Proposed change in income tax may hit homestay owners
income tax provisions could raise the tax liability of people who let out their property as homestay.
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It mandates that income from the homestay must be declared under house property and not as business income, which many property owners have been doing.
The move is aimed at plugging the loophole that house owners used to lower their tax liability. «The amendment will take effect from the 1st day of April, 2025 and will, accordingly, apply in relation to assessment year 2025-26 and subsequent assessment years,» as per the Memorandum to Union Budget 2024.
Experts say the move will adversely impact people who were giving out their house under companies such Airbnb, and they will not be entitled to other deductions. «The move would impact the taxability of such businesses and they would now be able to take advantage of only a few deductions, like standard deductions, deductions of taxes paid, and not all expenses for business,» Vivek Jalan, partner, Tax Connect Advisory, said.
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