I had booked a house under construction in 2005/06 and had made the full payment to the builder and the EMI has begun.

The builder had intimated that possession will be given in December ’08, but now has changed the date to June ’09.The property registration was done only in 2007.

Will this delay in getting possession in any way affect the opportunity for me to claim tax rebate on interest income? I understand if I claim the rebate on interest only after getting possession.

I remember reading somewhere that there is a 3-year time limit on the builder frame for giving possession. Just wanted to be clear on this point. ?Bindu

You are right in observing that the tax rebate can be availed of only after obtaining possession. There is no time frame as such in the law for handing over possession. That would be as per the agreement signed with the builder. For the interest that is paid by you prior to obtaining possession, tax deduction on the same can be availed of in five equal installments, beginning from the year in which you take possession. Note that in the case of self-occupied properties, the total limit on the current year’s interest, as well as the installment of past interest is capped at Rs 1.50 lakh.

Company XYZ Ltd is paying Rs 40,000 as yearly LIC premium for one of its employees. The employee has not been claiming a deduction of this Rs 40,000 u/s 80C in his computation of income. The company is paying FBT on the premium paid. This expense is debited to staff welfare expense in the company books. Please let us know whether on maturity, the amount received by the employee from LIC will be taxable in his hand.

?Sunanda

Any sum received under a Keyman insurance policy is not covered by Sec 10(10D) and consequently, such an amount is fully taxable in the hands of the recipient, unless it is received on the death of the insured person.

I have the following two questions –

1) My wife and I are joint owners of our house. Whether the loan repayment against housing loan under principle and interest component will be deducted only from the earning counterpart or otherwise?

2) Whether the mediclaim policy amount of Rs 15,000 will be inclusive of the Rs 1 lakh limit of saving or it will be directly deducted from the taxable salary?

? K.S Yadav

It seems from your query that it is you who own the house and your wife’s name has just been added as a second holder as a matter of precaution.

In this case, the deduction for loan repayment under Sec 80C, as well as that for interest will be deducted from your income. In any case, if your wife doesn’t earn, there is no significance of the tax deduction.

Q : My wife owns a house in her name.

Can I get a tax deduction by availing HRA i.e. can I submit rent bills for staying with my wife in her house and claim tax rebate?

? Tushar Pawar

You cannot pay your wife rent for staying under the same roof as her even though the house may belong to her. It is an established principle of income tax law that husband and wife cannot have a commercial relationship. If you pay her rent and claim the same as HRA deduction, the ITO might term it as a tax evasion transaction.

If I switch over from one equity scheme to another equity same in the same Asset Management Company without redemption within a year, what is the short-term capital tax applied.

?Anwar

A switch from one scheme to another within the same MF or even from one option to another is considered to be a transfer and provisions of capital gains would become applicable. The only exception is to switch from a dividend option to a dividend reinvestment option and vice versa.

The authors may be contacted at wonderlandconsultants@yahoo.com