I am a 30-year-old housewife. I get a rental income of Rs 20,000. Which ITR should I file?

I am a 30-year-old housewife. I get a rental income of Rs 20,000 and have no other source of income. Which income tax returns (ITR) form should I file? Is rental income added to the income tax? Annually, I earn less than Rs 5 lakh. In that case, do I need to file ITR?

Name withheld

Reply by Maneet Pal Singh, Partner, I.P. Pasricha & Co:
Considering the case in hand, ITR-1 Form should be filed. However, it comes with a proviso. ITR-1 is filed when assessee holds only one house property and the total income during the year does not exceed Rs 50 lakh. Further, the assessee should not hold directorship in any company. If all these conditions are satisfied, then she can file ITR-1 Form. As asked in the query, rental income forms part of the total gross income of a taxpayer. Therefore, the same is to be offered to tax and disclosed under the head “Income from house property” under Schedule-HP in ITR Form. Furthermore, since the total rental income is only Rs 20,000 p.m., i.e., Rs 2.4 lakh annually. The income falls below the basic exemption limit. Hence, the assessee can go away without filing the ITR. However, in today’s time, filing ITR comes with several benefits listed below: -

1. Filing ITR can help a taxpayer allow carry forward of losses to future years. The same can be offset against one’s income & future income.

2. To check the creditworthiness of a loan applicant, financial institutions ask for the Income Tax Return of the applicant to be secure while disbursing the loan.

3. Sometimes, most embassies require ITR documents whilst applying for a visa.

Hence, even if the income falls below the basic exemption limit, then also it is advisable to assessee to file ITR to be eligible for the listed benefits above. The ITR thus filed would be called NIL Income tax Return.

However, the slab rate differs if the assessee is a resident or a non-resident. Since, in the present case the total rental income is Rs.2.4 lakh falls below the basic exemption limit of Rs 2.5 lakh, which is the same for both residents/non-residents. It would have no relevance.

Also, the assessee stance that the earnings are below Rs 5 lakh is of no importance here as the income is not taxable. Nonetheless, the assessee would have been eligible for a rebate of Rs 12,500 under section 87A. While filing ITR, the taxpayer should furnish the details pertaining to annual rent received/receivable, house tax/municipal taxes paid, name & PAN of the tenant, Interest paid/payable on housing loan, address & details of co-owner of the property (if any). Even if the taxpayer not falling under the income tax bracket wishes to skip filing ITR, he/she can do so as nothing legally will bind him/her.

(Views expressed by the expert are his/her own)