Cost for repairing house can be deducted from capital gains

When I sell my house can I show the money spent on repairs while calculating capital gains tax? How should I show the proof? I have the bills paid to the contractor for the repair work  – Shashank Arora

While computing the capital gains upon sale of an asset, any capital expenditure incurred on the addition or alteration of the said capital asset that qualify as “cost of improvement” is deductible from the sales consideration. Thus, if the repair expense is capital in nature, it shall be allowed as deduction in computing the capital gains provided it is not claimed as a deduction under any other head. However, no deduction for revenue expenditure shall be allowed from the sales consideration. The bills and bank statement reflecting the payment shall be the sufficient evidence to substantiate the expenditure.

My uncle who was employed in railways passed away last month and my aunt has started receiving family pension. Will this be taxable? She is a senior citizen and has income from FDs and rental  – Poorna Rajendran

From your query, we understand that your aunt is receiving the family pension in the form of periodical payments. The family pension received by your aunt shall be liable to tax as the ‘income from other sources’ under section 56 of the Income-tax Act, 1961. As per section 57 of the Act, a deduction of 33.3% of amount of such family pension or Rs 15,000 whichever is less, shall be allowed while taxing such income. However, in case, the total amount of your aunt consisting of family pension along with the other income is below the basic exemption limit of tax (Rs 5,00,000 in case of a senior citizen), no tax shall be required to be paid. 

Chirag Nangia, Director, Nangia Advisors LLP

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