7 Income Tax saving tips you might not know

Haven’t you gotten bored of regular income tax saving tips? Are you looking for some tips which are different, kinda unique and not very well known? If yes, then you’re reading the right article, mate! I will share some tips which would help you in area of income tax saving. Some of these tips will help you in this, current year and some, at some later point. But helpful at some level, they will be :) . Below is a video on this topic where I explain those 7 tips. Incase you dont want to watch the video , you can just skip it and move forward to read the tips in text . Let’s look at them. If you are reading this article on email, you can watch the video on youtube here

7 income tax saving tips

1. Gift money to your major children and Save tax on Future Income

Imagine this, you have Rs 25 lacs. Logically you put this in a fixed deposit or invest in some other financial product through which you get an interest at 8%. You will get Rs 2  lacs as interest which will be added to your income and you pay tax on this income. Not good!

Now what? How do we save tax on these 2 lacs? As per income-tax laws you can gift any amount of money to your major children without attracting gift-tax and as their money will become theirs any income arising out of it would be treated as their income, not yours. In case their income is below the limits, there won’t be any tax.

However there can be times, where you might not feel too comfortable gifting away large amounts of money to your major children, in which case, there is another option of giving them loans. And guess what? you can make interest-free loans to your major children as per the law :) . Please note that doing exactly the same thing with your spouse is not possible. Any income you transfer to your spouse which generates any income will be treated as your income only. However, if you are going to be married in some months and you have some big amount of cash, you can gift her right away, as gift given to prospective wife would become hers lawfully! . I hope you liked this first point on income tax saving tips

2. Claim stamp duty and registration fees in 80C

Many people dont know this, but the Stamp duty and the registration fees of the documents for the house can be claimed as deduction under section 80C in the year of purchase of the house. An important point to note here is that you should be in possession of the house if you want to claim these deductions. So in case of under-construction properties, you lose out on claiming this deduction. As per the income tax

The stamp duty, registration fee and other expenses incurred for the purpose of transfer shall also be covered. Payment towards the cost of house property, however, will not include, admission fee or cost of share or initial deposit or the cost of any addition or alteration to, or, renovation or repair of the house property which is carried out after the issue of the completion certificate by competent authority, or after the occupation of the house by the assessee or after it has been let out. Payments towards any expenditure in respect of which the deduction is allowable under the provisions of section 24 of the Income-tax Act will also not be included in payments towards the cost of purchase or construction of a house property.

3. Get deduction for rent even without HRA

All the salaries class people get HRA from their companies, and hence they claim deductions on that. However, what if you are self-employed professional or working for a company who does not provide you HRA benefit? Can you still claim HRA? Yes! But with some caveats.

Under Section 80GG, you can claim deduction of the rent paid even if you don’t get HRA. However not many people are aware of this deduction. If you are not being paid any HRA or don’t have any housing benefit from employer. You can claim least of following 3 things as HRA

a) Rent paid less 10% of total income

b) or Rs 2,000 a month;

c) or 25% of total income.

Note that your spouse or minor child should not own any house with the city limit if you want to claim this benefit , You will have to submit a form called 10-BA that you are paying rent and not receiving HRA.

Bonus tip : If you are staying with your parents, you can pay them rent. If they don’t have
 significant income, it would mean you  save  tax on rent paid and even your parents income does
 not cross the  tax  limits, which is a win-win situation.

4. Declare your losses in tax return to save tax in future

A lot of people do not show their losses in shares, mutual funds, gold ETFs, real-estate in their tax returns. This is a big mistake, as you lose an opportunity to save tax in future years. You can set-off your losses against profits in current year as well as in the future too. For example : Assume you had sold your real-estate property and made a profit of 10 lacs after indexation. You will have to pay a tax of Rs 2 lacs @20%. However suppose in the same year you have also made a loss of Rs 4 lacs in stocks , you can set-off this loss with your 10 lacs profit and just pay tax on Rs 6 lacs , which comes at 1.2 lacs only. That’s a cool 80k in savings!

Also if you have only losses this year and no profits, you can show this loss in your tax returns and carry forward and set-off this loss against any future profits for next 8 yrs. For more details read this article.

5. Buy House with Parent or Siblings as joint-owners

Yes, if you thought only spouse can be co-owner in the real-estate property to claim the tax deductions, you don’t know the whole story. You can have your spouse/parent/siblings as co-owner and all the co-owners can claims the tax deductions of 1 lacs for principal and 1.5 lacs for interest part . So if you take a housing loan with your siblings as co-owner of property and co-Borrower of loan, the loan amount interest and principle paid will be available for tax exemption in ratio of your loan amount.

So if you are still a bachelor or a single who wants to buy a house, consider asking your brother, sister or parents to become the co-owner so that both of you can get tax benefits and reduce your tax-outgo. The only problem in this case is that loan-sanctioning companies are very stringent in giving loans to siblings, as their are higher chances of you parting your ways with them later in case of any family issues, however in case of spouse it happens lesser.

Bonus Tip : The co-owner who falls in the higher tax bracket should  hold a higher proportion
of home loan to make sure that the tax  benefits are maximised.

Income Tax saving tips

6. Use education loan to lower tax for your Children in Future

So what, if you have all the money to pay for your children’s education fees? It would be wise to opt for an education loan in name of your children’s name as you can claim the full interest paid on education loan under section 80E. Note that its only available if you are a parent or a legal guardian . You can’t claim deduction for your spouse education loan :)

The other thing is that you can take education loan on your children name so that after some years when they pay off their loans, they can claim the deductions themselves. Apart from this, they’d be more responsible and this education loan payment from their pocket will make sure that they don’t spend to much money in wrong places and you can use your money today some where else!

7. Take unlimited deductions for your second home loan interest payment

This one is the last tax saving tips we will discuss here. If you have already bought first home where you are living right now and want to buy another house, the good news is that you can claim full interest paid for the EMIs of second house. As per tax laws, you can claim full deductions for the amount paid as interest on loan for second house.

For the first house you can claim up to 1.5 lacs in interest, however for your second house you can claim full amount of interest without any upper limit! . Read some tips on buying real-estate

Which of the above income tax saving tips were new for you ? Please comment .

431 CommentsAdd Comment

  1. Prasad

    Nice tips. A few of these were totally new to me. What I would like to know is, is there any option or way to claim tax deductions for spouse’s loan? I will be probably taking a loan of about 12 lakhs in a few months time for my wife’s post graduation. What would be the better way to save tax on this loan?

    P.S: Some Ctrl +C. Ctrl +V error on this page. The last few paragraphs are repeated. :)

  2. Karthik

    Thanks for the post.

    “7. Take unlimited deductions for your second home loan interest payment” is new to me…..

    I just spoke with my finance team and they too seem unaware of this… Would you please quote the tax law which states this?

    I am living in my second house (taken on loan) and not in the first house (loan which I have completed – in another city). Is this applicable too?

    Thank you so much.

      • Rajesh

        Hi Manish,

        I am regular follower of your website and liked most of the articles.
        Now with regard to you tip 7. i think you should make it clear that if we want to get the benefit of tax claim for the unrestricted interest paid on second home loan then the pre-condition is it should be rented / or self declare it as an rented house (with nominal rent amount should be shown as income from the property)

        Rajesh

        • Rajesh

          Whatever the case , you will get unlimited interest payment exemption . Incase you have not rented it out , it would be deemed to have been let out and you will pay tax on the rent which you would have got incase you had given it on rent

          Second house = unlimited exemption for the interest payment

          Manish

          • Anunay

            Hi manish, the unlimited interest deductions on your second home loan? This may be correct techinically but practically this is not the case. The second home will not be self occupied and even if you have not rented it out, that rental value will be deemed income added to your taxable income in which you can deduct the interest paid. The interest component in EMI repayment will never be greater than the notional rent practically and hence you will not be able to claim any deduction.

