ITAT rejects Shah Rukh Khan’s contention to not pay tax on Dubai property

Bollywood superstar Shah Rukh Khan, who owns several properties across the globe, had asked exemption from paying tax on notional rent on his Dubai villa, saying he had filed return in India.

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But, the Income Tax Appellate Tribunal (ITAT) has rejected the contention.

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Khan had told the ITAT that under the India-UAE tax treaty, income earned from immovable property owned in Dubai is liable to be taxed in the UAE and, therefore, he must be exempted from paying the tax here in India.

The ITAT, in its answer, said that while he would need to pay the tax here in India, credit for taxes that he pays in the UAE, if any, would be allowed as per the law.

This decision will not only affect Khan but also several other taxpayers who have second home overseas, especially those under the jurisdiction of the Mumbai bench of the ITAT.

The I-T Act states that in case a person has two residential properties, only one can be treated as "self-occupied" and can be exempted from tax, the other one has to be taxed under the head "income from house property" based on notional rent.

A 30% standard deduction and municipal taxes paid on such property are allowed to be deducted from the value.

(Image source: Abu Dhabi)