30 Oct -Tax Talk :: Business Line

 

1. I have decided to buy a home for which the loan application is in process. We would like to let out the property as we are staying in my in-laws house, in the same city where we are buying the property - Bangalore. Now, can I claim interest exemption on the home loan interest if I expect the possession of the property in the current FY 2013-14?

- Kiran

Response:

As per the provisions of the Income-tax Act, 1961, deduction for interest payable on the home loan can be claimed under the head “Income from house property” once construction is complete and possession is taken. In your case, you will get the possession of the property in FY 2013-14, hence you will be able to claim deduction of home loan interest payable, in your tax return for FY 2013-14. The deduction is limited to Rs. 150,000 in the case of self occupied property or property not occupied due to employment somewhere else. However where the property is let out, the above limit is not applicable i.e. in your case, you can claim deduction of the entire home loan interest payable for the FY 2013-14 against the rental income.

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I hold shares in a company listed on Bombay Stock Exchange. I bought them in 2008. I came to know that capital gain on sale of listed shares is exempt from tax. Kindly advise whether the exemption is available if I sell them to my mother.

- Anand

Response:

As per the prevailing Indian tax laws, any equity share shall qualify as a long term capital asset if it is held for more than one year. Further, any gain from the sale of a long term listed equity share will be exempt from income tax if –

the sale is made on or after 1 October 2004 and;

Security Transaction Tax (STT) has been paid on such sale.

In the present case, since you are holding the shares for more than one year, these shall be considered as long term capital asset and any gain on sale of such shares shall be “long term capital gains”.

We understand that STT would not be paid at the time when you sell your shares to your mother, as it would be an off-market transaction i.e. shares not being sold through a Recognized Stock Exchange in India. Accordingly, long term capital gain, on off market sale of these shares to your mother, shall be taxable in your hands.

(The author is a practising chartered accountant.)