            Correct me if I am wrong

            • Anunay

              Not always .. Its not always the case they you have to add the whole rent as your income , first you deduct any municipal taxes from it and then deduct another 30% from it as “Standard deduction” , so that will be your income .

              Now take interest part . Lets say you buy a 2BHK for 20 yr tenure for 50 lacs @11% .

              You interest alone can run around 3-4 lacs in first year . And how much rent you can get for that 2 bhk ? 12-13k and after deducting things from it , it might turn out to be 1 lacs per year only . So your interst part will be very high compared to the rent atleast in first half of tenure !

              Manish

          • ketul

            is there any limit for purchasing gold in physical form in income tax rule because i want to know how much gold in physical can you keep with you according to income tax rule, 50 gm or 100 gm or none

      • Karthik

        Thanks, Manish. When I go through these, I get a feeling that I should have 2 loans running. Is that so? In my case, one of my loans is paid off and only one loan is currently on. Please let me know.

    • banudas

      The question is not about the first house or the second house. The question is whether the house is let out or self occupied. All the relevant provisions are in section 24 and 25 of the Income Tax act. You can claim the deduction of full interest if the house in Let out.

      • Venugopal

        Exactly!! This concept of second home is just the interpretation of the tax. Many people can claim this benefit and save a lot by letting their first home on rent also. If i understand it correctly, its not for under construction property. But you can still claim this benefit for under construction period after getting possession from builder in next five years equally divided.

  3. Mitr Singh

    Manish,

    if capital gain(LTCG) from property is 12,50,000 & We use 6,50,000 (Including redistary) in second property in that case the taxable amount is (12,50,000-6,50,000=6,00,000) so tax 20% of it is 1,20,000. Now how can i reduce the tax without purchanse of any debanture or anything. How can i reduce the tax…

    Thanks
    Mitr Singh

    • Mitr

      I assume that this capital gains is considered indexed cost price of the house , In that case you can not save paying tax on this 6 lacs without investing it .

      If you want , then you will have to invest that money in REC or NHAI bonds only . else you have to pay the tax

      Manish

      • Navraj

        Hi Manish, I have purchased a plot and plan to contruct a house in the near future. what documentation would be required to prove that the plot is for construction purposes and hence get the tax rebate on the stamp duties?

  4. bharat shah

    frankly , no tip is not unknown to me. however, it refreshes your knowledge and also thought provoking, particularly bonus tip. in my case, my son is not getting hra, and we live together in my house. i am not having any income.so your bonus tip for hra is beneficial.keep up writing such articles! most tips are less known or thought off!

    • Bharat

      Yes , you can ask him to pay you rent of Rs 2000 per month (max he can get in HRA as exemtion) . He will save some money in tax and you will not pay any tax on it as your limit will be lower :)

      Manish

      • coder

        @Manish, first a big thank you for the information about sec 80gg.
        secondly pl let me know if i pay rent for 5 months of the current FY & then my company provides me accomodation, how much max deduction i can avail:
        1 ) 2000 x 5 =10000 or 2000 x 12 =24000
        2) total rent paid less 10 % of the net income (deducting all deductions except 80gg form total income)?

        thanks in advance

          • coder

            thanks for so quick reply.

            i have read somewhere (in some IT rules book) that the deduction is least of the following 3

            “Quantum of deduction
            The amount of deduction is calculated as under
            1- excess of rent paid over 10% of modified total income; or
            2- 25% of modified total income; or
            3- Rs. 2000 p.m
            Whichever is less is allowed as a deduction from the gross total income”

            so i was & am confused and asked this (2000 x 5 =10000 or 2000 x 12 =24000 ?)
            thank you in advance

  5. Daya

    Fantastic article Manish! it was truly helpful. I appreciate your hard work and efforts. Such articles will be really helpful for people like us who are the new entrants to the Income Tax and Investment procedures..!! Thanks once again!

  6. Vikas

    Hi,

    Need a clarification if someone can help.

    We have bought a house that we are paying for through our savings. The house is in the name of my wife. Can I extend a loan to her on interest for paying for this property?

    The idea is that she can claim deduction on the interest (up to Rs 1.5 lacs) from her income. I will have to pay tax on the interest but then as of now I am paying 10% tax and she pays 30%. It is still a saving for us.

    • Vikas

      It would be a wise decision to transfer the major part of house in her name as she is in higher tax slab . something like 75:25 in her and your name . She should be able to bring down the tax outgo a lot

      Manish

      • Vikas

        It is 100% in her name.

        Can I give a loan to my wife?

        Can she claim tax deduction on the interest she pays me? (I am aware it will get added to my income and that is OK).

              • dr kishan

                dear manish,
                great article as usual. one point to differ. i think its not necessary that the loan be taken only from recognised institutions. loan can be taken from anybody and the person can claim tax deduction for that while calculating income tax.
                section 24 incometax:
                thus only requirement is making documents regarding interest payable and paid

                i think that this applies when the loan is taken from spouse also. further clarifications will require the help of CAs
                please correct me if i am wrong

                dr kishan

  7. Pratik

    Hi,
    Manish ,
    Tax decuction on interest paid /stamp duty is only available for housing loans or we can claim if we purchase a commmercial plot or shop/office on loan .

    thanks
    Pratik

  8. Krish

    Very informative article.. The apna loan article is very eloborative about point # 7 but focussed which should be declared as self occupied or rental home. It is not clear whether it makes sense for anyone to opt for second home buy.

    If someone is in 30% tax bracket, your rental income is equivalent to interest paid, it is no great deal to buy the second home. However if someone bought second home with 50 lacs amount on loan and getting meagre rental income say 10,000 pm, it would turn out as very attractive.

  9. Rakesh

    Manish,

    Once again excellent post. I was not aware of –
    2 Claim stamp duty and registration fees in 80C
    5 Buy House with Parent or Siblings as joint-owners
    7. Take unlimited deductions for your second home loan interest payment

    Rakesh

  10. Anonymous

    Thanks Manish for a great article once again
    for #1, can we gift money to parents. My child is minor :)
    for #5, how do you declare the % of ownership. Currently I have house on my and my mother’s name. We haven’t declared any %age allocation. Loan is paid completely by me and I am taking full deductions. I hope this is a valid as per IT Laws. Also how the rental income on the house should be divided.

  11. Ashish

    Hi Manish, Thanks for an informative article. Some questions
    #1: Can we gift money to parents? My child is minor :-)
    #5: I have a house in joint ownership with my mother, but we haven’t declared any %age. I pay the loan completely and take the full exemption. I hope this is valid as per IT rules. Are there any guideline on showing rental income as well.

  12. Raj

    You can even open a Trust for your kids under HUF and get treated as a separate entity under tax laws. Correct me if thats not the case.

  13. Monali

    Can the Joint Loan Holders(Husband & wife) claim the Registration Fees & Stamp duty in any ratio like (40:60) for tax exemption if both are working ?

  14. Hi Manish,

    Nice article, though a query on #7, There are some limitations on 2nd house like it should be atleast 50 km away from your work place, can you clarify that?

  15. Amit Gulati

    Hi Manish

    As always another brilliant article with perfect timing as people have started submitting investment proofs for tax saving. Someone told me that if I spend some money towards medical expenses of my dependant parents that also qualifies for tax saving u/s80c. Do you have any idea about this?

