I have one query relating to housing loan-if the property i.e., house is purchased in the name of husband and wife on loan which too has been applied to by both; will the wife’s loan account installment paid by her husband claimed by him as deduction both for interest as well as Sec. 80C for principal component? And up to what limit?

?Dhara Mistry

From the information provided, it seems that the house property is purchased in joint names and the loan too is being applied for jointly. It is not clear whether the equity portion (most loans are available up to 75% to 80% of the property value, the balance being contributed by the owners) is also being contributed equally or only the husband is putting in that amount. In any case, deduction will be available in proportion to each person’s stake in the property taking into account own equity as well as the loan component. However, if the husband pays the wife’s share of EMI, the wife will not be entitled to the deduction. Assuming that this is your only self occupied property, the maximum deduction for interest that may be claimed by each individual is Rs. 1.50 lakh.

If one is invested in a debt fund with the dividend payout/reinvestment, the following arises-the dividends are tax free as the dividend distribution tax has been paid. Now suppose the individual chooses to exit the fund, either at a higher or lower NAV than he bought it at, is he liable to Long / Short term Capital Gains or loss, as may emerge due to difference of purchase / sell NAVs ?

?Cdr TR Mogul IN Retd

Yes, regardless of the option chosen, there is short or long term capital gains tax incidence upon sale of mutual fund units. In the case mentioned by you, there may arise a notional loss on account of the dividends already received.

I was awarded by ESOP by my company. Details are as follows Vesting date : 02 September 2008 Shares credited to my demat account after 9th April 2009 I do not know the date of allotment.

I gave company the cheque dated 05.02.09 for my option. Is this my exercise date?

Now in the above case which way will I be taxed – will it be FBT or will I have to perquisite tax?

?Gagan Bihari Mohanty

You can check with the company as to the date when the shares were transferred in your name. More often than not, the exercise date is the same as the date on which shares get allotted. You state that you have given a cheque dated Feb 2008 but do not know the exact exercise date. You will appreciate that this information has to be got at your end only. In any case, if on your ESOPs, FBT is payable, the company will do the needful. Again, you can check on the same. If not, then the company will deduct tax at source through payroll.

My grandfather’s estimated income from all sources (pension, interest from FDs, interest from Post office savings, LIC, etc) is Rs 2,90,000 for the year 2009-2010. He is investing Rs 5000/- PM through SIP to SBI Magnum tax gain scheme. His age is 80 years. He has a PAN and has been filing tax returns every year. He feels that he does not need to file tax returns as his income after deducting Rs.60000 investment is less than the exemption limit of Rs 2.35L. Is this true?

?Anoop

It is the gross income before availing of any deductions that needs to be considered for the purpose of filing tax return. In your grandfather’s case, the same is Rs 2,90,000 and since this is more than the basic exemption of Rs 2.40 lakh (and not Rs 2.35 lakh), he needs to file a tax return. It will be a nil tax return on account of the Sec. 80C exemption, nevertheless, it needs to be filed.

A family member wants to sell off a property which he has owned for more than 10 years for about 50 lakh. Will the proceeds of the sale be taxed for capital gains (if yes, on what basis) and if he needs to avoid that, can he re-invest in some other property or bonds or such? What are other options for investment to avoid this tax?

?Hrishi Parandekar

Yes, long term capital gains tax will be payable. The cost of acquisition will be indexed to adjust for inflation. Inflation indices for capital gain calculation purposes are released by CBDT each year. Such indexed cost will be reduced from the sale value to arrive at the capital gain figure. The tax is 20% of the capital gain.

This tax can be saved by either investing the capital gain amount (and not the tax amount) within two years in another property or capital gains tax saving bonds within six months of sale u/s 54EC.

There is no other investment that can save tax on capital gains.

?The authors may be contacted at wonderlandconsultants@yahoo.com