Avail of HRA & home loan benefits

My wife sold some shares and had a short term gain of around Rs 25,000 and a long term gain of Rs 40,000.

She has no other source of income.

I would like to know whether she has to pay any capital gains tax or not. 
Or, am I liable to pay tax on her income?

 - Sabbella Venkata Reddy

In this case, the first thing that needs to be ascertained is the source of income that has been used for the purchase of shares by your wife.

If your money was used to buy shares in the name of your wife, then effectively the income generated would be clubbed along with your income.

In case these shares were bought using the pocket money saved by your wife, then it would not be included in your income. It would be treated as your wife's income.

In this case, as the total income is below the taxable limit, there would be no tax implication on the gains.

• What is capital gains? How is it calculated?

I took a home loan. Now I need to submit documents to my company for tax saving purposes.

I have the letter from the bank which indicates the principal and interest component on the home loan.

I have no other income apart from my salary. I am residing in the very property I have purchases (self-occupied).

Am I supposed to fill Form 12C which is an "Income declaration form"? Should I put "Rs 0" in Form 12C? Or must I mention the interest component of my loan?

- Amol Deshmukh

You could mention the income figure as zero wherever these are not applicable.

But, in the case of interest paid on the home loan, you could mention the amount of interest paid - payable as negative amount (which will be treated as loss on house property).

• Claim home loan benefits, HRA

I purchased an apartment in June 2005 by taking a home loan from ICICI Bank.

I started paying the Equated Monthly Installments from the very next month. The apartment will be ready for occupation next month (February 2006).

Can I get the benefit of House Rent Allowance till February 2006 and home loan (principle and interest) benefits during the financial year of April 2005 to March 2006?

Since the interest amount I'm paying towards the home loan is more than Rs 1,50,000, can my wife (she is also working) get the income tax benefit on that excess amount?

- Vijayashankar Hulikunte Shivanna

Yes, you could avail of both HRA and loan repayment benefits for the current year.

Your wife can avail of the differential deduction only if she is a co-applicant and co-owner in the house property.

Moreover, it is advisable for her to transfer her share of repayment to your account in case you are making the loan repayment.