Tax payable on rental income may not be the rent charged

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: capital gains, which of the three dates (date of allotment, date of registration or date of possession) would be taken as the date of purchase?

2. All tax benefits under section 54 seem to be for long term capital gains, Is there any exemption/benefit under any section for short term capital gains of a residential property?

Under section 54, we can reinvest the capital gains in another residential property one year before the date of sale. So is it possible to do that investment by taking a loan (since I don't have the money unless I sell my old flat) in a joint property or do I need to purchase property independently? Also, can I use my sale proceeds from my old flat for any purpose, since I have already done the investment by taking a loan?

—Ravi Raj

The answers to your questions are in the positive. Yes, you can take a loan to invest in the new property and then sell the old property and use the proceeds any which way you desire. There need not be any one-to-one correspondence or direct link between the sale of a property and the funds used to buy another property to save on the capital gain.

I own a house for which my interest component on loan is about Rs 1.90 lakh p.a. I have rented out the place for Rs 12,000 p.m. I stay in another rented apartment. Under the circumstances can I claim loss from the house rented out by me as deduction against my salary income?

—Rajat Kaul

Computation of tax on house rent is a complicated matter. It is better to employ an accountant to file the tax returns if you have rental income.

Tax payable on rental income may not be the actual rent charged. It depends upon several factors like i) Municipal Ratable Valuation and the place where the property is located, such as Delhi, Chennai, Mumbai, Kolkata, etc, ii) Fair Rent assessed on the basis of rents fetched by similar properties in the neighbourhood iii) Standard Rent applicable to those cities under the Rent Control Acts of respective states, iv) Actual Rent and v) Unrealised and irrecoverable rent.

You would get first a deduction from the lease rental of municipal taxes paid and thereafter a standard deduction of 30%.

The interest payable on a housing loan is also deductible.