Expenses on renovation of self-occupied house do not qualify for tax benefit

For a let-out or deemed let-out property, irrespective of actual renovation or repair expenses, a flat standard deduction of 30% only is allowed


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Is the interest earned on my savings account taxable? I have earned an interest of Rs40,000 till September. —Shekhar Shah

Yes, interest earned on a savings bank account is taxable as ‘income from other sources’. Tax deduction up to Rs10,000 per financial year (FY) is allowed, under section 80TTA.

Will I get a tax benefit if I renovate my house without taking any loan? —Chhaya Ghai

The expenses incurred on renovation of self-occupied house do not qualify for tax benefit or deduction. For a let-out or deemed let-out property, irrespective of actual renovation or repair expenses, a flat standard deduction of 30% only is allowed. If renovation expenses incurred are capital in nature, these could be considered as “cost of improvement”. Accordingly, if you sell the house, while computing capital gains, the above mentioned renovation expenses that have been considered as cost of improvement along with cost of purchase of house, can be reduced from the sales proceeds to determine taxable capital gains.

I am a salaried individual. Do I have to pay advance tax? —B.N. Cama

Advance tax is payable by individuals (as applicable) if the total tax liability on the estimated income is likely to be Rs10,000 or more during the financial year. This tax liability is calculated after considering tax deducted at source (TDS).

Assuming you are not a senior citizen, if you do not have personal income (i.e., other than salary), and appropriate taxes have been deducted and paid by your employer on the salary, you will not be required to pay advance tax.

But if you have personal income, then the applicable tax (net of TDS) would have to be calculated. If the said liability is Rs10,000 or more for the financial year, you will be required to pay advance tax.

I have two apartments of which I want to gift one to my son. What will be the tax implications? —Vibhuti Rai

Any immovable property received by an individual from any person during any financial year without consideration and if the stamp duty value of the property exceeds Rs50,000, it is taxable under ‘income from other sources’ in the hands of the recipient.

An exemption is available if the property is received from a relative, who include the individual’s parents. So, there should not be any tax implications in your son’s hands. You shall also not be taxed on the gift transaction. But it would be advisable to have documentation to substantiate the genuineness of the transaction and evaluate stamp duty.

We have assumed that your son is major (i.e. attainted the age of 18 years). So, any subsequent income from the apartment shall be taxable in your son’s hands depending on the nature of income. If your son is minor (i.e. below the age of 18 years), clubbing provisions will be applicable. The subsequent income, if any, shall be included in the income of either of the parents whose total income during the relevant financial year is higher.

Parizad Sirwalla is partner (tax), KPMG.

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