My flat is being financed by IDBI bank at Bhopal and I am now planning to have another flat of a bigger size at Indore financed from HDFC bank. Now what will be my tax exemption? And will it be on both of the loans or it will be only on the previous one, or it will depend on my priority on which I want to take a tax rebate?

My previous flat is now in use by my dependent parents.

?Ritu

As per the Income Tax Act, for any tax payer, one house property is exempted from tax. Also, the interest deduction on such a property is limited to a maximum of Rs 1,50,000. The second house property onwards is taxed on a notional rent basis (even if the same is not given out on rent). Simultaneously, the full amount of interest paid by the tax payer can be claimed as a deduction without any limit. So in your case, any one property, either at Bhopal or at Indore, can be claimed as exempt by you. The second other property will be subjected to tax with the full amount of interest deductible.

My company reimburses my local conveyance, travel and other related expenses; boarding, client entertainment expenses, etc. I submit the original bills to the company for claiming this reimbursement. Can I know:

1) If the reimbursed amount is taxable or exempt

2) The maximum amount exempt, if applicable

3) Do I need to submit supporting for the claim (note: the documents have already been submitted to the company- nothing is available with me at this stage)

?Nanavaty

None of these items as specified by you are taxable for you. It is your company that is supposed to pay Fringe Benefit Tax (FBT). As far as you are concerned, nothing is taxable.

I have bought a house some years ago, which is jointly owned by my parents. I am a co-applicant in it. Can I claim tax benefit on interest paid? I am already claiming HRA. If yes then how do I go about it?

?Nityanand

It is not clear when you say that you have bought a house that is jointly owned by your parents. It seems that from your query that the house is in your parents name and you are a co-applicant for the loan. The interest deduction is available for property purchased using housing finance. If you are claiming the HRA deduction, it implies that you are renting the property from your parents. If so, then how can you claim tax benefit on interest? That is paradoxical

If I deposit money in my daughter’s PPF account, would that be counted as gift money OR would there be any tax liability on that?

?Sadashiv Ghag

Whether you give money to your daughter and she deposits it in her PPF account or whether you make a direct deposit in her PPF, either way it will be considered as a gift from you to your daughter and there would be no tax on this transaction. This is because as per the Income Tax Act, gift to relatives is tax-free.

I plan to invest in equity mutual funds. Can I invest in two or three funds at a time and then shuffle the money from existing funds to another, after a period of one year? Is this option viable to increase the value of money as there is no tax on the transactions as long-term gains are tax-free?

?Sandesh Dhuri

Yes, though long-term gains are tax-free, this method is in fact liable to decrease the value of your money. The only thing you will achieve by shuffling the funds within one year is to pay the agent his commission and the new funds their loads. Moreover, what value will the new funds give you that the old funds cannot? The only way to make money in mutual funds is to stay invested over the long-term. Choosing of the fund is important but once chosen, stay with it.

Our mother expired in 2008 without a proper will. A family settlement has been executed by our family members. Our problem is that an Income Tax Refund of Rs 31,104/- for AY 2006-2007, has not been refunded to our mother during her life time, and now when the refund voucher, if sent, will be in her name. What should the family do so that this money can be claimed and utilised by us. Four family members have signed the family agreement.

?Vidya Sharma

Normally, the bank account of a deceased person is continued for some time to enable handling of money received after death. Yes, it is not strictly proper to do so for obvious reasons.

The alternative is a little complicated. You can open a new bank account in the style — “Estate of Mrs xxxx (your mother’s name)”, that can be operated by a person authorised by the other family members. You can thereafter operate this account for collecting funds into the account and distributing funds to the family members.

The authors may be contacted at

wonderlandconsultants@yahoo.com