    Thanks
    Amit

    • Amit

      There is no provision under sec 80C for this . But you can claim 15k for reimbursment . So if you have any medical expenses like medicines , doctor bills etc up to 15k , thats deductible , you get this in your package per year , but if you show the bills, you dont pay tax on this much amount ,so if you are in 20% bracket , you save 3k in tax

      Manish

      • Amit Gulati

        Thanks Manish

        I just got further info on this.

        Section 80DDB makes this allowance. A deduction to the extent of Rs. 40,000 (60,000 if senior citizen) or the amount actually paid, whichever is less, is available for expenditure actually incurred by you on yourself or on any dependent relative for medical treatment of a specified disease or ailment.
        The diseases have been specified by the Income Tax Act.
        You will need to furnish a certificate in form 10 (I) from any Registered Doctor working (but not necessarily regularly employed) in a government hospital.

        If you have health insurance which has reimbursed part of the treatment expense, then the remaining expense can be considered as a deduction under this section.

        Please note: this is applicable only for the treatment of certain diseases.

        Thus, Section 80DDB allows for a deduction of up to Rs. 40,000 (or Rs. 60,000 in case of senior citizens) for medical treatment expense incurred.

  16. Amit

    Hi Manish,

    A very informative post indeed!!!!!!
    I have got one query :- Is the interest earn on PPF in a particular FY is also comes under saving u/s 80C???? Say one has got 5 lakhs in his PPF account till 31st March 10 then the interest earn@ 8% i.e. 40K in FY 10-11 will also be come under savings??????

    Amit

    • Amit

      No , it does not come under 80C . I think you are askig if you have to pay any tax on that money or not ? So the answer is NO . you can get all this interest money at the time of maturity and at that time it will be tax exempt

      Manish

  17. Jaibeer

    Q: Cost of property: Rs 22lac, Mr A contributed 6 Lac and his son took the loan for rest of the required amount. two questions:
    1) how can Mr A include himself as co-owner? Does he need to persuade his builder for the same?
    2) Loan has been taken by his son, so can Mr A enjoy the deductions u/s 24 and u/s 80?

  18. UKN

    Had a question on the same lines as Jaibeer. If a father owns a property and son has constructed the house using the home loan (remember here the property is in the name of father). Will the son be able to claim the deduction on income tax since he pays the EMI ?

    If this is not possible is there a simpler way to get tax benifit ?

  19. Gift money to your major children and Save tax on Future Income

    Dear Manish,
    As Always very informative article! Great Job.

    1. Kindly clarify on tip no.1 i.e. Gift money to your major children and Save tax on Future Income. Provide source
    2. Can parents gift money to their married children? Money that Parents got from their children as Rent (or Rent paid by children to Parents), after adjusting/paying income tax by Parents.

    • 1) The tip comes from Subhash Lakhotia in his book “How to save tax through tax planning” (he comes on a tv show TAXGURU)

      2) Yes they can , parents can also get money from children and the income arising out of that money will be parents income !

      Manish

  20. raju

    Hi Manish,
    Is the money generated from the gifted money to spouse is taxable?
    If he/she is not earning member?I read somewhere, gift money to relatives is not taxed…

    Pls suggest on this.

    Regards,
    Raju

    • Raju

      Yes , the money you gift to your spouse or minor children if invested anywhere , the income arising out of it will be added to your salary .

      Note that the gifts to Major children and Parents is non-taxable . Also the gift given by specific relatives does not attract tax . Here relatives mean

      * Spouse of the individual;
      * Brother or sister of the individual;
      * Brother or sister of the spouse of the individual;
      * Brother or sister of either of the parents of the individual;
      * Any lineal ascendant or descendant of an individual;
      * Any lineal ascendant/descendant of spouse of the individual

      Manish

  21. Srikanth Achanta

    One question, i paid 7000rs to change my Home loan interest rate from 11% to 9% in this financial year. It was a limited period offer from ICICI bank.

    can i claim this amount for tax rebate?

  22. rajeev

    Manish,
    Day by day I have started considering your blog as on stop shop for all financial needs.
    I try to keep myself aware with most of the stuff but pleasantly surprised with point 7, about which I had not clue at all.

    Thank you very much your 7 might give a little push to real estate market :-)

    • Rajeev

      Thanks , Just make sure that every point is their to assist in decision and not influence your decisions . So just because their is unlimited deductions does not mean you go and buy real estate :)_

      Manish

  23. Sharad

    Hi Manish,

    Thanks for the information you have shared here. I own a house and I want to buy a flat in my wife’s name. She is a housewife.
    What is the best way which would not add the rental income (on possession) to my income. I don’t plan to take a loan as the flat should be in wife’s name.
    a). Should I make the payments and sign a loan paper with my wife.
    b) Gift her the money and she pays off.

    Thanks
    Sharad

  24. Sharad

    Manish,

    Query no 2 is if I’m getting a rental income from the house I’m staying in (from 1 floor). Would it be added to my income? If yes, what could be the best way to not get it counted. Is it possible to rent out to my mother/spouse and they in turn rent it out to the tenants. As none of them have any source of incomes. Would it be possible to show some kind of notional rent I receive from mother/spouse and they show the total rent and file return on this income.

    Thanks
    Sharad

  25. Amit

    Manish and Other Finance GURU’s…

    We are planning to buy a flat. Me and My wife together would be applying for Loan. Our plan is to finish the loan in 4 to 5 years ( Just to make sure we dont end up paying huge interest to bank).

    After 5 years, we wont be able to claim HRA and we might end up paying good amount of Tax.

    Is there any way of buying/transfering this flat in my parents name and pay rent to them. They can show it as thier income while filing returns.

    Any other Ideas are welcome….

    • Amit

      you can definately pay off the loan in 4-5 yrs , but did you do comparision between taking loan for 5 yr and 10 yrs ? In which case are you getting benefitted , as you also have to consider taxation . Considering you take it for 10 yrs , the interest part will be good enough as in that case you and your wife can claim total of 5 lacs (2.5 lacs each , 1 lac for 80C and 1.5 for interest) .

      You can always sell it off to your parents, and the house will become theirs … Assuming they will not have any other income, they will not have to pay any tax on it .. Looks as a good strategy to me .. Just make sure you transfer the house to him and not SELL to him , as it would mean paying the taxes on the profit again !

      Manish

  26. Amit

    Thanks Manish….. sounds like a plan….

    Do you have any idea how much would it cost to transfer the flat? Do we have to re register the flat? Cant we Gift it, instead of Transfering?

    • Amit

      I have no idea on the procedures details , you can Gift it ..

      Better hire a good CA , its better to pay him fees than to loose more than that by trying to do things on your own .

      Manish

        • Sandeep Jain

          Hi Amit,

          So what’s your final status. Actually I’m also about to get possession of my flat but due to lack of awareness 5 years back I booked it in my name. I was also thinking if I can simply register it in my Mother’s name. and then start paying rent to her. OR I can sell it to her, OR gift it to her.

  27. abhishek manocha

    the last point isnt in the favour of rich? for first house you get only 1.5 as upper limit, for the second you can claim any…. wow democrarcy!

  28. Judy

    Wow Manish, I am going to add you on my soul search list.
    I have found great wealth in the above article.
    Hope to use them in future as age age catches up.
    TQ.

