Personal Finance

You don’t need to declare purchase of property

Sanjiv Chaudhary | Updated on November 22, 2020 Published on November 22, 2020

I bought a flat (first-time home-buyer) in August 2019 for ₹58 lakh. I have taken a home loan of ₹40 lakh, with my wife as co-applicant. I paid the remaining ₹18 lakh, registration, TDS and other charges by liquidating some FDs and using the amount that I got from family members. Neither I occupy the flat nor have I rented it out. My wife and I have already utilised the ₹1.5 lakh (deduction) under Section 80C. I have claimed HRA, with my rent as ₹ 17,500 per month for financial year 2019-2020.

1. Under which section can I claim rebate? Is it Section 80EEA?

2. Do I need to declare that I bought a flat along with my wife? If yes, under what section? Do both of us need to disclose it individually?

3. Do I need to declare the money I got from my /my wife’s FD and from family members? If yes, under what section?

4. My wife has already filed ITR-1, without any of the above declarations on the online portal. How do I rectify it ? Which items do I consider for rectifying her filing of returns?

-Shashi

I understand that you purchased the property in August 2019 along with your wife as co-owner of the propertyThe property was not rented out during the year, ie, FY 2019-20 and you do not own any other property in your name or in joint name. In light of the above, please find my responses to your queries:

1. We have provided below a list of few illustrative deduction / exemptions (limited to the facts in your queries) that may be claimed by you and your wife:

U/s 80C of the Income Tax Act: The repayment of principal component and stamp duty paid on registration can be claimed as deduction up to a maximum of ₹1.5 lakh

U/s 80EEA of the I-T Act: Interest payment on the housing loan can be claimed as deduction up to a maximum of ₹1.5 lakh upon fulfilling the following conditions:

i. The loan has been sanctioned during the period April 1, 2019, to March 31, 2020

ii. The stamp duty value of the property does not exceed ₹ 45 lakh

iii. The taxpayer does not own any residential house property on the date of sanction of the loan

iv. The taxpayer doesn’t claim any other exemption/ deduction in respect of such interest payment in any other section (including Section 24(b) as mentioned below)

U/s 24(b) of the I-T Act: Deduction of interest payment on housing loan can be claimed as deduction from house property income. In case the property is not rented out and is self-occupied, such deduction can be still claimed. In such cases, the deduction would result in loss and such loss can be set off against income of the taxpayer from any other sources, except capital gains (Loss under house property to be restricted to a maximum of ₹ 2 lakh). In such a case, deduction u/s 80EEA shall not be available).

2. Purchase of property is not required to be declared at the time of filing of tax return. However, in case you claim deduction u/s 24(b) of the I-T Act, reporting would be required in Schedule ‘HP’ of the ITR form. However, if your total income exceeds ₹50 lakh, the property would be required to be reported as an asset in Schedule ‘AL’ of ITR form.

3. There is no specific requirement to report liquidation of fixed deposits (though interest incomes are to be taxed). Loan obtained from relatives are to be reported as Liabilities Corresponding to Asset in case you have a reporting requirement in Schedule ‘AL’ of the ITR form.

4. Your wife may file a revised return u/s 139(5) of the I-T Act for AY 2020-21, the due date for which is March 31, 2021. Aforesaid items can be considered in the revised return of income.

The writer is a practising chartered accountant

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Published on November 22, 2020
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