The Hindu Business Line : Joint loans, double deductions?

If both, you and your wife, are the actual owners of the property, each one of you will be able to claim the deduction with respect to the interest on the housing loan.

The limit of Rs 1,50,000/- will be reckoned with and each one of you can claim a deduction up to this maximum limit with respect to the interest.

I had taken an educational loan and fulfilled the conditions specified in Section 80E for the claim of deduction.

In the financial year 2005-06, assessment year 2006-07, I had given the particulars of the repayment of the loan and the interest payment thereon to my employer who had taken the same into account in determining the tax to be deducted at so urce on salary.

I now understand that only the interest on the loan qualifies and that the principal repayment does not qualify for the deduction. Can I now file a revised return withdrawing my claim of excess deduction under Section 80E? — Tushar

The deduction under Section 80E is available only if the following conditions are satisfied:

The assessee is an individual.

The assessee has out of his income chargeable to tax paid the interest, on the loan taken.

The loan is taken from a financial institution or a bank or an approved charitable institution.

The loan has been taken for the purpose of pursuing the assessee’s higher education.

The deduction is available for 8 assessment years commencing from the assessment year relevant to the previous year in which the assessee starts paying the interest. This provision is applicable from assessment year 2006-07 prior to which the deduction was allowed subject to a limit of Rs 40,000/- both in respect of principal and interest.

If your interest payment is therefore less than Rs 40,000/-, the deduction that has been claimed by you would be in excess of what can be allowed as a deduction. It would be advisable for you to file a revised return and withdraw your claim for the deduction which you otherwise are not eligible for.

A revised return you may note can be filed at any time before the expiry of one year from the end of the relevant assessment year or before completion of assessment whichever is earlier.

In your case one year from the end of the relevant assessment year expires on March 31, 2008.

I purchased a house in Delhi through a housing loan. I have been claiming the tax benefits on the repayment of loan and the payment of interest.

I now propose to gift this house to my parents and purchase another property by availing another housing loan. Can I get the tax benefits on the housing loan taken for both the house properties? — Rajesh Kalra

You can get the tax benefits only in respect of the repayment of principal and payment of interest on the housing loan that you propose to take.

It will be appreciated that once you have gifted the existing house property to your parents, you will no longer be the owner of the property and though you continue to pay the EMI on such property which is gifted, the tax benefits on the same cannot be claimed since you are not the owner of the property.

I purchased a house in Gurgaon in March 2007. Can I claim any tax benefit on the stamp duty and registration charges paid for the purchase of the said house?

If so, what is the limit up to which I can claim the same and what are the documents that are needed for the same? — Biju Benjamin

A deduction can be claimed by you in respect of the stamp duty and registration fee for the purpose of transfer of house property to you.

This deduction can be claimed under Section 80C (2)(xviii)(d). The claim for deduction will be subject to a maximum of Rs 1,00,000/-. You may note that this limit of Rs 1,00,000/- will be the aggregate amount of deduction that you can claim in respect of various payments and investments which are referred to in Section 80C.

Is interest from a savings bank account taxable?

If so, can the interest paid to the bank on a loan taken from the bank be deducted against such interest from the savings bank account?

I have done some trading in commodity futures and can the loss from the same be set off against the gain? — Prabit

Interest from savings bank account will be chargeable to tax as income from other sources.

You may not be able to get a deduction in respect of interest paid on a loan taken from a bank since what is permissible as a deduction is only interest expenditure which can be said to be incurred for the purpose of earning the interest income.

Apparently the interest expenditure is not incurred by you for earning the interest from the savings bank account and hence will not qualify for deduction.

A transaction in the commodities market without delivery will be treated as a speculative transaction.

A loss from a speculative transaction can only be set off against profits from speculative transactions and the balance which cannot be so set off can be carried forward and set off within four assessment years immediately succeeding the assessment year in which the loss was first computed.

You cannot set off such speculative losses against income from any other source or head.

(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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