My wife and I took a home loan. Can she claim deduction for interest payment? The house is registered in my name.
The interpretation of section 24 of the Income-tax Act allows deduction of housing loan interest only to the person in whose name income from the property is assessed under the head “income from house property”. Since the house is not registered in your wife’s name, she will not be able to claim any deduction of interest or other expenses even if she is paying the loan.
Is loss from trading in futures and options (F&O) considered business loss or short-term capital loss? How many years can I carry forward this loss and under which head?
There is nothing specified in law on whether loss from F&O trading is business loss or capital loss. However, loss from F&O trading may be considered business loss due to the following factors:
*Purpose behind entering into most F&O transactions is to make profit from short-term fluctuations in market prices
*Period of any F&O transaction is generally short-term
*Often, the sheer volume of trades in such transactions entered into by a person on an ongoing basis indicates that it amounts to a business
The Finance Act, 2005 amended the proviso to section 43(5), with effect from FY06, to provide that transaction in derivatives (which includes F&Os) would not be regarded speculative transaction, provided the same is carried out in a recognized stock exchange.
Accordingly, any loss from transacting in F&Os will be treated as non-speculative business loss and shall be eligible to be carried forward for a maximum of eight years and can be set off against any other business income.
However, if F&O transaction is for investment purposes and not to make profit from short-term fluctuations in the market, the resulting loss may be treated as short-term capital loss (since F&O contracts are generally short-term with a tenor of three-six months), which can be carried forward for eight years and set off against capital gains only.
I got Rs50,000 on maturity of my life insurance policy for which my father paid the premiums. What will be the tax liability?
Any sum received under a life insurance policy, including the sum allocated by way of bonus on such policy is exempt from tax. However, in relation to a policy issued after 1 April 2003, the exemption shall be available if the premium paid/payable in any of the years does not exceed 20% of the sum assured.
Therefore, irrespective of who paid the premium, Rs50,000 received by you shall be exempt from tax, subject to the limits specified above. If you are a minor, such income shall be clubbed in the hands of your father.
Nitin Baijal, director, BMR Advisors
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