sekar (retd) 25 May 2012
I let out my flat in Mumbai to a close friend.The rent that we decided in view of our close association is Rs 10000 pm. the hsg society is stating that this is too low and have threatened to report it to the IT.
To my knowledge there is no guideline norm for rent but there are limits on purchase price.
Can I file a supplementary agreement for increased rent if they insist.
Now advise me on the issue. dt 25/5/2012
A V Vishal (Advocate) 25 May 2012
The agreement is between you both, whether to charge 10,000 or Re.1 is the understanding between the contracting parties and they cannot threaten you in such a manner, neither you should be cowed down by such threats, they cannot do a thing on the issue.
C. P. CHUGH (Practicing Lawyer) 30 May 2012
Renting at a value you feel appropriate, is your privelege and no one can force you to charge, which you do not wish to. Taxation of "Income from House Property" is different. Under the existing provisions of income tax act, income from house property is taxabale at a presumtive value for which the property can be fairly let out. In your case, if the fair market rent of the property is more than what you are charging from your friend, a complaint to income-tax department may lend you in problem because the AO would tax you on the basis of FMV of rent and not on the basis of rent actually received by you.
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