[S_U_N]

Originally Posted by hserus

All transactions with banks / insurance companies etc have your PAN on file. That will do very well for a start, for them to catch you.

It is very easy and in fact automatic to track such "on the books" transactions with organizations that have to implement kyc norms, by law.

Yes there are ways to get around KYC but all of them aren't what you'd describe as legal.

Well, perhaps they can trace such things.
BTW: Why does the person have to pay tax now for the previous years?

Is there a minimum period for which the loan should be active?

[reverse_gear]

Originally Posted by S_U_N

Yes. That is true in his case. But his wife mentioned that even if the loan was from another bank (say SBI), it would make no difference to the benefits.

Absolutely right, exactly what I am saying. The Loan and the home loan insurance are actually different products from different companies, so you could take the loan from one company and the insurance from another. In this case, the loan is from HDFC and insurance from HDFC Ergo, which is a different company in the same group. But HDFC Ergo offers the same products to borrowers from other banks like SBI, LIC or any other. Same would be the case for any other home loan insurance company.

[hserus]

Originally Posted by S_U_N

Well, perhaps they can trace such things.
BTW: Why does the person have to pay tax now for the previous years?

Is there a minimum period for which the loan should be active?

80C states that if you repay the loan in some manner in under 5 years (such as for example this case where an insurance payout closes the loan) you lose any benefits gained under it from claiming HTL principal.

Such benefits will then have to be compensated for in this FY's tax return.

Interest payments u/s 24 don't appear to have that provision so you're lucky that way.

[S_U_N]

In continuation with the my earlier post, I found out that the insurance was from HDFC Ergo. So, most likely this was the Critical Illness (or Platinum) plan where all debts are paid off.

[supremeBaleno]

I had a query about continuing the PPF account by depositing yearly subscription after the initial 15-year period. Getting confusing answers online as to when to submit the Form-H for a/c renewal. Basically the clarity needed is on when does a PPF a/c mature (since the year it was opened is not taken into consideration while calculating maturity) ?

1) My PPF a/c was opened during FY 1999-2000. So, I guess my a/c matures on 31-3-15 / 1-4-15. Is that right ?

2) I understand that "If you want to continue this account by depositing yearly subscription, then within one financial year after its maturity, you have to submit Form-H".
So, should I be submitting Form-H between 1-4-15 to 31-3-2016 ? Or should I be submitting it before current FY (2014-15) ends ?

[hserus]

2014 - 2015 I believe

[S_U_N]

My PPF account matured last year (2014).
I did not know that back in April. So, we deposited money as usual at SBI.

After few days, we got to know that account has matured so we cannot put money and the money got credited back to my account.
I think we got a letter at home stating that, but cannot remember exact sequence.

Then we had to fill some form (request for extending it by another 5 years) and pay the cheque again.

The account matures in the 16th year - you can take your money then - that is my understanding.

Originally Posted by supremeBaleno

I had a query about continuing the PPF account by depositing yearly subscription after the initial 15-year period. Getting confusing answers online as to when to submit the Form-H for a/c renewal. Basically the clarity needed is on when does a PPF a/c mature (since the year it was opened is not taken into consideration while calculating maturity) ?

1) My PPF a/c was opened during FY 1999-2000. So, I guess my a/c matures on 31-3-15 / 1-4-15. Is that right ?

2) I understand that "If you want to continue this account by depositing yearly subscription, then within one financial year after its maturity, you have to submit Form-H".
So, should I be submitting Form-H between 1-4-15 to 31-3-2016 ? Or should I be submitting it before current FY (2014-15) ends ?

[supremeBaleno]

^^^ @S_U_N, in which FY was your PPF a/c opened ? Was it in FY 1998 - 99 ?

[S_U_N]

Originally Posted by supremeBaleno

^^^ @S_U_N, in which FY was your PPF a/c opened ? Was it in FY 1998 - 99 ?

I don't have that data with me, unfortunately. The book is in Mumbai.

[latentpotential]

I have a house in another city (another state) which is given out on rent. The rent earned on the same is 'x', the EMI outflow on it is '3x' and there are expenses like maintenance, municipal taxes etc 'y'.

Can I claim the house as a loss of '3x - x' * 12 + y? I have been suggested the same by a financial advisor, and my reaction was OO. It would make a big difference in my taxation of course, but I am not sure of the legality, implication, clauses under which this is even moderately possible.

