In case of a minor child, any income accruing to such minor child is clubbed in the hands of the parent whose total income is higher.
By Chirag Nangia
Q1. My son, who is 15 years old, earns Rs 30,000 interest a year from FDs. Will it be clubbed with my for tax purpose? —Mohit Arora
In case of a minor child, any income accruing to such minor child is clubbed in the hands of the parent whose total income is higher. Clubbing provisions in respect of the income earned by a minor child does not get attracted only where either the income is earned by a disabled child or income accrues to him on account of manual work or activity involving application of skill/talent. The interest income earned from FD by your minor son shall be taxable in your hands or your spouse’s hands whoever earns higher income.
Q2. I had booked a house in 2008 and have not got possession as yet. I have prepaid all my bank loan from my savings. If I get possession of the flat in my lifetime, can I get any income tax benefit? —Deep Gupta
Assuming that your flat is under-construction till date and hence the delay in taking possession. Any interest paid on the loan taken for purchase of house property before completion of its construction can be claimed as a deduction in five equal annual installments while computing the house property income starting the year in which the construction is completed. However, in case of self-occupied property, deduction on account of interest shall be limited to Rs 30,000 (instead of Rs 200,000) if the construction does not get completed within five years from the financial year in which the amount was borrowed. Though there have been favourable rulings by certain courts where the delay in completion of construction is not attributable to any default on the part of the home buyer, the matter remains litigative.
Q3. I am a retired executive. Do I have to inform the tax department if I purchase a flat for Rs 30 lakh from my own savings and retirement benefits —Arun Kumar Dayal
At the time of purchase of the property, you shall not be required to inform the tax department about the incidence of purchase. It is the responsibility of the registrar to report the purchase/sale of immovable property by any person for an amount exceeding Rs 30 lakh. Further, if your total income exceeds Rs 50 lakh in a financial year you shall be required to furnish a statement of assets and liabilities in the Income Tax Return wherein you shall be required to give the details of your property.
(The writer is director, Nangia Advisors LLP. Send your queries to firstname.lastname@example.org)