Financial Daily from THE HINDU group of publications
Sunday, Aug 07, 2005
Financial Daily from THE HINDU group of publications Sunday, Aug 07, 2005 |
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Investment World
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Income Tax Columns - Tax Talk Can tax benefit be claimed for expenditure on renovation? T. Banusekar
I have spent a further sum of Rs 1 lakh out of my own funds towards renovation and painting of the house. I presently stay in this house. Can I claim tax benefits on the interest and principal repayment of the housing loan? Can I claim any tax benefit in respect of expenditure incurred for renovation of the property? S. Narayana Rao Reply You can claim the tax benefits in respect of the principal repayment of the housing loan and of the interest on the housing loan. If the property is self-occupied, the annual value of the property would be taken as nil and you cannot claim any tax benefit in respect of the expenditure on renovation of the property. Query My daughter has been suffering from epilepsy for the last 18 years. She has completed her degree despite this. I have incurred a substantial expenditure towards her treatment. Can I claim income tax benefits in respect of the expenditure? K. V. Ramamoorthy Reply You cannot claim deduction under the Income Tax Act in respect of the expenditure incurred on your daughter's treatment. Query I have invested in REC bonds for the purpose of claiming exemption on capital gains. Is interest from the bonds be taxable? Praveen Reply The interest from the bonds will be taxable as income from other sources. Query I have been working for a software company for the last 13 years. I took a housing loan in 2002 and constructed a house at Chennai. I have been paying the EMI and have been claiming the tax benefits on the principal repayment and interest on the loan. I have shifted from Chennai to Hyderabad, where I have rented accomadation. Can I get tax benefits in respect of the rent as well as the principal of the loan and interest paid towards it? Is it compulsory for an employer to deduct tax at source on salary? Is it possible for an employee to pay the tax on his own either during the course of the year or while filing a return of income? V. Srinivasan Reply Whether a property is self-occupied or let out or is deemed as let out, interest on capital borrowed for the purchase of the same could be claimed as deduction. The principal repayment will also qualify for deduction under Section 80C. This will be true even if the property is vacant. It is only that if a property is self-occupied that the deduction in respect of interest will be subject to a ceiling limit. Your question should, therefore, be whether the property at Chennai can be treated as self-occupied in which case the annual value will be taken as nil. A property can be treated as self-occupied if:
If the property at Chennai is vacant and you are not able to occupy it due to your employment being at a different place, the annual value can still be taken as nil provided you are not deriving any benefit from the property and further provided that this is the only house owned by you. Section 192 of the Act mandates that every person responsible for paying any sum chargeable under the head salaries should deduct tax at source. Your employer will, therefore, have to deduct tax at source on the salary. It would not suffice if you were to pay the tax on your salary during the year or while filing a return of income. Even if you so pay the tax there will continue to be a default on the part of your employer for non-deducting tax at source on the salary. Query Is a broker required to deduct tax at source on the capital gains of an assessee earned from the sale of shares? G. Srinivas Reply There will be no requirement for a broker to deduct tax at source on the capital gains earned on sale of shares. If, however, the capital gain is earned by a non-resident, tax will have to be deducted at source by the person responsible for paying the same to the non-resident. The requirement to deduct tax at source in such cases on the payments made to a non-resident arises by virtue of Section 195 of the Act. Query My salary income during the previous year 2004-05 is Rs 3,50,000. I have also earned a short-term capital gain of Rs 50,000 and a long-term capital gain of Rs 1,20,000 in the year. The entire gain is on sale of shares after October 1, and securities transaction tax has been paid on the same at the time of sale. For the purpose of computing the rebate under Section 88, will the short-term capital gain and long-term capital gain be included as part of my gross total income. Manish Reply While the short-term capital gains will be included as part of gross total income, the long-term capital gains will not be treated as part of the gross total income. The long-term capital gains will be exempt under Section 10 and will not form part of gross total income. Short-term capital gains will, however, be a part of gross total income though it will be taxed at 10 per cent as provided for in Section 111A of the Act. You will be eligible for the rebate under Section 88 since your gross total income would only be Rs 4 lakh.
Mail your queries to taxtalk@thehindu.co.in or by post to `Tax Talk', Business Line, Kasturi Buildings, 859, Anna Salai, Chennai-600002.
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