My wife and I are repaying a housing loan including interest a sum of Rs 6,25,000/ per annum.( Rs 4,50,000 as principal and Rs 1,75,000 as interest. Both of us are tax payers. Please clarify the amount of exemption under I-T for both of us.

Madhusudhanan, e-mail

I take it that the interest and the principal are being paid by the two of you in equal shares, 50:50, and that the house is self-occupied for your residential use. In that case, half of the interest amount can be claimed as a deduction from the nil value of the house which is the starting point of computing income from house propertyBoth of you can claim a loss of Rs 87,500 each from income from house property which would abate against your incomes from salary or business or profession or against any income at all. Likewise, the principal amount to the extent of Rs 1 lakh each can be claimed under Section 80C as deduction from your respective gross total income. The maximum permissible deduction under this section is Rs 1 lakh.

What exactly is a wealth management scheme which is at the back of the Citibank employee-related scam?

Bhavana Mohan, New Delhi

Call it wealth management or portfolio management scheme – both target the high net worth individuals (HNIs). Banks often lure HNIs with such schemes in return for their parking funds with them. There is nothing wrong with such schemes so long as there are strong Chinese walls erected by the bank and the time-honoured auditing principle of internal check is in place. The entire show should not be allowed to be hogged by a relationship manager. Concentration of power and duties in one person is a strict no-no in an auditor's checklist. Relationship managers must report to a high ranking official and there must be rotation of relationship managers at reasonable intervals as well as the official they report to. Moreover, the custodial and buying and selling activities must be separated. All these tend to minimise the chances of fraud unless there is a collusive fraud which is unlikely if a large number of people are involved and they all know that rotation is round the corner. One is not sure what happened in Citibank — a systemic fraud or fraud by a single employee.



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(This article was published in the Business Line print edition dated January 17, 2011)
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