Are sale of shares or mutual funds bought before 31 January 2018 and sold between 1 February and 31 March 2018 (but not held for one year) covered by grandfather clause while computing short-term capital gains?
—Rajeev
Listed shares or units of equity-oriented mutual funds that are held for less than 12 months qualify as short-term capital assets. The gain/loss arising from the sale of such assets results in short-term capital gain/loss (STCG/STCL). Such gains are taxable at a special rate of 15% plus applicable cess and surcharge.
As there is no change to taxation of such STCG, the grandfathering clause which you are referring to (as applicable to long-term capital gains or LTCG arising in FY19) does not apply to STCG arising in FY18 or FY19.
I took a home loan and bought a flat in 2014. Currently, I am living on rent in a different city and my parents are living in that flat. I cleared the loan recently. Should I consider this flat as self-occupied or let out (I am not taking any rent from my parents)? Can I take HRA (house rent allowance) benefit as I am living on rent in a different city? Can I take tax benefit on home loan principal (under Section 80C) and interest (under Section 24B) paid? Do I need to mention the flat as “deemed to let out” and show nominal rent in my tax returns?
—Name withheld on request
On account of the fact that you cannot occupy your owned accommodation as you are working in a different city and are staying there in a rented premises, the house owned by you and used by your parents can be considered as a “self-occupied property”. Assuming you do not own another house, you need not offer a “deemed rental income” to tax in India. There are judicial precedents in the context of an individual owning two houses occupying one by himself and other being occupied by family wherein the property occupied by the family is treated as deemed to be let out property, though the fact pattern in these judicial precedents is slightly different that the taxpayer himself occupies a house owned by him rather than staying in a rented premises.
Any interest paid by you towards the loan you have availed, capped to a maximum of ₹2 lakh per financial year, can be claimed as a loss from the house property and offset from your regular income.
The principal amount of housing loan repaid by you is eligible for a tax deduction under Section 80C (capped to ₹1.5 lakh per financial year after considering all eligible investments/payments).
HRA exemption can be claimed if you actually incur rental expenses in respect of a house occupied by you, provided this house is not owned by you.
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Parizad Sirwalla is partner and head, global mobility services, tax, KPMG in India.Queries and views at mintmoney@livemint.com