I have an ancestral residential property which I plan to sell. I plan to invest Rs. 50 lakhs in NHAI capital gain bonds and the remaining in flats. Can I buy two flats in order to avail a tax exemption? I am told that I can buy only one flat. Kindly let me know your views.
Section 54 provides that the investment has to be made in one residential house in India to claim the exemption. Various Income Tax Tribunals have held that the exemption can still be claimed if the investments are made in two adjoining flats or a building which is used as a single residential unit. Please note that you may have to litigate in such cases at least up to the Income Tax Appellate Tribunal, as the assessing office may take a different view.
The law also provides for a lifetime opportunity to claim the exemption under Section 54 by investing in two residential houses, provided the amount of long-term capital gain does not exceed two crore rupees.
I went to the U.S. for my MBA in 2007. I took a loan from Citibank U.S., which my university co-signed for me. I graduated in 2009 and have been repaying my loans since then in EMIs every month. I relocated to India in 2010. I want to know if I qualify for a tax exemption on the interest paid each year on this loan. Or should the loan have been taken only from India in order to avail the exemption?
Under the old tax regime, deduction is available under section 80E for interest paid on education loan taken from an approved charitable institution or financial institutions in India for the purpose of higher education of self, spouse or children for eight consecutive years from the year in which you start paying the interest. This deduction is available only in respect of interest on a payment basis, irrespective of the year to which this belongs, but no deduction is available in respect of repayment of principal amount.
Since the benefit is available only if the loan is taken from a charitable or financial institution in India, you can not avail the benefit under section 80E, as you had taken the loan from a financial institution in the US.
I would like to know whether I can deduct my monthly maintenance charges on my apartment and electricity charges as expenses? Especially as one can deduct HRA, can the same logic be applied here in respect of self-occupied property? I am sixty-six, and my mother, who is eighty-six and semi-invalid and requires an attendant constantly, for which I am paying twenty thousand rupees every month. Is this deductible?
As per the provisions of the Income Tax Act, you are allowed to deduct only the amount of interest paid on a home loan for an occupied house and no other deduction is allowed. So, amounts paid by you towards maintenance charges or electricity charges. Moreover, in respect of expenses incurred for one attendant, they are not eligible for any deduction under any provisions of the income tax laws.
Writer is a tax and investment expert and can be reached at jainbalwant@gmail.com and on his twitter handle @jainbalwant
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