Deductions for stamp duty under 80C

Deductions for stamp duty under 80C

T. Banusekar

 

Q.  Will rebate under Section 80C in respect of stamp duty paid for registration of a property be available only in respect of such duty paid for acquiring a residential house or will it also be available in respect of such duty paid for acquiring a commercial property such as an office or a shop?

 

A. Will exemption under Section 54EC be available on capital gains arising from the transfer of a commercial property such as an office or a shop? â€" Dinesh Mittal

 

 The deduction under Section 80C for stamp duty will be available only on purchase or construction of a residential house. No deduction can be claimed under Section 80-C in respect of the stamp duty paid for acquiring an office or a shop.

 

The exemption under Section 54EC would be available subject to satisfying the following conditions

 

 The asset transferred is a long-term capital asset.

 

 The investment is in bonds of the National Highway Authority of India or in bonds of Rural Electrification Corporation.

 

 The bonds are redeemable after a period of 3 years.

 

Q.  If the exemption should be claimed under Section 54EC, the investment should be made before the expiry of six months from the date of transfer of the capital asset.

 

A.  Therefore, if a commercial property such as an office or shop is sold, the exemption under Section 54EC can be claimed subject to the satisfaction of the other conditions stated above.

 

 You may, however, note that the maximum amount that can be invested in a financial year for claiming the exemption under Section 54EC cannot exceed Rs 50 lakh.

 

 I have constructed three houses. Two are let out and one is self occupied.

 

I have taken loans for constructing all the three houses â€" two from bank and one from my employer.

 

Q.  I am offering the rental income from the two properties let out to tax.

 

Will I be entitled to claim the deduction under Section 80C in respect of the principal repayment of the loan taken for all three houses or will I be eligible for the deduction only in respect of the loan taken for one of the houses?

 

If such deduction is available in respect of the loan taken for all three houses, can I furnish the particulars of the principal repayment to my employer, who would consider the same for the purpose of deduction of tax at source on my salary? â€" Anonymous

 

A.   There is no prohibition on claiming the principal repayment on housing loan in respect of the loan taken for more than one house property.

 

 You may, however, note that a loan taken from your employer will be eligible for deduction under Section 80C only if your employer is a public company or a public sector company or a university established by law or a college affiliated to such university or a local authority or a co-operative society.

 

 Subject to this restriction, the principal repayment for all three loans, two from the bank and one from your employer would qualify for the deduction under Section 80C.

 

 You can furnish the particulars of the principal repayment of the housing loans to your employer, who can take the same into consideration for the purpose of allowing deduction under Section 80C and in computing the tax to be deducted at source on your salary income.

 

 You may, however, note that a maximum deduction that can be availed under Section 80C is a sum of Rs 1 lakh and that deduction under Section 80C would be available in respect of certain payments and investments, which would also include principal repayment of housing loan.

 

Q.  Is short-term capital gains, from sales of shares, are taxable even if the total income of the assessee is less than the maximum amount not chargeable to tax? How are profits or losses from trading in options and futures taxable? If there is a net loss from such dealing in options and futures, can the same be set off against income from any other head? â€" Venu Gopal

 

A.  The short-term capital gains, from sale of shares, will be chargeable to tax only if the income, including such gain, exceeds the maximum amount not chargeable to tax.

This would be true whether the gain is from sale of listed securities through a recognised stock exchange or gains from sale of any other capital asset.

 

 You may note that Section 111A, which provides for a differential rate of tax on short term capital gains from transfer of listed securities through a recognised stock exchange, makes a specific provision that if the other income excluding the short-term capital gain does not exceed the maximum amount not chargeable to tax, the amount by which such other income falls short of the maximum amount not chargeable to tax would be reduced from the short-term capital gains and only the balance gets charged to tax.

 

 This would in effect mean that if the total income, including the short-term capital gain from sale of listed securities through a recognised stock exchange, is less than the maximum amount not chargeable to tax, such short-term capital gain would not be charged to tax.

The profit or loss from dealing in options and futures would be treated as a regular business income or loss subject to satisfying the following conditions:

 

The transaction is carried on through a registered broker or sub-broker or by banks or mutual funds; and

 

 The transaction is carried out electronically on screen-based systems and which is supported by a time stamp contract note, which indicates the client identity and the number allotted under the SEBI Act or the SCR Act or the Depositories Act and also gives the permanent account number of the client if the above conditions are not satisfied, the gain or loss from dealing in options and futures would be treated as speculative income or loss.

Regular business loss can be set off against income from any other head other than income under the head salary.

 

 The balance if any after such set off can be carried forward and set off against income from business within a period of 8 assessment years immediately succeeding the assessment year in which the loss was first computed.