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

T. Banusekar

MY SOURCES of income are as given in Table 1. These incomes relate to the financial year 2003-04. All the incomes other than the salary income and interest on bank deposits are computed after allowing all permissible deductions. Of these, the long-term capital gains are exempt under Section 10(36). I have invested Rs 70,000 in a recognised provident fund and Rs 30,000 in IDBI flexi bonds. Can I claim rebate under Section 88? If so, at what percentage? Am I eligible for standard deduction? If so, what is the amount that I can claim as standard deduction?

Rakesh Kumar

Reply

You can claim a standard deduction of Rs 30,000 as also rebate under Section 88 at 15 per cent.

Standard deduction that can be claimed under Section 16(i) is Rs 30,000 or 40 per cent of the salary, whichever is less, if the salary before allowing standard deduction does not exceed Rs 5 lakh. If it does, the standard deduction is Rs 20,000. So far as rebate is concerned, the 15 per cent rebate is available since your gross total income is Rs 4.61 lakh. This is arrived at as shown in Table 2.

Query

My wife took a housing loan for the purchase of a plot along with a partially constructed house on the same land. My wife was then employed with the LIC. The property was registered in her name only at that time. This was done in the financial year 2003-04. We have now made an application to LIC Housing Finance Ltd (LICHFL) for a take over of this loan already taken and also for an enhanced loan being made available. The application for this loan is made in the joint names of my wife and myself. The application for loan has since been sanctioned by LICHFL.

My wife now has no source of income and I would be repaying the principal and also the interest on the loan. Kindly clarify whether I can claim deduction in respect of 50 per cent of the interest paid to LICHFL and also of the rebate to the extent of 50 per cent of the principal repayment. Will I also be eligible to claim 50 per cent of the stamp duty and registration charge for registering the property as eligible for rebate?

Dinesan K.V.

Reply

The answer to this question will primarily depend on who is the real owner of the property. The real owner can claim the benefit of deduction in respect of interest and also the rebate under Section 88 in respect of the principal repayment of the housing loan and the stamp duty and the registration charges.

In your case, if you are 50 per cent owner of the property you can claim the deduction and rebates as indicated by you in the query.

If you are holding a lesser or higher share you can claim the deduction and rebate in that proportion. This will essentially depend on the understanding between your wife and you in relation to the ownership of the property.

Query

I am working in the State Bank of India. I constructed a house by using a housing loan from my employer in 1992. For this, I also took loans from co-operative credit societies. I subsequently took a personal loan (by way of over draft) in 2002 for repairs to the said property.

In September 2003 I prepaid the original housing loan taken from my employer. The loans payable to the co-operative credit societies and the personal loans are still outstanding. Will I get the benefit of deduction in respect of interest and rebate in respect of principal repayment for the financial year 2003-04?

A. Pratap Kumar

Reply

You can get the deduction in respect of interest for all the loans in the financial year 2003-04. Of course, the deduction in respect of loan taken from SBI would not be applicable after September 2003 when the loan was repaid.

Insofar as principal repayment is concerned, the rebate will be available in respect of the repayment of the housing loan taken from your employer, that is, SBI. The principal repayment to the co-operative credit society will qualify for rebate if the society is engaged in the business of financing the construction of houses.

The principal repayment of the loan taken for carrying out repairs will not qualify for rebate under Section 88. The amount qualifying for rebate and the interest qualifying for deduction will be subject to the limits provided in Sections 88 and 24 respectively.

Query

My wife is the owner of a plot of land. I propose to take a loan in my name and to construct a house on the said plot. Will I be able to claim the deduction in respect of interest on loan and also rebate on the principal repayment of the loan?

Biju Philipose

Reply

It would be possible for you to claim the interest as a deduction and also the principal repayment as a rebate. The law recognises dual ownership in respect of immovable property, that is, the ownership of land by one person and that of building by another.

In your case if you are to be the owner of the house you propose to construct though your wife may be the owner of the land, the benefit under Section 24 in respect of the interest on loan and also the rebate under Section 88 on the principal repayment will be available to you.

Rakesh Kumar

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

Stories in this Section
Quiz

Copyright © 2004, 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