  29. Rinks

    My mother is housewife and hence she is not having any tax liabilities. I am in 30% tax slab. I have some surplus with me to invest for 1-1.5 yrs (Preferring FDs) and want to avoid taxes on return. I have thought of following
    – I will give money as loan (or Gift) to my mom (whose income won’t get included in my income) and she will invest money for time period and after 1.5 years she will return me back my money.

    is it a true method to avoid paying tax on returns?

  30. Abhisek

    Hey Manish,
    Great post giving a lot of Insights.
    Just a couple of questions…

    1) I am karta of our Family’s HUF. I had extra funds in my account which i parked in the HUF Account as Loan so as to get Interest in HUF Account. Please let me know under whose file will it be taxable.

    2) My mother (getting remuneration as director in pvt. ltd.) is planning to buy a House. In case she makes part of the payment from her account and part of it from our HUF Account, in whose file will the Rent Income be taxable? Or will it be proportionately taxable? Also, what if we make the payment from the HUF account and get the House registry in her name? Also, who will get the benefits of 80C for Stamp duty in the various cases mentioned? (No Loans taken)

    Abhisek

  31. Amit

    Manish and Other Punters…

    Off Late i see some banks are offering 10.5% returns for senior citizen.
    My father is senior citizen. He gets pension and ends up paying little tax.
    Mother earns little, she does file tax returns with zero tax.

    If My father and Mother jointly deposit money, will they get 10.5 % returns as my Father is senior citizen and Bank does not deduct TDS as my mother’s income is less than the minimum Taxable limit?

    Probably i am asking too much :)

  32. ASHOK YADAV

    THE SUGGESTIONS GIVEN BY YOUR COLUMN ARE REALLY VERY IMPORTANT TO THE PUBLIC AT LARGE . PEOPLE DOES NOT HAVING THE KNOWLEDGE OF TAX LAWS ARE PAYING TAX ON NTHE INCOME WHICH CAN BE CLAIMED FOR REBATE BUT NOT DOING SO BECAUSE LACK OF KNOWLEDGE. THANKS FOR SUGGESTIONS.
    ASHOK YADAV
    9897439750

  33. Mann

    I have a “big” house loan running. Because of other financial obligations, I could not get my house registered, i.e. I did not go for registration and stamp duty stuff.
    Its been three years and I still hold only the Power of Attorney. Can you tell me if getting the registration done is really important? I am living in that house and have been paying house tax for every year.
    Thanks for your time and sharing so insightful information.. This site is now “bookmarked”….!!

  34. Nitin Gupta

    Suppose i am planning to buy a house for my parents.
    Is it correct that to get max benifit i shud buy the house in a city other than where my office is, so that i can get tax rebate on HRA(rent paid) as well as tax rebate on home loan interest.

  35. Ajay

    Hi,
    Regarding point 3.
    I stay with my parents & my parents are retired & basically don’t draw any kind of Income. What should I do to claim HRA?? Any documents to be in place?

  36. vishal

    Hi Manish,

    With the Direct Tax Code coming from 1st April 2012, the Tax Saving Mutual Funds will no longer have Tax benefits.

    What is your suggestion should someone start an SIP for this year? as SIP has to be of longer term without the Tax benefit other schems could be more attractive from 2012 compared to an existing SIP in Tax saving, or what is the other option.

    I am thinking of SIP in HDFC Tax Saver but then what should I do from 2012?

    Thanks

    • Vishal

      From Apr 2012 , there wont be any more option of investing in Tax product ,but for poeple who have already invested in those ELSS , there money will be locked up for 3 yrs and they will be able to take money out only after 3 yrs of payment . so you can start the SIP atleast till 2012 !

      Manish

  37. asif adeni

    Dear Sir
    am now retired. my daughter has given Rs 5 lakhs by cheque to buy a car.

    in other words she has gifted me Rs 5 lakhs. how do I show in my IT.. return..?

    Kindly let me know –thanks.

    Regards

    Asif Adeni

  38. bilandar

    I am NRI. I come below the income tax bracket. This is the first time I have already filed ITR just for getting refund on TDS on bank interest. However, I have not declared income from renting the house to my sister. In fact, she stays in my house in India but I don’t collect any rent from her. But, she is working and has declared rent paid to me to get her tax relief.

    Will it be problem for me in this situation?

  39. bilandar

    Dear Sir,

    I am nri. My mother is housewife in India and a senior citizen. She has income about 1 lac per annum from the bank interest.

    In current financial year I will come under tax bracket from income from bank interest. Just to avoid tax on my income, I wish to give 5 lacs as a loan to my mother and she will invest on her own and earn and then return back principal amount after 3 years.

    Can you please tell me, how to prepare documents for doing this in simple way and later I can use this to get tax relief for me.

      • bilandar

        That way I will be depositing amount in my mother’s name and so interest income will be earned by my mother and not by me. (She is currently no falling within the tax bracket where as I fall within tax bracket) Anyway, this will ensure dual pupose. One way I can help my mother to earn some income and two I can save the tax on my personal account.

        So now question is, if I want to give a rs. 5 lacs as a interest free loan instead of direct cash to mother (which she can utilise in fixed deposit on her name), how can I do it simple way?

  40. Mahesh Chatterjee

    Hello Sir,

    My name is mahesh chatterjee,i just want to know that is there any tax deduction we gift our parent with some goods like electronic items?I want to give Laptop to my parents will it come under Tax deduction?And thanks for your all the tips.

    • Mahesh

      No , You cant get any tax benefit by “giving” the gift , its always the other side which benefits by getting the gift and the benefit is only upto “not being taxed” .

      Manish

  41. Anand

    Dear Manish,

    My father has a plot of land which is registered in his name,as an individual.
    I am planning to construct a house on this plot. What options are available for me to save tax.
    Is there a provision where I buy the plot from him and then take loan both for buying the plot and construction of house. Will my father be charged with tax for the amount which I transfer to him for land.
    I am looking at an option where we both enjoy benefit and save maximum tax.

    Regards,
    Anand

    • Anand

      The best answer can come from CA only . But as far as i understand , you can directly build the house on the plot with loan taken by you and your father in 50% : 50% or what ever ratio works foryou

      Manish

  42. kasi

    Me and my mom have joint home loan and joint owners of the home.We both stay together.
    I have paid my home loan that i have taken for the house. I still Now can i pay rent to my mom and claim HRA. My mom has no income , i can file income tax return for her for this rental income.
    is this allowed ???

  43. mahendra chouhan

    I have purchased a flat in name of my wife last year when she was not earning now she is in job .I have sold this flat in july, so STCG liability will rise on me o or on my wife?

  44. raman

    Dear Manish.Great article.
    I have two properties A&B. Both on Joint name with my wife and both on rent.Property B home loan is being paid by me and I am enjoying tax rebate. Peoperty A no loan is pending. Wife also files return…hardly taxable bracket.I am showing rent from property B in my income.Rent from Property A comes into her bank account
    Question: For the purpose of filing my income tax return and showing rental income. Do I have to show income as 50% each(into my wife and my account) or I can chose to show it as 10% and 90% or any other ratio(1% and 99%)? Why do I ask? I would like to show the higher rental into wife’s income (propertyA) because she wud hardly make it to tax bracket. rental from Property A goes to her account and for Property B comes to my account
    Regards
    raman

  45. raman

    Dear Manish.Great article.
    I have two properties A&B. Both on Joint name with my wife and both on rent.Property B home loan is being paid by me and I am enjoying tax rebate. Peoperty A no loan is pending. Wife also files return…hardly taxable bracket.I am showing rent from property B in my income.Rent from Property A comes into her bank account
    Question: For the purpose of filing my income tax return and showing rental income. Do I have to show income as 50% each(into my wife and my account) or I can chose to show it as 10% and 90% or any other ratio(1% and 99%)? Why do I ask? I would like to show the higher rental into wife’s income (propertyA) because she wud hardly make it to tax bracket. rental from Property A goes to her account and for Property B comes to my account
    Regards
    raman

  46. Deepa

    Dear Manish,

    I am a regular reader of your blog and I find them very useful.
    I have a doubt regarding the interest paid on education loan and tax deduction. I am paying interest on my education loan. My last year’s statement from bank showed that the interest I paid as Rs9910 and I already filed my IT returns and the processing is over. But recently, I got my net banking activated, and the account statement shows that the interest paid in the previous financial year was in fact Rs 24,000. Is there any way I can avail the tax deduction on the same now? or is it possible for me to show it in this year’s returns?
    Regards
    Deepa

  47. Ram

    Manish,

    Nice article. Just wanted to check on point no 7 that you have mentioned in the article.

