Tax Talk

SANJIV CHAUDHARY | Updated on August 17, 2013 Published on August 17, 2013

I am a salaried employee. I took a housing loan from a public sector bank and constructed a dwelling house in a plot owned by my mother. I am the only child and none of us (father, mother and me) own any other house or land. In this regard, am I eligible for income tax benefits in respect of the housing loan (on interest as well as repayment amount)?

- Roy Paul

In the instant case, it is assumed that the cost of construction of the house property has been borne by you and the house (including piece of land) is registered in your name also.

In that case, you may be eligible to claim income tax deduction in respect of interest payable on housing loan as well as principal repayment.

Actual facts and circumstances of the case should be examined before drawing any conclusion.

It should be noted that in case of a self-occupied house property, the maximum deduction of Rs 1,50,000 per annum can be claimed in respect of interest payable on housing loan, provided the construction of the property has been completed within three years from the end of the financial year in which the loan was borrowed.

The deduction in respect of principle repayment is covered within the overall limit of Rs 1,00,000 prescribed under section 80C of the Income-tax Act, 1961.

I am a salaried employee and earn Rs 4.32 lakh annually. In June 2013, I got 500 grams of gold ornaments as ancestral property. I want to sell them now to repay my home loan of Rs 9.5 lakh. The gold jewellery of my ancestors/parents is not in any income tax records. Is it possible to sell these ornaments and pay capital gains tax?

- Akash

Under the Income-tax Act, 1961, jewellery is considered as a capital asset, subject to capital gains tax.

If it is held for more than 36 months before the transfer, the nature of capital gains would be long-term (subject to indexation benefit), else short-term, if held up to 36 months.

It is pertinent to note that in case a capital asset has been acquired through inheritance as in the instant case (being ancestral property), the period of holding of the previous owner should also be considered for determining the nature of the capital gains i.e. whether the same will be long term or short term.

In case of a long term gain, indexation benefit is available. Further, in case of inherited capital asset, the cost of acquisition for the purpose of calculating capital gains tax should be the cost to the previous owner.

(The author is a practising chartered accountant)

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Published on August 17, 2013
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