Home loan interest rates are a function of the outside economic environment

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: My questions are to do with capital gains. Recently, I have read that capital gains tax on sale of property can be saved by investing in NHAI bonds. First of all, what does NHAI stand for and where do you get the requisite application form for investment? Does the deposit receipt or whatever instrument they issue indicate the whole amount i.e. Rs 100 or it shows Rs 80 i.e. after the discount.

I am expecting some amount along with my other siblings from the sale of our ancestral property, which is nearly hundred years old. Will that also attract capital gains tax? Since I am a retired person, what is the way out that I can enjoy some amount and deposit the rest in NHAI? Please also note that presently I do not have any taxable income.

—ZA Qadri

Long-term capital gains tax may be saved by investing the capital gains amount in bonds under Sec 54EC of the Income Tax Act. Currently, two institutions, National Highway Authority of India (NHAI) and Rural Electrification Corporation (REC) are empowered to issue such bonds. The application forms for these bonds would be available with banks and other financial broking houses. The deposit certificate would depict the full amount invested. However, such investment saves the investor the capital gains tax, which is 20%. The sale of your ancestral property will attract long-term capital gains tax. Such tax liability will be in proportion to each inheritor's interest in the property. Therefore, provided your share of the capital gains is more than Rs 1.50 lakh (Rs 2.25 lakh if you are a senior citizen), then you may invest such additional amount in these bonds. Note that there is a ceiling of Rs 50 lakh per financial year for investment in these bonds.

I have taken a home loan for the purchase of my house. Currently, I have a lump amount and I was wondering whether to either prepay or increase my EMI so as to reduce the period. In case if EMI is required to be increased, then by how much ? I need your valuable suggestions please.

—Hitesh