    As i understand the tax law states that there is no limit on the interest deduction for loan on properties which are not self occupied. This essentially means that if one is staying on rent in parents/landlords house and buys a home(would be thr first home) then one can enjoy the benefit of the unlimited interest deduction. It need not necessarily be the second home.

    As rightly said by you rent on this property (actual or notional) would have to be declared as income by the person enjoying the benefit.

    Lemme know your thoughts.

    Cheers
    Ram.

  48. ClickInsurance.co.in

    These are wonderful tax savings tips. As they say, awareness about the tax savings options is the first step in capitalizing on the benefits that are provided by the governement for claiming tax deductions. The benefits under section 80C for claiming tax exemption for investing in mutual funds, provident fund and insurance products should also be given a serious thought by everyone.

  49. prema sankaran

    Dear Manish,
    I read about giving interest-free loans to children to save tax. I would like to know how to go about this from you. Could you give me some details? I would like to give Rs 2 lacs to my daughter who is now an adult.

  50. abhijit majumdar

    Ihave one question regarding long term capital gain.i have earned Rs1100000/after indexisation as long term capital gain from sale of a plot ,now Iam going to purchase a flat for 2300000/out of that my own contribution Rs 3 lakh and 20lakh from home loan and have a plan to invest Rs eight lakh on that flat in coming two years.do I have to pay any long term capital gains tax on Rs 8 lakh(1100000/-300000/) or I shall be exemted from paying long term capital gains tax since I shall invest Rs 800000/ in coming two Fin.years, still I have not filed my return nor I have deposited any amt in capital gains deposit scheme in any bank, give some advice

  51. Sanghvi

    The article above is very insightful and nice. However I would like to know, if my mom can take a loan from her FD and inturn give that loan to me interest free and also whether my mom can claim deduction on the interest paid on the loan against the FD (Fd interest less interst paid on the loan agst FD)?

  52. Rustom

    Hi Manish,
    I have read the blog and I must say Good Job Manish…!!
    well I thought of asking you a suggestion myself .
    can you advice me on some ways apart from home loan to save my tax.
    I’m a defence officer and pay Rs 6900/- pm tax and it gets deducted at source.
    so which tax form, I should fill and how should I save this hard earned money?
    Thanking You in Anticipation.

    • Rustom

      Truely speaking apart from home loan , sec 80C,D,E,F,G etc are the top most ways of saving the tax, if you have exhausted them , than there are hardly any other ways .. meet a CA , he can make a customized solution

      Manish

  53. Joe stephen

    Thanks for the Tips on Tax saving.

    If I give a gift of 4 lakhs to my wife whose income is less than 1 lakh (she files nil return every yr), Do I GAIN in reducing my annual income by 4 lakhs (I am in the 30% tax bracket) thereby saving 30% of 4 lakhs as tax, which otherwise would have added to my tax for the current financial yr ?

    • I don’t think you will be able to gain that benefit. As all your income will get clubbed to your wife income unless yr wife is having job or business which is own by her only. But you can take that advantage by giving to parents.

    • Joe

      No , you cant do that .. you can gift the 4 lacs to wife , but you need to pay tax on that , also any income earned on that 4 lac will also become your personal income and not your wife’s

      manish

  54. Abhishek Manu

    Hi Manish, I have been reading this forum, need one suggestion. I have recently bought a house on my wife’s name, and loan is also on my wife’s name. I am just a co-aaplicant in the loan, but, full EMI is being paid by me. My company says I cannot claim any tax benifits as loan or home is not on your name. I am paying heavy taxes and would like to reduce it, please suggest if any criteria exists through which I can save tax through this component.

    Thanks

    • Abhishek

      For tax deduction facility , you should also have house on your name in same ratio in which you are paying the EMI , only then you will be able to claim the tax else not , there is no workaround here ,its plain INCOME TAX RULES

      Manish

  55. amit

    Hi thanks for the post,
    there is another way to save your tax. Gift your money to me and I’ll run away, this way you can Show your loss under section 420 G, and save tax,. Another benefit will be you’ll get my blessings

  56. Mehul Dalwadi

    Dear Friend,

    Thank You very much for putting this data on net, till to date i don’t know this idea.

    THANK YOU VERY MUCH.

    Reard,

    Mehul Dalwadi

  57. sumit

    my mother is selling her house and wants to give that money to me and my mother
    what is the way out?
    she will have to pay capital gain on profit or not??

  58. sriram

    Firstly thank you for very good article.
    Secondly I have a question is there any way to get tax saving for investment on the remodelling of the existing house.

  59. Divakara A B

    Thanks for the excellent tips.
    You had suggested that, if the amount is gifted to children who are majors are kept in the bank as FD, the interest earned on the FD will be treated as their income and will not be clubbed with mine. Please clarify whether such gift can be made to married daughter. Is there any ceiling on the gift per person per year? Is there any procedure to gift money or just issuing the cheque will be traeted as gift.

    • Divakara

      There is no limit for making a gift to certain relations , gifting to your daughter is 100% tax free in your daughters hand for any amount . You will have to produce a GIFT DEED . But note that with this , the money will become hers and not yours , legally its her money after that and the income coming from it will be her income .

      Manish

  60. D

    Hi Manish,

    Great job on the website!

    I have one query for you: I am living with my mother and the flat we live in is jointly in my name and her name.

    I would like to pay her rent, but since the house is party in my name, do i need to get it transferred fully to my mother’s name and then pay rent?

    Also, any other guidelines so i can increase my mother’s income?

    Thanks very much!

  61. Durga Prasad S

    Hi Manish,

    Thanks for useful information in the site.

    I need one clarification regarding claiming house registration fee under 80C. I bought a new house and registered on my wife name.She is house wife.

    Can I claim house registration fee for my tax savings under 80c?

    Thanks,
    Durga

  62. Durga Prasad S

    Hi Manish,

    I think my question is already answered above.

    I understood as per your previous answers, I can not claim

    Thanks,
    Durga

  63. joel dsouza

    hi manish,
    good tips simply explained,i am 46yrs not working due to health,i have 2 rooms enjoined into 1,mothers name is added.now given the same on rent as one unit and staying in smaller house 20kms away.this has been done for some income purpose.what is the way out because rent and broker exhaust more than 50%.
    thanks
    joel

  64. Padmakumar G

    Happy New Year Manish…

    I have my house in Pune with my wife as co-owner given on rent from May2011 onwards. My wife is a home maker and the rent is going in her account. We are living on a rental accommodation in Bangalore. I am paying the EMI for the house at Pune claiming 100% benefit. How do I show the Pune rent in my declaration ? Do I need to declare as my source of income, even if the amount is going to my wife’s account ? How do I need to declare Let out Property ? Please advise.

