Tax queries answered by Dilip Lakhani, Senior Chartered Accountant

Every week, an expert selected by ET answers queries from our readers on tax .

I have been investing in shares every month and after holding for 2-3 years, I sell them at decent profit. As I have come to know from various articles that long-term capital gain is tax exempted, will I qualify for LTCG? If yes, should I show this income in my I-T (income tax) return? If yes, under which column? Raman Madan
I understand that you have made investment in the shares of listed companies in India. If the said investments are held for more than 12 months from the date of purchase and are sold on the floor of the exchange by paying Securities Transaction Tax, the resultant long-term capital gains will be exempted under section 10 (38) of I-T Act, 1961. While filing the return of income, you can show the same in the schedule of exempt income against the item `Long-term capital gains from transactions on which Securities Transaction Tax is paid'.

I am staying in a house where the interest on home loan is higher than the interest on housing loan of my second house which I have given on rent and claiming rental income in my I-T return. In such a case, can I claim the interest on the rented house under the staying house category (cap of Rs 2 lakh) and the interest at staying house under full exemption as a second house? Is there a provision to do so? I am told that what is important for I-T Department is to ensure that the claimant declares both the properties clearly. Manoj Kabre
In respect of the property which is actually let out, the interest payable on the capital borrowed for acquiring the property shall be deducted while computing income under the head `Income from house property'. In respect of the property used for self occupation, the deduction of interest payable on the capital borrowed for acquiring the property shall be restricted to Rs 2 lakh. You will have to identify the amount borrowed which is utilised for acquiring a property which is let out or self occupied and interest payable on such borrowing can be deducted from the annual value of the respective properties. You cannot adjust the interest payable on the amount borrowed which is utilised for acquiring self occupied property against the rental income.

(Please send your queries on tax to et.tax@timesgroup.com)

Source: Economic TImes

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