The Hindu Business Line : Claiming deductions from two housing loans

I have now purchased another house, in which I now stay, with the help of another loan. The principle repayment and the interest payment on the said two loans are: For the first house, the interest is Rs 25,000 and principle is Rs 47,000. For the second house, the interest is Rs 1.7 lakh and the principle is Rs 22,000.

Will I be able to claim the principle repayment of the loan taken for purchase of both the houses, as eligible for deduction under Section 80C? — Sanjay Deshmukh

It appears that there should be no difficulty in claiming deduction under Section 80C in respect of the principle repayment on the loan taken for both the house properties.

A doubt, if at all, in this connection, may arise because of the use of the words “a residential house property” in Section 80C (2)(xviii) of the Act. It may, however, be noted that under the Section 13 of the General Clauses Act, the reference to singular will include the plural, unless the context otherwise requires.

Therefore, a safe view can be taken that deduction under the Section 80C can be claimed in respect of the principle repayment of the loan taken for both the house properties. You may, however, note that the principle repayment on a housing loan will qualify,

Only if the payments are made towards or by way of any instalment or part-payment of the amount, due under any self-financing or other scheme of any development authority, housing authority, housing board or other authority engaged in the construction and sale of house property on ownership basis; or

Any instalment or part payment of the amount due to any company or co-operative society of which the assessee is a shareholder or member towards the cost of the house property allotted to him; or

Repayment of the amount borrowed by the assessee from the Central Government or the State Government, or

Any bank, including a co-operative bank, or

The Life Insurance Corporation, or

The National Housing Bank, or

Any public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes, which is eligible for deduction under Section 36(1)(viii), or

Any company in which the public are substantially interested or any co-operative society, where such company or co-operative society is engaged in the business of financing the construction of houses, or

The assessee’s employer where such employer is an authority or board or a corporation or any other body established or constituted under a Central or State Act, or

The assessee’s employer where such employer is a public company or a public sector company or a university established by law or a college affiliated to such university or a local authority or a co-operative society.

In your reply through this column on September 17, 2006, you had stated that the short-term capital losses can be set-off either against the short-term capital gains or long-term capital gains.

You had, however, in a reply in this column on August 12, 2007, stated that where shares are sold through a recognised stock exchange and where securities transaction tax was paid at the time of sale, the loss, if any, can neither be set-off nor carry forward. Kindly clarify why there is a difference in your replies to the two queries? — V. Ganesan

In respect of transactions in shares, if the they are of such nature as to be charged under the head capital gains, the gains will be taxed at 10 per cent (as increased by the appropriate surcharge and additional surcharge), if the gain is short-term and will be exempt if the gain is long-term, provided securities transaction tax is paid at the time of sale. On the other hand, if no securities transaction tax is paid at the time of sale, the gain, if short term, will be charged at normal rates of tax.

While the gain, if long term, will be taxed at 20 per cent (as increased by the appropriate surcharge and additional surcharge).

You may note that a short-term capital loss can be set off either against short-term capital gain or long-term capital gain, while a long-term capital loss can only be set off against long-term capital gains. Both losses can be carried forward and set off only within a period of eight assessment years, immediately succeeding the assessment year in which the loss was first computed.

You may also note that the long-term capital loss, from sale of shares, can only be set-off against long-term capital gain or carried forward and set-off against long-term capital gain, if the gain is otherwise taxable.

In a case where the long-term capital gain is exempt as a result of the gain being from sale of shares through a recognised stock exchange, where the gain is exempt, the loss, if any, will also have to be ignored and cannot be set-off or carried forward and set-off.

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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