No wealth tax on house let out for over 300 days in a year

Updated: November 23, 2014 11:25:07 PM

The capital gain on sale of jewellery is subject to tax as per Section 45 of the Income Tax Act...

Last month, I sold some gold jewellery that I had purchased in 2010. What are the tax implications?
—Anuj Seth
The capital gain on sale of jewellery is subject to tax as per Section 45 of the Income Tax Act,1961 (Act). As the jewellery has been held by you for over 36 months, it is a long-term capital asset, which is liable to tax at 20.6%. You would be eligible for indexation benefit. The cost inflation index for FY15 is 1,024. If your basic exemption is not exhausted by any other income, the long-term capital gain shall be reduced by the unexhausted basic exemption and only the balance will be taxed at 20.60%. Further, you can avail benefit available under Section 54EC/54F on reinvestment in specified assets, subject to conditions.

I am a salaried employee with a private bank in Mumbai. In FY14, I incurred a loss under the head Income from House Property and short-term loss on sale of shares. Is it necessary to file a return before the due date to carry forward such loss?
—Gopal Radhakrishnan
As per the Act, you can set off the losses from house property income against salary income in the same year. (Setting off short-term capital loss against current year’s salary income is not allowed.) The balance loss from house property, if any, shall be carried forward for adjustment in the next financial year against Income from House Property.
Losses under capital gains cannot be carried forward for setting off against capital gains in the subsequent eight years if the return of loss is not filed before the prescribed due date, i.e., July 31, 2014. The said restriction does not apply where the losses are only under the head Income from House Property, and carrying forward is permissible for the subsequent eight years.
If you didn’t file your return before July 31, 2014, you will not be eligible to avail the benefit of carrying forward and setting off losses under the head capital gains.

This financial year, I spent some money repairing my residential house out of a loan from a scheduled bank. Will I get the R2- lakh deduction while computing the income from house property?
—Pranav Kaushal
The deduction of R2 lakh in respect of interest paid is available only in cases where the loan has been utilised for acquiring or constructing house property. It is not applicable where the loan has been used for repairs.
If the loan is taken for repairs or renewal of a house property, the maximum deduction on account of interest is R30,000.

I have two houses — one in Mumbai, which is self-occupied and another in Surat, which I rented out for all of Fy14. What is the wealth tax liability?
—Ramandeep Singh
Since the Surat house was let out throughout the year, it will not be considered as asset for wealth tax purposes. As for the Mumbai house, you can claim exemption for one house under Section 5(vi) of the Wealth Tax Act.

I bought a plot of land for R24,000 in May 1979 and am now planning to sell it. What will be the cost
of acquisition?
—Dhiraj Kumar
As per Section 55 of the Act, you may take R24,000 or the fair market value of the plot as on April 1, 1981, whichever is higher, as the cost of acquisition.
Note that as per Section 55A of the Act, where the assessing officer is of the opinion that the value adopted by the assessee as on 1 April 1981 is higher than the fair market value as on that date, he can make a reference to the valuation officer for determining the fair market value of the property.

The writer is founder of RSM Astute Consulting Group
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