    • Padmakumar

      I am wondering how you are claiming the full benefit if your wife has not taken the home loan on her name ? Because if she is co owner and also a co borrower , then the rent will be deemed to be her income

      Manish

      • PadmakumarG

        Thanks for the quick response Manish. In the loan agreement we are co-owners also per the registration documents for the house of Pune given on rent since May 2011. I am the only one claiming the Home Loan benefits (EMI) as my wife is not employed, as stated earlier. Do you mean to say, I cannot claim the home loan benefits (Interest + Principal), as the rental income is going in her name only.

        • Padmakumar

          No , I am not saying that … as per the rules .. you can claim tax deducations only in the ratio of what you own and have co-borrowed , so I am assuming you guys are 50:50 in ownership and borrowing .. so now you can claim only that 50% part of yours upto the limit to 1.5 lacs in interest and 1 lac in principle .

          Manish

          • Padmakumar G

            Thanks Manish, but as she is not employed anywhere and doesn’t have any source of income, its me who is claiming the 100% home loan benefit limited to 1.5 lacs in interest and 1 lac in principle. Now as the rent of that house is going in her account, I want to know how I would be declaring that amount. Do I need to show the rent is my ‘Income from House Property’ apart from claiming full home loan benefit ? Please advise

  65. Padmakumar G

    Thanks Manish, but as she is not employed anywhere and doesn’t have any source of income, its me who is claiming the 100% home loan benefit limited to 1.5 lacs in interest and 1 lac in principle. Now as the rent of that house is going in her account, I want to know how I would be declaring that amount. Do I need to show the rent is my ‘Income from House Property’ apart from claiming full home loan benefit ? Please advise.

      • Padmakumar G

        Thanks Manish, the rent is going to her account as she has no other earnings and the total rent amount is well below her taxable income. So you mean to say, if I am claiming 100% home loan benefit, I need to declare the rental income as my source of income ? I will start a thread on the forum too. Thanks

  66. Ashutosh Gangrade

    Hi Manish !
    My company is giving me 54000/- yearly as HRA .Can this amount be used to save Income Tax.Actually currently I am have invested Rs. 30000/- .I want to reach to the limit of Rs. 100000/- , If HRA can be used then I will have to invest only Rs.16000/- other than that Rs. 30000/-.

    • Ashutosh

      NO HRA does not help in direct tax saving .. only benefit of HRA is that its tax free and you dont have to pay tax on that .. but your Salary comes only after HRA is cut

      Manish

  67. Jasbir

    Hi,

    I have a house loan and staying in another city.
    So i can claim HRA as well as other benefit of House Loan(interest + principal).
    House loan is name of me and my father but we have not declared the ratio.

  68. mahendra chouhan

    I would like to make one clarification from you that in the calcualtion of short term gain calculation from sale of house property,cost incurred on traveling for buying flat in another city than place of work or recidence to be considered in cost of acquition ?

  69. N. RAMAKRISHNA RAO

    Sir, I have retired from service on superanuation. I am getting pension+bank interest= 4,00,000/- per year. After paying income tax on my income i want to tranfer rs. 1,00,000/- per year to my wife who is not having any income. She will pay the income tax as per existing rules. it is correct or not. please clarify

    Thanking you,
    Sd/-
    (N. RAMAKRISHNA RAO )

  70. Katoch

    I could not see an answer to Ramans question, as I have similar query. His question was…..
    raman August 19, 2011 at 1:15 pm
    Dear Manish.Great article.
    I have two properties A&B. Both on Joint name with my wife and both on rent.Property B home loan is being paid by me and I am enjoying tax rebate. Peoperty A no loan is pending. Wife also files return…hardly taxable bracket.I am showing rent from property B in my income.Rent from Property A comes into her bank account
    Question: For the purpose of filing my income tax return and showing rental income. Do I have to show income as 50% each(into my wife and my account) or I can chose to show it as 10% and 90% or any other ratio(1% and 99%)? Why do I ask? I would like to show the higher rental into wife’s income (propertyA) because she wud hardly make it to tax bracket. rental from Property A goes to her account and for Property B comes to my account
    Regards
    raman

  71. Katoch

    Hi Manish – You are doing a wonderful service ! My query….
    Property A–> registered in my name and my wifes name. All loans are cleared. On rent. Rent taken in two parts 50% in my ac, 50% in my wifes ac.

    Property B –> Wife co-borrower for 2nd home loan. I pay the EMIs. Property on rent. All rent goes in my wifes ac. Total income of wife less than 5 lakh per yr. Does not file IT.
    Questions
    1. Can I show Property B as self occupied ? (I think out of 2 properties one can be)
    2. Can I alone claim 1 lakh principle u/s 80(c), and unrestricted interest payment u/s 23(i) [or is it u/s 24 ?] with a certificate that my wife is not claiming benefits in IT or do I have to ask my wife to file IT returns and claim 1 lakh each in principal and 50% each of interest paid (she does not pay EMI) ?
    Thanks
    Katoch

  72. SUBHADIP ROY

    I do not agree with point 4. Loss in share market is loss from speculation (speculation loss). And that can not be offset with gain from property. Loss in speculative business can only be offset against gain in speculation business.

  73. subha kandhari

    my mother gifted me 10,00000 as my marriage gift in 2010. now she want to make a gift deed. so can u plz tell me how much gift tax she has to pay or any suggestion to save maximum tax? plz reply its urgent…

  74. sankaran

    To save tax in my hand I gift 15 lakhs to my daughter. My daughter in turn gifts the amount to her mother who is my wife not having any income. Now my wife puts the money in fixed deposit and earns interest. Whether clubbing provision still applies in my income? Please clarify.

  75. VIVEK

    hi manish,
    i m a regular reader of ur articles.
    as return filing time is up ahead , hats off to you for yet another nice article at the right time.
    well i have sm queries.

    1. i hv bought a house for 35 lacs, for which i took 26 lacs of loan frm HDFC, can i get exemption of 1 lac capital and 1.5 lac interest paid that means a total of 2.5 lacs.
    2. if suppose i buy a second house can i realy get full interest exemption .
    3 if my wife and i become the co-owner of the house can v both get exemption of unlimited interest seperately.
    4. if my wife was a co-owner of my first house (which is not the case as i m the only owner of my first house) cud v hv both enjoyed the exemption of 1 lac for capital and 1.5 lac interest paid separately.
    5. one more thing about filing of return: as per now i m filing a return thru a CA who is taking 12 %of refund money as he brings the cheque. one benefit of this thing that he surely brings the chaeque in abut 5-6 months, can it be safe to go for ECS option for refund. what if the money is not refunded or delayed because i can run to get money back as i remain very busy.

    • Vivek

      1. Yes, definately :) .. just make sure you have possession certificate .

      2. Yes

      3. Yes, but it must be second house for both of you, means if the first house is only on your name, then the secound house will be first house for your wife , in that case she will have that limit

      4. Yes, if she was co-owner of the first house and was paying the EMI also in same proportion , then the limits are seperate for both of you , means 2.5 lacs each = 5 lacs total

      5. In that case your CA should be ok .. but if you file the refunds online , its known that refunds come back in 2-3 months only .. if the refund amount is not big , then CA is ok , but if it runs in very high amount, you might be loosing too much money just because of convinience factor

      Manish

  76. suresh

    Hi

    I have bought a house in 2006 through homeloan in my home town and i am claiming tax benefits on the same

    Since i am staying in some other city i am also claiming HRA benefits

    I am planning to buy one more house through home loan in my home town.Need clarity on the following

    a) Can i continue to claim HRA benefits
    b) I will claim only interest benefits from both loans and i will not claim any benifit on principle amount since i have already exhausted 80C through PF & PPF
    c) Can i claim tax benefit for standard deduction for both houses and show rent from one house

    • SUresh

      1. Yes
      2. Yes , thats fine
      3. Not both , one house will be deemed to be self-occupied and you cant show rent on that one .. you can show rental income on only one of them

      Manish

  77. jayesh

    as per the last tip, please advise under which section, the interest payment is exempted from income for loan for purchase of second house?

    can the second house be purchased in joint names?

