• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

T. Banusekar

I propose to purchase a flat. The possession of the flat will be handed over to me only in April 2007. If I were to take a loan for purchase of the flat, can I get any tax benefit in respect of the EMI paid during the construction period?

V. Mittal

Reply

If possession were to be handed over to you in April 2007, the interest which accrues up to March 2007 can only be claimed in five equal annual instalments beginning from the year in which the possession is handed over to you.

In your case the deduction can be claimed beginning from the assessment year 2008-09 (previous year 2007-08).

The principal repayment may, however, qualify for rebate/deduction in the respective years since for this purpose what is relevant is the actual payment of the principal.

Query

If I want to pay an exemption in respect of Leave Travel Allowance, should I produce the original tickets, to my employer or would it be sufficient if I were to give copies of them to my employer?

Anand Raj. V.

Reply

It should suffice if you give copies of the tickets to your employer. The exemption u/s.10(5) is available so long as there is an expenditure incurred on travel. What is important is the fact that the employee must have undertaken the travel and that he must be in receipt of Leave Travel Allowance. The proof of travel in the form of copies of tickets would be enough for your employer to take into account the exemption while deducting tax at source.

Query

I presently reside at Delhi where I am employed. I propose to take a housing loan to purchase a house at Meerut (U.P.). This loan will be taken by me jointly along with my father. My father is a retired government employee and he is getting pension from the UP government.

Neither of us has any loan towards housing which has been taken by us. I stay in a rented house in New Delhi. Can I claim the exemption in respect of HRA has also the tax benefits in respect of the housing loan?

Pankaj Tyagi

Reply

There should be no difficulty in your claiming the exemption under Section 10(13A) in respect of the rent paid by you at Delhi and also the tax benefits on the housing loan taken by you. You can claim the interest on housing loan as a deduction against the annual value of the property and a rebate/deduction in respect of the principal repayment of the housing loan.

The annual value of the house can be taken as nil provided you do not own any other house property and further provided that you do not derive any benefit from the house property that you have purchased at Meerut.

Query

For the previous year 2004-05, my gross salary is Rs 1,25,000.

After taking into account the standard deduction of Rs 30,000, my salary income comes to Rs 95,000. I do not have any other income. As my net salary after standard deduction is less than Rs 1,00,000, I understand that there will be no tax payable by me. Is this correct?

Anand

Reply

Your understanding that you will not be liable to pay tax in the assessment year 2005-06 (previous year 2004-05) is correct.

This will be so as your net salary does not exceed Rs 1,00,000 and further because you do not have any other income.

Query

My income from salary for the financial year 2004-05 is Rs 1,40,000. There is a short-term capital gain of Rs 20,000 that I have earned from dealing in equity shares. Securities transaction tax has been paid on the sale of the shares.

The short-term capital gain is therefore chargeable to tax at 10 per cent.

My gross total income is Rs 1,60,000 being the aggregate of the salary and short-term capital gains. Would it be possible to take a view that the short-term capital gain which is taxed only at 10 per cent and which is not eligible for rebate under Section 88 should be excluded in computing the gross total income for the purpose of determining the percentage of rebate under Section 88?

D. Majumdar

Reply

The short-term capital gain, though taxed at 10 per cent and though not being eligible for rebate under Section 88 will still form part of the gross total income for the purpose of determining the rebate under Section 88.

It may be noted that if the gross total income does not exceed Rs 1,50,000, the rebate under section 88 will be 20 per cent of the sums contributed/deposited while if the gross total income exceeds Rs 1,50,000, the rebate under Section 88 will only be 15 per cent.

We may also note that if the gross total income exceeds Rs 5,00,000, no rebate under Section 88 can be claimed.

Mail your queries to taxtalk@thehindu.co.in or by post to Tax Talk', Business Line, Kasturi Buildings, 859, Anna Salai, Chennai-600002.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Investment quiz

Copyright © 2005, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line