Your queries: Income Tax – Cannot deduct stamp duty for computing capital gains

• January 16, 2023
• CA Chandan Agarwal's Office

Your queries: Income Tax – Cannot deduct stamp duty for computing capital gains

* I purchased a flat two years ago and want to sell it now. Will I get any benefits in stamp duty?

Assuming you have held the property for a period exceeding 24 months, the capital gains on sale is classified as long-term capital gain (LTCG). For computing LTCG, the indexed cost of acquisition, indexed cost of improvement and expenses (incurred wholly and exclusively in connection with the transfer) is deducted from the sale proceeds. LTCG so computed is taxed at the rate of 20%.

There are no provisions for concession in stamp duty payable at the time of purchase of another residential property, upon sale of one. However, capital gains is tax exempt if you buy another house within one year before or two years from the date of transfer. In case of construction, the time limit is three years.

* I am working abroad and my family stays in India. Can I claim HRA benefit from my company for the rent I am paying for my family?

—R K Pandey

Salaried individuals, who live in rented houses, can claim the House Rent Allowance (HRA). This allowance is for expenses related to rented accommodation. If you don’t live in a rented accommodation, this allowance is fully taxable. In your case, since you are not living in the rented house in India, you are not eligible to claim the exemption.

* I am applying for an education loan for my son’s higher education. What tax benefit will I get?

As per Section 80E, any individual who takes a loan from any financial institution or approved charitable institution for pursuing higher education, whether in India or abroad, can claim deduction on the amount of interest paid for a consecutive period of eight years, beginning from the assessment year in which he has started paying the interest on loan or until the assessment year in which the interest is paid in full, whichever is earlier. Education loans can be taken for self, spouse, children or student for whom you are the legal guardian.

Source: https://www.financialexpress.com/money/income-tax/your-queries-income-tax-cannot-deduct-stamp-duty-for-computing-capital-gains/2948726/