India, March 16 -- A Mumbai flat owner reportedly paid no tax on around Rs.17 lakh of annual rental income by structuring the property as a genuinely jointly owned asset with family members. Since each co-owner had a defined share in the property, the rental income was split among them and taxed individually. As each person's share remained below the taxable threshold, no tax liability arose.

Here's a look at how rental income splitting works and the rules taxpayers must follow to ensure it remains legitimate tax planning.

If you co-own a property with a spouse or family member, you can divide the rental income among the co-owners, which reduces each owner's tax liability. Both co-owners can claim deductions separately, further optimisi...