  78. saket

    I am a Central Govt. employee falling under new pension scheme (CPF). Please guide me that is there any notification of I.Tax for declaring the investment made under Contributory provident fund as not eligible for deduction under 80C. Previously I got deductions for investment made under CPF under 80C. Is the investment made under CPF is still eligible for deduction under 80C? Please clarify (for F.Y.2011-12).

  79. Jay

    Hi Manish,
    I work in private sector and want to save my TAX, i have utilized saving under 80C and also had claimed HRA… now i want to further save my TAX,

    My Mother is a housewife and my father is in govt service….
    If i give 2 Lakhs rs to my mother
    1) is this mean, my net taxable income would be reduced by 2 lakhs ??
    2) will there be any effect on my fathers’ TAX, coz im gifting to my mother ?
    3) Is there any extra form/certificate that i would have to fill along with my ITR to show this gift?
    i know too many questions, please guide :)

    thanks & regards,
    Jay

    • Jay

      You cant save further tax now .. if you gift 2 lacs to your mother , the only advantage is that your mother will not have to pay tax on that 2 lacs and the income arised out of that money will be your mother income , but note that your mother will be the owner of that money than .. she can do whatever she wants with it

  80. Pramod

    Hi Manish, i m in Govt Job i added my father in my medical card and take medical reimbursement for his treatment about Rs 35,000 Is this amount taxable? and i also want rebate in HRA rent paid to my father. Can i take benefit of HRA. Also i booked a plot i m paying loan interrest for that . Can i take rebate on that interest too, i havn’t got possession for that
    thanks & regards,
    Pramod

  81. binu

    dear friend,
    is there anyway i can save on tax for the housing loan i am paying on behalf of my father.the house is in my dads name..i am helping with the emi…thanks

  82. Samarjit Baruah

    Hi Manish,

    Thanks a lot for sharing these great tips, need your urgent help on point 7 –

    I am currently working in Assam and staying in a rented house. I have a housing loan against a flat in Gurgaon. Possession certificate of the same would be issued in the 1st week of March’12. This is my first proprty.

    => Interest paid on the property in 11~12 : 1.98 Lacs
    => Interest paid upto FY 10~11 : 2.8 Lacs, 1/5th of this Pre-EMI interest – 56,000/-

    Plz guide how I can claim the entire amount of 2.55 Lacs (i.e 1.98 + .56 lacs)
    Plz suggest whether I need to declare any income rent, as the possession is taken in March and it won’t be rented out in FY 12. If yes, plz suggest what should be the nominal value, and whether 30% deduction to be shown in the calculation.

    Thanks again for all your valuable inputs :)

    Samarjit Baruah

    • Samarjit

      You need to show that you paid the interest before possession and now you can declare 1/5th of it , so you can get it . But the total interest is limited to 1.5 lacs only .. so you can never claim more than 1.5 lacs in a year . But in your case your yearly interest is anyways going beyond the limit, so this benefit is of no use to you.

      If your interest was say 90k yearly , then you could have took that 56k and claimed the total of 1.46 in a year .

      Manish

  83. Ramakrishna

    Hi,
    Thanks for the use ful info. I have a question. I took loan from my friend and it is credited to my account online. Should I declare this as income? this is purely an informal loan.Is this income taxable?

    Regards,
    Ramakrishna

  84. Ramakrishna

    I started trading in sharemarkets from April’1 2010. I made so many transactions that I lost count of what is the exact profit/loss i got. Is there a way where by I can calcualte net gain/loss i amde over a particular period of time or i have to calculate manually ?:(

    Thanks,
    RK

  85. sunil

    i am a salaried person 30% slab
    i listen that if you gift money to your father it will be reduced from income is it true or can we save the tax by gift the money to parents
    any other tip to save tax as salaried
    your tip about second house is awesome thank you

    • Sunil

      No , your cant save tax on the amount by just gifting it to your father, the only advantage is that if you gift some money to your father, the future income arising out of that money will be treated as your father income , not yours .

      Manish

  86. Soumya

    Hi Manish,

    I worked for a company for 3 months (did not avail HRA) and then freelanced for the remainder of the financial year. Can I submit form 10 BA and claim and tax relief?

    Thank you,

    Soumya

  87. pooja

    Thanks for the good article. I know that the capital gain tax from sale of property can also be saved by investuiing the amount in a residential property. I wish to know is it ok if i invest in my child’s name. i mean if i buy aproperty in my child’s name but with my own funds will it be considered for saving capital gain tax.

  88. Sriram

    Hi,
    If I buy a 3rd flat will i be allowed to have the 1.5 lac deduction on my taxable salary?

    I am staying in one of them and my parents are staying in the other. Hence I don’t get any income from both of them.

    Regards
    Sriram

  89. vijay singhania

    mother gifts jewelry to her major sons acqired by her in 1975 would like to know tax liabilities under capital gains in the hand of the donar.

  90. Swati

    I have a question on Gift tax- what category of relatives does the clubbing of income rule apply to?
    For example, I gift money to my parents / grandparents. They then invest that money in FDs. Now, will I be liable to pay tax on the interest earned on those FDs deposited in their name?

    (I know that if a lady invests in FDs, where the money is gifted to her by her husband, then the interest earned on those FDs is taxable in the hands of her husband.)

    • Swati

      In your case, if you gift the money to your parents/grandfather, then it will then officially become their asset and then all the income arising out of it will be taxed in their hands :) . So this is a good strategy. go ahead.

  91. rafi

    i have sold an ancestral agricultural land.to save capital gains can i construct a house on a plot owned by my wife.

    • Rafi

      No , if the plot is not on your name, you cant save tax on that. Also after selling agricultural plot the money can be saved only when you invest the money in agricultural property

      Manish

      • rafi

        Can you claim exemption u/s 54 or 54F for constructing house on land owned by wife?
        May 15, 2010 By taxworry
        Capital gains exemption can be claimed u/s 54 or 54F if the sales consideration is invested in buying the house or constructing the house . It does not matter if the land on which construction is done is owned by spouse. This is what karnataka High court said in the deicision in case of CIT and Anr. vs P.R. Seshadri [228 CTR 334 ]
        The facts of the case
        The assessee during the relevant accounting period was holding 90% shares in a company and transferred the entire shareholding in favour of another company. The assessee during the year had received Rs.25,00,000/- as advance payment towards the transfer of the said shares, and had invested the proceeds in the construction of a residential house on a piece of land that was owned by the assessee’s wife.
        A.O. assessed the Capital gain on transfer of share . Assessee appealed to the CIT (A) and made the alternative argument of deduction under section 54F on the construction of the house on a piece of land which was owned by his wife gument was not accepted by the CIT(A).
        On appeal to the tribunal by the assessee, the tribunal held in favour of the assessee and in doing so held that the assessee had contributed to the construction of the house out of his funds generated by the sale of shares and irrespective of the fact that the land belonged to the wife of the benefit under section 54F.
        Decision of High court
        23. The first question relating to the benefit of s. 54F being availed by the assessee in our opinion has to be answered against the Revenue and in favour of the assessee for the reason that though the land may be in the ownership of assessee’s spouse, nevertheless the Tribunal has recorded a categorical finding that construction work was in progress during 21st April, 1995 till 31st Aug., 1996 and the wife of the assessee could have included the value of construction for mortgage purposes and this alone does not mean that construction was carried out by the wife of the assessee out of her own funds so as to deny the assessee the benefit of deduction under s. 54F of the Act.
        24. If that is to be accepted as finding of fact then we find no impediment in the assessee’s claim for relief under s. 54F, as the assessee had claimed relief to the extent of Rs. 20,96,008 as his contribution towards the cost of construction of the building and this amount we find that will fall within the cost of the building. Accordingly questions (i) and (ii) are answered in the affirmative and against the Revenue.
        what is your opinion on this?
        please reply

