By Amit Maheshwari
Apart from the home loan, I had taken a top-up loan last year. Will I get a tax deduction on it?
—Umesh Sehgal
Yes, you can claim tax benefits on your top-up home loan, but only if the funds are used for eligible housing purposes such as buying, constructing, or renovating a residential property. The interest paid on a top-up loan qualifies for deduction under Section 24(b) up to Rs 2 lakh per year for a self-occupied property and without any upper limit for rented property. Principal repayment on the top-up loan can also be claimed under Section 80C, but only if the loan is used for purchase or construction of a house. If used only for repairs or renovation, principal repayment is not eligible for deduction.
If I take an education loan of Rs 20 lakh, will I get tax benefits on the interest payments?
—Ashok Gupta
Under Section 80E of the Income-tax Act, 1961, an individual can claim a deduction for interest paid on an education loan, provided the loan is taken in their own name and they are the one repaying it. This deduction applies only to the interest portion of the EMI, not the principal. Therefore, if the loan is in your name and you are making the repayments, you will be eligible for the tax benefit on the interest paid under Section 80E. However, it is important to note that this deduction is only available for the old tax regime.
Can I set off long term capital gains from selling shares with loss in options trading?
—Abhinav Sagar
As per Section 43(5), profits and losses from options trading (F&O) are classified as non-speculative business income and must be reported under the head “Profits & Gains from Business and Profession”. Derivatives, including options, are not treated as capital assets for taxpayers, so any income or loss from such trading is not considered capital gains. Consequently, as per Section 72 of the Act, a non-speculative business loss (such as from F&O) can be set off against any income except salary, including capital gains (both short-term and long-term), in the same assessment year. Notably, long-term capital losses from shares can only be set off against long-term capital gains, not business income. Therefore, you can set off losses from options trading against long-term capital gains from shares in the same financial year. However, any unabsorbed business losses (Including F&O losses) can be carried forward and can only be set off against business income.
The writer is tax partner, AKM Global.
