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Ask Mint Money | Jewellery kept for at least 36 months is long-term capital asset

Ask Mint Money | Jewellery kept for at least 36 months is long-term capital asset
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First Published: Wed, Nov 16 2011. 10 45 PM IST

Updated: Wed, Nov 16 2011. 10 45 PM IST
I have taken a home loan of Rs 20 lakh jointly with my wife and we jointly own the house. How can we claim income-tax deductions separately?
-Manoj Prabha
As per section 24(b) of the Income-tax Act, for computation of income under the head house property, deduction is allowed in respect of interest payable on loan taken for purchase/construction/repair of the property. As you and your spouse are co-owners of the house, both of you can claim deduction under section 24(b) in respect of the interest payable on home loan taken jointly with your spouse.
However, for the purpose of computing deduction, interest payable by you and your spouse (to the extent of share in the property) on loan taken for purchase of the house shall be taken into consideration. Further, both of you shall be eligible to claim deduction under section 80C, subject to the overall deduction limitation of Rs 1 lakh with respect to the amount of principal loan repaid pertaining to your individual share in the house property.
I booked a flat for which I had to sell some jewellery. Will the payment received against the sale of jewellery be taxed?
-Rakesh Jain
As per section 2(14), jewellery not held as stock-in-trade is an item that comes under the definition of “capital asset”. Also, we are presuming that jewellery sold by you was held for at least 36 months, qualifying to be a long-term capital asset as defined under section 2(29A). The gains arising on the sale of such jewellery shall result in long-term capital gains liable to tax at 20%. As per section 54F, capital gains arising on transfer of long-term capital asset are exempt from tax entirely/proportionately provided all/portion of the net consideration (sales consideration less selling expenses) is reinvested for the purchase of a residential house within one year before or two years after the date of transfer of such capital asset. For claiming exemption under section 54F, the date of purchase of flat may be reckoned from the date of actual possession.
Accordingly, where you get the possession of the flat within one year before or two years after the date of transfer of jewellery, you shall be eligible to claim exemption from long-term capital gains tax entirely or proportionately depending upon the amount of sales proceeds reinvested for purchase of flat and fulfilment of certain other conditions.
Queries and views at mintmoney@livemint.com
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First Published: Wed, Nov 16 2011. 10 45 PM IST