Sir, We are 5 friends booked flat in pune with the builder in February 2014. Builder has taken 10 lakh from each as advance payment to reduce the per sq feet rate and thus the flat cost. But till date builder is saying that his project is in approval stage (i.e. after 4 years as well). So finally we all decided to withdraw the amount from builder. Builder is still saying here and there to handover the money but still we are hopeful that he will give the money with simple interest of 7-8%.
My question is I had given the money earlier from NRE account but Builder can not deposit the money to same NRE account as the same account is used for the deposit of foreign currency only. So deposit of refund amount with interest to normal saving account will cause any tax burden? So just want to ask, should I take one cheque in my favor or should I split the same in different amounts in my family peoples name so that I would not be taxed. Should I taxed on the initial payment of 10 lakh as well? or I will be taxed on interest amount only? How to avoid taxation in this scenario?
It is always best to take back money in your name and show the interest as income from other sources and pay the tax.
Thank you for advice. Sir but my question is whether the tax on principle amount is applicable? Will bank deduct tax on my deposited amount or I need to declare extra income in ITR which is purely interest