My father wants to take a home loan for extending a portion of the house. Will I be eligible for tax benefits on the principal amount and interest that I pay through my account?
You will not be able to get tax deduction benefits on the renovation loan if the property is not in your name and neither are you a co-owner in the said residential property. If you are a co-owner in the property, the interest payable on the loan will be available for deduction if the loan has been taken to “repair, renew or reconstruct” the said property. The limit for such deduction will be Rs1.5 lakh if the property is self-occupied. No deduction is available for repayment of the principal portion of such a loan.
Harsh Roongta, CEO, ApnaPaisa.com
I will be posted to the UK shortly, but I wish to continue with my savings bank account through which I want to transfer money to my family in India. Is this possible? What would be my tax liabilities?
You can continue to hold and operate your savings bank account in India while you are posted in the UK. As long as you are a resident for the purpose of income tax, you are liable to pay tax on your income. The Income-tax Act determines the residential status of a person, based on his stay in India during the previous year as well as his stay in India four years prior to the fiscal year. A person is considered as a resident of India if he has been in India for a period of 182 days or more in the relevant fiscal year or has been in India for a period of more than 365 days or more during the four years preceding financial years. The global income of a resident is taxable in India, irrespective of the place from where the income is accrued. In addition to the Income-tax Act, the Foreign Exchange Management Act (Fema) also has provision of treating a person as a resident of India for the limited purpose of administration of Fema.
My father took an educational loan from a financial institution for my MBA. Would he be eligible for tax deduction on the amount he repays?
Yes, your father can avail tax deduction on the interest paid for the loan, provided that the MBA pursued by you was full time and the loan was taken from a bank or financial institution approved for this purpose.
Harsh Roongta is CEO, ApnaPaisa.com
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