By Chirag Nangia
What are the tax benefits for availing a home loan?
A deduction up to Rs 1.5 lakh is permitted under Section 80C on account of principal repayment of home loan taken for purchase/ construction of a house. In addition, you can claim a deduction on interest borrowed for acquisition, construction, repair or reconstruction of a house from the income computed under the head “house property”.
Deduction of interest for self-occupied house property is up to Rs 2 lakh, which is reduced to Rs 30,000 if construction is not completed within a period of five years. Besides, you can claim a deduction of interest for pre-construction periods in five consecutive instalments, from the year in which the property is acquired or constructed. Although you may not be able to claim a deduction in respect of principal repayment of home loan on account of exhaustion of prescribed limit, you may still get benefitted by claiming deduction of interest element.
As I am planning to prepay my home loan, will I get any tax benefit?
Prepayment of home loan does not entail any specific benefits whereas benefit on repayment of home loan is provided. However, these benefits differ based on timing of repayment of loan, i.e., paid before or after the property is acquired. If repayment is made after acquisi-tion/ construction, the total principal amount paid in a financial year can be claimed as a deduction from gross total income under Section 80C before calculating net taxable income. Interest payment can be claimed as deduction under Section 24, up to Rs 2 lakh for self-occupied property provided construction gets completed within five years from end of financial year when property was purchased/ constructed.
I want to transfer some shares to the demat accounts of my daughter and NRI son as a gift. Should I execute a gift deed?
—S B Manhas
Since shares are considered “movable property”, it is not mandatory to execute a gift deed. However, in order to create a legal record, it is best to execute one. An acknowledgement may also serve the purpose. Further, capital instruments can be transferred to NRI by way of gift subject to satisfaction of RBI rules.
I am a salaried employee and invest in the stock market. I made some capital gains in August this year. Which ITR form should I file next year in July?
—K L Sridharan
ITR 1 is a simple form for resident individuals having total income up to Rs 50 lakh, having income from salaries, one house property, other sources (interest, etc.) and agricultural income up to Rs 5,000. Individuals having income under the head ‘capital gains’, cannot file ITR 1, and must report particulars of income in ITR 2. In the current assessment year, you may furnish ITR Form 1 instead of ITR 2, if you do not have income under the head capital gains.
The writer is director, Nangia Andersen India.
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