[reverse_gear]

Originally Posted by latentpotential

I have a house in another city (another state) which is given out on rent. The rent earned on the same is 'x', the EMI outflow on it is '3x' and there are expenses like maintenance, municipal taxes etc 'y'.

Can I claim the house as a loss of '3x - x' * 12 + y? I have been suggested the same by a financial advisor, and my reaction was OO. It would make a big difference in my taxation of course, but I am not sure of the legality, implication, clauses under which this is even moderately possible.

Principally correct, but there are a few corrections:
- x (i.e. the rent) should be based on rental value of property (i.e. reasonable rental for similar property) or actual realised rent, whichever is lower. If you are receiving fair market rent or thereabouts, this is not an issue
- there is a deduction of 30%*(x+y) which would be applicable from this loss computation. This is required under IT Act.
- y includes only municipal taxes, not maintenance
- entire EMI is not allowable under this head (3x in your calculation), only the interest portion
- Overall cap of 2 lakh for loss on house property

All the best.

[hserus]

The way you claim income or loss from house property is -

Gross annual rent income
Less property tax paid
Less statutory 30% deduction (actual rental income - property tax) x 30%
Less interest on housing loan
Less 20% of any pre handover (construction phase) interest (claimed for 5 years)

The other thing here is that principal of the housing loan is eligible under 80C but that 1.5 lakh is usually covered by so many other things (insurance policy, kids education, PF etc etc). And for first time home owners with home value under a certain amount there's some additional concession.

That overall cap of 2 lakh for house property is for self occupied house property. If you have rented it out there's no ceiling on how much loss you can claim, as long as you show actual or notional rental income from the property depending on whether it is rented out or deemed occupied (aka unoccupied).

[reverse_gear]

Originally Posted by hserus

That overall cap of 2 lakh for house property is for self occupied house property. If you have rented it out there's no ceiling on how much loss you can claim, as long as you show actual or notional rental income from the property depending on whether it is rented out or deemed occupied (aka unoccupied).

You are correct about this. Sorry for lack of clarity on my earlier post.

Originally Posted by reverse_gear

- there is a deduction of 30%*(x+y) which would be applicable from this loss computation. This is required under IT Act.

Please read this as 30%*(x-y).

[latentpotential]

Originally Posted by reverse_gear

Principally correct, but there are a few corrections:
- x (i.e. the rent) should be based on rental value of property (i.e. reasonable rental for similar property) or actual realised rent, whichever is lower. If you are receiving fair market rent or thereabouts, this is not an issue
- there is a deduction of 30%*(x+y) which would be applicable from this loss computation. This is required under IT Act.
- y includes only municipal taxes, not maintenance
- entire EMI is not allowable under this head (3x in your calculation), only the interest portion
- Overall cap of 2 lakh for loss on house property

All the best.

Originally Posted by hserus

The way you claim income or loss from house property is -

Gross annual rent income
Less property tax paid
Less statutory 30% deduction (actual rental income - property tax) x 30%
Less interest on housing loan
Less 20% of any pre handover (construction phase) interest (claimed for 5 years)

The other thing here is that principal of the housing loan is eligible under 80C but that 1.5 lakh is usually covered by so many other things (insurance policy, kids education, PF etc etc). And for first time home owners with home value under a certain amount there's some additional concession.

That overall cap of 2 lakh for house property is for self occupied house property. If you have rented it out there's no ceiling on how much loss you can claim, as long as you show actual or notional rental income from the property depending on whether it is rented out or deemed occupied (aka unoccupied).

Originally Posted by reverse_gear

You are correct about this. Sorry for lack of clarity on my earlier post.



Please read this as 30%*(x-y).

Wonder of wonders, this is a eye opener. But then I also claim the EMI interest as exemption under section 24 I think. So how do I double claim? Wont that be wrong?

Also, what section is this loss parked in? How many years can it be carried forward - if it can be carried forward?

Will this loss be deducted from my net salary income, prior to computation of tax?

[hserus]

Er, just which other section of the income tax act are you trying to claim EMI interest under if not u/s 24? Income or loss from house property is section 24 of the income tax act. http://www.incometaxindia.gov.in/Tut...-Practical.pdf

If you show your employer these workings and also show proof such as rent agreement and/or receipts, property tax receipt, bank loan statement for the year (or provisional statement for the loan from your bank) then they will doubtless adjust their TDS to account for the claimed income or loss.