole owner for tax purposes. In this scenario, clubbing provisions may likely come into existence. To legally split the rent, you must possess valid documentation proving her financial contribution to the property’s acquisition.
l I have received some dividends from Infrastructure Investment Trusts (InvITs) and stocks. Do I have to pay tax on them at slab rate?—Ashok Dua
The taxability of your dividend income depends entirely on its source. For regular equity stocks, dividends are fully taxable and will be added to your total income under the head “Income from Other Sources,” taxed at your applicable slab rates. Conversely, distributions from Infrastructure Investment Trusts (InvITs) demand a more segmented tax analysis. InvIT payouts typically comprise interest, dividends, and repayment of capital. The interest component is always taxable at your slab rate.
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The dividend component’s taxability depends upon the Special Purpose Vehicle (SPV) under the InvIT. If the SPV has opted for the concessional corporate tax regime, the dividend is taxable at your slab rate. Also, if the SPV has not opted for this regime, the dividend is tax-exempt in your hands. Refer to the annual tax distribution statement provided by your InvIT to accurately classify and report these components.
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l I had taken an education loan of Rs 5 lakh for my son two years ago. I did not claim any tax benefit. I cleared the entire loan last year. Can I claim tax benefits now?—Shubham Naudiyal
Yes, you can claim tax benefits for the entire interest paid during the financial year if you opt for the old tax regime. You can claim the full interest paid last year while filing the ITR. Additionally, tax benefits can only be availed for a maximum of eight consecutive years starting from the year repayment begins, or until the interest is fully paid off, whichever is earlier.
The writer is managing partner, AKM Global, a tax and consulting firm. Send your queries to fepersonalfinance@expressindia.com
Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Investors should assess their financial goals, risk appetite and consult a qualified financial advisor before making investment decisions.
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This article was first uploaded on June five, twenty twenty-six, at thirty-one minutes past eleven in the night.
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