Proceeds from sale of house held for over 3 years treated as long-term capital gain

Written by Suresh Surana | Updated: Jul 29 2014, 06:53am hrs
I work with an MNC for a CTC of R12 lakh. can i claim 80C benefit against home loan principal repayment in FY14, when the property was under construction

Prakash Sharma

Under section 80C, the borrower can claim deduction against home loan principal repayment subject to the condition that income from such property is chargeable to tax under the head income from house property. As under- construction residential property is not capable of generating any income, repayment of principal during construction is not eligible for deduction under section 80C. Only in the year in which construction is over and income from property is chargeable to tax can principal repayment be considered for deduction under 80C.

I bought an apartment in March 2004 and wish to sell it now. Where should i invest the proceeds to save tax

Subir Goswami

As the house has been held by you for over 36 months, the gain on its transfer will be treated as long-term capital gain. Accordingly, you can either avail tax exemption on reinvestment of capital gains in the purchase/construction of a residential flat (under section 54) within the specified period, or invest in bonds issued by NHAI or REC, which generally have a lock-in period of three years (under section 54EC).

I am a salaried employee with a manufacturing company. The company has given me some furniture for personal use. Do I have to pay any tax for availing this facility

Amit Prajal

Under the I-T Act, the use of movable assets belonging to the employer, by the employee or any member of his household, is treated as a taxable perquisite in the hands of employee. The value of the perquisite is calculated at 10% of the original cost of the asset as reduced by any charges recovered from the employee for such use. Thus, the taxable value of the perquisite, i.e., 10% of the cost of furniture, would be included in your salary.

I recently sold a residential flat for profit. I had inherited it in 2008 and my late father had purchased it in 2001. Will indexation benefit apply from the year in which I inherited it, or the year in which my father bought it

PM Prasad

When an assessee inherits a capital asset (a residential flat) from the previous owner, the cost to the previous owner is adopted as the cost of acquisition in the hands of the said assessee. The indexed cost of acquisition has to be reckoned by taking the cost inflation index for the first year in which the asset was held by the assessee.

In certain court rulings, it has been held that the indexation benefit shall be available even for the period of holding of such capital asset by the previous owner from whom the asset was obtained by means of succession, inheritance or devolution. Hence, you can claim indexation benefit from the year in which your father purchased the flat (i.e., 2001) based on the court rulings.

I own a residential property from which I earn rental income. I paid R10,000 in February 2014 towards total property tax payable of R20,000 and the remaining R10,000 was paid in July 2014. Am I eligible to claim deduction on the entire property tax, i.e., R20,000 while computing the income from house property in FY14

Suraj Gupta

Deduction in respect of property tax is permissible subject to the condition that it has been actually paid during the financial year. Property tax due, but not paid, during FY14 would not be allowed as deduction while computing the income from house property for FY14. Thus, you will be eligible to claim deduction of R10,000 only. However, property tax paid in July 2014 (i.e., R10,000) can be claimed as deduction for computing income from house property for FY15 even if it relates to past year.

* The writer is founder of RSM Astute Consulting Group

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