The author is a tax and investment expert
Interest cannot be claimed in respect of self-occupied property under the new tax regime. Any gift made by a member of the HUF to the HUF is not taxable. Rebate under Section 87A is available to all resident Indians if the taxable income is less than the threshold limit under the respective tax regimes
I have taken a home loan jointly with my wife. Can both of us claim benefit of interest under Section 24 (b) on the loan?
For claiming the tax benefits, both the joint borrowers should be co-owners of the property as well and servicing the home loan together. Both you and your wife can claim benefit on the interest amount on the home loan under Section 24(b) up to Rs. 2 lakh each in case the house is self-occupied.
If the house has been let out on rent, then a proportionate interest can be claimed. Also, loss under the house property head can be set off against other income, while loss not set-off can be carried forward for eight years for set-off against house property income in eight consecutive years.
If you opt for the new tax regime, you cannot claim any interest in respect of self-occupied property. For let-out property, the interest can be claimed only up to the extent of taxable income under the house property head.
The ratio in which both the joint borrowers will be able to claim the tax benefits shall be in the ratio in which they are servicing the home loan i.e., their respective share in the loan and not necessarily their share in the property. Do note that the share in loan in monetary terms cannot exceed the share in the property in monetary terms.
I am a pensioner and a senior citizen. I also happen to be the karta of a Hindu Undivided Family (HUF). Now I want to transfer my bank deposit in HUF to reduce my tax liability. Can I do it so that the income of my HUF does not get clubbed with my personal income?
Under the provisions of tax laws, any gift made by a member of the HUF to the HUF is not taxable under Section 56(2), as the members of the HUF are treated as relatives. So, there will be no tax liability at the time of transferring the individual assets to the HUF.
However, under the clubbing provisions of Section 64, any income which arises to the HUF from the assets transferred to the HUF shall be added to the income of the donor and will continue to be added to the income of the donor till the HUF is fully partitioned. Also, even after the partition, the income in respect of share allotted to the spouse of the donor shall be clubbed with the karta’s income.
Alternatively, you may make a gift of the same money to other members of the HUF who have lower tax liability, instead of gifting the same to the HUF, and get out of the clubbing provisions.
I am a practicing architect. Can I claim rebate under Section 87A?
Rebate under Section 87A is available to an individual who is a resident in India, provided his taxable total income does not exceed Rs. 5 lakh under the old tax regime, and Rs. 7 lakh under the new tax regime. This rebate is available to all resident individuals, whether salaried or not, as long as the taxable income does not exceed the threshold limit under the respective tax regime. In case your tax liability is lower than Rs. 12,500 under the old tax regime and Rs. 25,000 under new tax regime, the rebate shall be restricted to the amount of your tax liability.
The author is a tax and investment expert
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