Personal Finance

Tax Talk

SANJIV CHAUDHARY | Updated on January 26, 2013 Published on January 26, 2013

The principal amount paid towards the loan used for construction or purchase of a residential house is allowed as deduction under the Income-tax Act, 1961.


In the financial year 2011-12, I sold a flat and forgot to show the capital gains part in the I-T return filed last June. Can I do it now and how? I am a salaried employee.

— B. Sahoo

According to the tax law, if any person who has filed his return within the due date applicable to him or in pursuance of a notice issued under section 142 (1) of the Income-tax Act, 1961, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.

We understand that you have filed the original tax return for FY 2011-12 within the due date i.e. before July 31, 2012. You can therefore, revise your return for the FY 2011-12, to include the omitted information of capital gain, and file it any time before March 31, 2014 or completion of assessment for the relevant FY by your Assessing Officer, whichever is earlier.

I am planning to buy a residential flat with help of a bank loan. For the time being, say, the next two years, the house will be let out for rent. Please let me know what tax benefits I can get from the home loan and how the rental income must be treated.

— D. Karthikeyan

According to the Income-tax provisions, any income from letting out of a house property is taxable under the head “Income from House Property”. The annual rental value of the property let out shall be taxable in your hands after deducting the municipal tax paid. The following two deductions shall also be available:

Standard deduction of 30 per cent of the annual value.

The interest payable on the loan taken for purchasing the said house property.

Please note that the interest paid prior to possession of the let-out house property, shall be allowed as deduction in 5 equal yearly instalments starting from the year of possession. The net annual value so arrived at shall be taxable at the applicable tax slab rates.

Further, the principal amount paid towards the loan used for construction or purchase of a residential house is allowed as deduction under section 80C of the Income-tax Act, 1961. Please note that in case the said property is transferred within 5 years from the end of the financial year in which possession is taken, the aggregate amount of deduction allowed in the previous years under section 80C will be taxable in the year of sale.

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(The author is a practising chartered accountant)

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Published on January 26, 2013
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