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Ask Mint | Interest earned on NSC attracts tax

Ask Mint | Interest earned on NSC attracts tax
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First Published: Thu, Apr 15 2010. 08 50 PM IST

Harsh Roongta, CEO, Apnapaisa.com
Harsh Roongta, CEO, Apnapaisa.com
Updated: Thu, Apr 15 2010. 08 50 PM IST
I get a house rent allowance of Rs25,000 per month. I live in a rented house, which is on personal lease. My rent is Rs25,000 per month. Is it more tax-prudent to take a company lease?
—Sangeeta Menon
Harsh Roongta, CEO, Apnapaisa.com
The Income-tax Act treats rent paid through a personal lease differently than that paid through a company lease. The answer to your question will depend on many factors, including the rent charged and paid by your company as well as your overall salary composition, including your basic salary.
My sister owned three residential properties, out of which she sold one and invested the profit in another residential property within two months of the sale. Will she have to pay long-term capital gains tax?
—Vijay Malhotra
The answer to your question depends on the period for which the property being sold was held by your sister. In case she held this residential house for three years or more and has already invested the capital gains in another residential property within two months of the sale, she does not have to pay any long-term capital gains tax. But if the property that was sold was held for less than three years, there is no tax exemption and such gains will be treated as short-term capital gains and will be taxed as regular income.
Can I take a housing loan jointly with my brother? Will I get exemption on the principal as well as the interest on the loan?
—Surbhi
You can of course take a home loan along with your brother if both of you are owners or co-owners of the property. You can get exemption for the home loan repayment in the ratio of your respective shares in the loan. Tax deduction benefits will be available under section 24 (interest payable on the loan) and under section 80C (for the principal repaid).
I have filed my returns for FY09. However, I forgot to add interest from National Savings Certificate (NSC) as I have not encashed the interest yet. What should I do?
—Shraddha Singh
You can file a revised return under section 139(5) of the Income-tax Act before the completion of the assessment or 31 March 2011, whichever is earlier. The interest accrued on your NSC is taxable and is also available as a deduction under section 80C (amount is considered as a reinvestment in NSC). So, if you have exhausted the section 80C limit of Rs1 lakh, it will have no effect on your net taxable income.
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First Published: Thu, Apr 15 2010. 08 50 PM IST