The Hindu Business Line : Stamp duty deductibility

Recently I took a loan from a bank to purchase a flat in Bangalore. I incurred registration and stamp duty of around Rs 80,000. Is this amount deductible under Section 80C or otherwise eligible for some other tax relief?

Gowri, Bangalore

These two are specifically covered by Section 80C as being eligible. Go ahead and claim these as deduction. But remember the overall limit under this Section is Rs 1 lakh, including for contribution to recognised provident fund, public provident fund, etc.

Assessment of NRI

I am an NRI living in Hong Kong. Last year I opened a PIS (Portfolio Investment Scheme) account for purchase of shares of Indian companies. Should I apply for PAN (Permanent Account Number)? My bank deducts TDS on gains.

What about on loss of shares? How can loss be adjusted? I purchased shares for making average price, so when I sell shares, the bank deducts TDS on gain but does not adjust loss. As per SEBI's advise in May 2006, I had to apply for PAN. Is it necessary to file return in India and/or apply for PAN?

Ashok Surekha, Hong Kong

You are required to apply for PAN if your total income is more than the tax-free amount. There is a special scheme of assessment for NRIs enshrined in Chapter XII-A containing Sections 115C to 115-I, wherein an NRI need not file a return if he volunteers to come under its purview.

It is an optional regime, the one that would not suit you because under the normal rules long-term capital gains earned through bourses on shares is tax-free provided securities transactions tax has been paid on the transaction whereas this chapter imposes a 10 per cent tax thereon.

Similarly, under Section 111A, on short-term capital gains, there is a flat 10 per cent tax provided securities transactions tax has been paid on the transaction, whereas the special regime contemplates normal slab rates on such gains. You will have to obtain PAN if your total income is above the tax-free limit. The bank is not adjusting the loss for the simple reason that Section 195 pursuant to which it is deducting tax does not give it this freedom explicitly.

In my view, this freedom must be given in cases such as yours because under PISs the bank has the complete details as to cost, the holding period, etc. Be that as it may, till the law is amended in your favour, you have no choice but to file a return and obtain refund of excess tax thus paid. Those interested in trading in the Indian bourses have to comply with the SEBI's diktats. If it has mandated all the market participants to have PAN, so be it.

(ASK! Send in your queries to ask@thehindu.co.in.)

http://MentorQA.blogspot.com

S. Murlidharan

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