Your Queries (Income Tax): Long-term capital loss on NCD can be set off against long-term capital gain

Capital gain or loss can only arise when there is a ‘transfer’ of capital asset. Fixed deposits made with an NBFC cannot be transferred for a consideration.

Unadjusted loss, if any, can be carried forward to the following eight assessment years.
Unadjusted loss, if any, can be carried forward to the following eight assessment years.
By Chirag Nangia

I was a retail investor in fixed deposit and NCD of an NBFC whose debt resolution process concluded recently. My FD of Rs 3 lakh was made in July 2017 for 48 months but I received only Rs 73,000 in Sept 2021. I also had been allotted NCDs of Rs 3.28 lakh in their IPO in August 2016 whose maturity was due in August 2019 and I received Rs 1.6 lakh in September 2021. Can I claim a long-term capital loss?
—Hardeo Singh
Capital gain or loss can only arise when there is a ‘transfer’ of capital asset. Fixed deposits made with an NBFC cannot be transferred for consideration. There are no provisions under the Income Tax Act for claiming loss of deposits in case of insolvency of a non-banking finance company. The amount of loss suffered by you on deposits must not be claimed as a deduction and should be construed as a dead loss. Further, as the listed NCDs were held by you for a period exceeding one year, the loss in respect of NCDs will be deemed to be “long-term capital loss”. Such loss can be set-off against long-term capital gains. Unadjusted loss, if any, can be carried forward to the following eight assessment years.

Is availing of a home loan to save tax a sound decision? I exhaust everything under 80C and invest under NPS.
—Hitesh Bathija
A deduction up to `1.5 lakh is permitted under section 80C on account of principal repayment of home loan taken for purchase/ construction of house property. In addition, taxpayers can claim a deduction in respect of interest borrowed for acquisition, construction, repair or reconstruction of a house property from the income computed under the head “house property”. In the case of a let-out property, there is no monetary cap on the amount of deception.

Deduction of interest in respect of 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 period 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.

The writer is director, Nangia Andersen India. Send your queries to fepersonalfinance@expressindia.com

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