Normally, income from house property is taxable in the hands of the owner of the house property. However, in case where an individual transfers a property to a spouse, the individual is deemed to be the owner of the property transferred
I am a doctor. I am planning to donate certain medical equipment to a medical relief society. Can I claim tax deduction under section 80G?
—Praful Baid
One of the essential conditions for availing deduction under section 80G is that the donation should be of a sum of money. Donations in kind do not qualify for deduction. This is specifically provided in Explanation 5 to section 80G, which says “that no deduction shall be allowed under this section in respect of any donation unless such donation is of a sum of money”. Thus, you will not get deduction under section 80G for donation of medical equipment.
I am an individual falling under highest tax bracket. I earn rental income on a house property. If I gift this property to my wife, in whose hands the rental income shall be taxed?
—Jay Shankar
Normally, income from house property is taxable in the hands of the owner of the house property. However, in case where an individual transfers a property to a spouse the individual is deemed to be the owner of the property transferred (except in cases where the transfer is in connection with an agreement to live apart).
In the given case, as you are planning to gift the property to your wife, you will be deemed to be the owner of such property even after the transfer. Accordingly, rental income would be continued to be taxed in your hands.
I am planning to buy a residential property for the first time for my own occupancy by taking home loan. Apart from Rs 2 lakh up to which deduction is allowed for interest repayment, is there any other benefit for interest paid?
—Rahul Bohra
Over and above the limit of R2 lakh provided for a self-occupied property under section 24 (B) of the Income Tax Act, there is a further incentive in the form of additional deduction up to R50,000 for the first-home buyer availing home loans from any financial institution under section 80EE which has been substituted by the Finance Act, 2016. In order to avail this benefit, the following conditions should be fulfilled by the taxpayer:
* Loan should be sanctioned between April 2016 and March 2017.
* Amount of loan sanctioned does not exceed R35 lakh
* Value of the residential house property doesn’t exceed R50 lakh
* On the date of sanction of the loan, the taxpayer shall not own any other house property.
The above deduction would be available from FY 2016-17 and onwards. Further, a deduction to the maximum limit of Rs 1.5 lakh is also allowed under section 80C in respect of principal repayment of the loan taken from the bank or financial institution, stamp duty charges, registration fees incurred for registering the property with the registrar.
I have earned long-term capital gains on sale of a Pvt Ltd. Company shares. I utilized certain amount of sale proceeds for my son’s higher education and obtained the bank loan to buy a residential flat. Can exemption under section 54F be denied to me on the grounds that I have not utilised same sale proceeds to buy the new house and instead opted for borrowed funds?
—Manish Singhal
For availing the exemption under section 54F, it is not necessary that the same funds received on sale of shares must be utilised to purchase the new residential house.
The law only states that in order to avail the benefit of this section, amount equivalent to the net consideration should be invested in the new property within the time limit specified. Thus, you will be eligible for exemption under section 54F even if borrowed amount are utilised for purchasing the house property.
What are the various forms for filing personal income tax returns and their applicability?
—Vikas Dhawan
Applicability of ITR Forms for AY 2016-17
ITR 1 (Sahaj): For individuals having salary income, income/loss from one house property, income from other sources
ITR-2: For individuals and HUFs having income from any source including capital gain or holding foreign assets (but not having business income)
ITR-2A: For individuals and HUFs having only salary income, income/loss from house property and income from other sources.
ITR-3: For individuals and HUFs having a share as partner in a partnership firm by way of any interest, salary, bonus, commission or remuneration, by whatever name called, due to, or received by him, excluding the share of profit from the firm
ITR-4: For individuals and HUFs carrying out proprietary business or profession
ITR-4S: For individuals, HUFs and partnership firms having a presumptive business or professional income.
The writer is founder of RSM Astute Consulting Group