  92. Anand

    Hi,

    We have a plot in the name of my father. I want to construct a house and since the plot is not in my name, I cannot save on income tax when availing a homeloan. CA suggested to include my name as the co-owner of the land, but that’s a lengthy procedure as the plot was allocated by the development authorities under scheme.
    Is there any other option available which can help me avail tax benefits, say power of attorney(maybe there are variations in POA but I am not aware of it). Will it help if my family makes some kind of will transferring the plot in my name.

    Suggestions would be greatly appreciated.

    Regards,
    Anand

  93. Jitendra Yadav

    If i receive a FD ineterst of Rs. 20000/- and transfer this money to my mother as a gift ,she is dependent on me .Then can i save tax on this amount.

    • JItendra

      No , you cant save tax on this money like this, once its income , then its income, the question you should have asked is , that will your mother have to pay any tax on this amount if she gets it from you as gift, then the answer is NO

      Manish

  94. Viral Patel

    Hi Manish,

    Very good info.

    I have one query regarding point # 7 .

    I am having one home loan for my new home i took. In current financial year only i have taken one add on loan against the same home. In this case will this another loan be considered under the no upper limit for interest on second home loan purview?

    Please clarify asap.

    Thanks
    Viral

  95. Vandana

    Hi Manish,

    Your all articles… are outstanding always !! even when i’m vry busy & searching on urgent basis searching some information, I always found ur site, And I can’t control myself to read your full articles !! Good Job !!

    I have 1 query Pl try to give some inform.

    One of my client having a property in his mother’s name now he wants to sold it.. & wann take a new one property.. but becoz of loan approval.. he will going to purchase new property in HIS & Brother’s Name.. SO I wann to ask u that Is that old property will be taxed under capital gain ??? His Mother’s will need to pay a tax or not?? IS THERE ANY OTHER WAY?? pl suggest me MANISH.. !! Awaiting for ur reply!!!!!!!!!!!!!!!!!!!1

  96. vandana

    Thank You for giving ur valuable time for replying !!! thanks……a lott!!! me too ws thinking the same… but wantsss to confirm frm you…Thanks a lottt

  97. sunny balwani

    Hi Manish,
    Thanks again for this wonderful article. I was not knowing these tips. I have two queres as mentioned below:

    1.There is one plot on my mother’s name, if she tranfers that plot on my name. Then i buy a flat through home loan, so will this flat can be considered as my second home & can i claim more than 1.5 L interest p.a. on this flat as second home? what will be money(approx) my mother has to spend for this plot transfer?

    2. My grandmother has given one plot to my father as a will before her death, but my father has not transfered that plot(current value 17L) on his name, now if he transfers this plot on his name, wht amount money (in form registration, stamp duty etc) approx he has to spend, and after this if he sell this plot then what will be tax implications. currently he is retired and not earning any income. He will be senior citizen after 3 yrs.

    Regards,
    Sunny Balwani

  98. saurabh

    hi Manish,
    Thanks for the tips. These tips are very useful.
    I have a doubt in first tip i.e saving tax by giving gifts.

    My gross income: 3.75 lakhs
    P.F=45000

    PPF=15000

    LIC=20000

    Medical Policy=15000

    Relief fund=20000

    Education Loan= 30000(only interest . however the total EMI was around 1 lakh).

    Hence total investment= 145000

    My net taxable income=50000(375000-180000-145000).

    Plz tell me if I gift Rs 30000 thousand to my mother who otherwise does not have any other source of income then how much will be my and her net taxable income ?(She has a fixed deposit in her name and these 30000 will be deposited in that F.D).

    Thanks and Regards,
    Saurabh

  99. Raghav

    Sir,

    Staying in a house bought in 2007 with a loan of 8.00 Lac and availing TDS on this one. Booked a flat in flat in May 2010. Regestration was done in Dec 2010 (Registration charges were 87K for land and construction deed). 16.00 Lac Loan sanctioned in Feb 2011. Costruction completed in Jan and the possession of the flat in Feb 2012.

    Paid intrest 80K and principle 37K on first house during Apr-11 to Mar-12
    Paid intrest 130K and principle 58K on Second house during Apr-11 to Mar-12.

    Already got Loss on property benefit -TDS on first house which is self occupied. I paid some 30K Tax inspite of this. No regrets.

    But, Now having the figures of intrest and principle amount paid on Second house, how to proceed to get the benefit on intrest paid on second house while filing returns?

    Please suggest.
    Thanks for keeping the thread alive.

    Raghav

  100. Abhishek Shrivastava

    hello manish,
    i live in a flat provided by my company(PSU), which is in company’ own colony.
    there is a rule that company will not pay HRA if any flat for eligible person is vacant. so i opt to choose company flat. it is not furnished neither they pay electricity bill for the same.
    there is no official lease agreement between me and my company for the same.
    now company’ finance people are saying that the amount equal to HRA (which is not even paid to me) is taxable since you are living in company flat.
    I do not understand tax much. i know that HRA is exempted upto a certain limit.
    Kindly educate me on the same.
    thanking you in anticipation

    • See , HRA is given only when company does not provide you accomodation because the HRA is the compensation for not providing accomodation, now when they have provided you accomodation , then you will not get HRA per se , so that part of income automatically becomes your income and hence taxable

  101. niladri sen

    Hi!

    i am planninag to sell my house, can i save on LTCG tax by declaring the profitable amount as a gift to my daughter?

  102. Uday

    Hi Manish,

    Let me applaud your informative article about little known Tax saving ideas. As for tip no. 7 I have been reading up a lot about this one, however i still am not clear about my own situation. Please let me elaborate.

    I live in a Company leased Accommodation in Mumbai. Amount Deducted from my salary is 20000 p.m. However, rent paid by company is added to my Form 16 as Perk(hence i pay 30% tax on that). I have the option of entering into individual contract with Landlord and claim HRA.

    I solely own a house in Ahmedabad which is clear of any loan. My In-laws are living in this house right now.

    I’m buying another house in Ahmedabad thru a joint loan (50Lac /11% /180 months) with my wife. The second house will eventually be occupied by my In-Laws. Thus making my first house un-occupied.

    Now in this case, how can i maximize my Income Tax Savings.

    1) should i opt for HRA instead of CLA.
    2) Do i have to have a Loan running on my First House before i can claim unlimited interest deduction for my second home?
    3) And suppose i start a Loan for house repairs and renovation on my first house, what is the maximum Interest deduction allowed for both of us.

    BTW for me and my wife 80C limit is always exhausted by PF deduction, LIC premiums and Tution fees.

    Hoping to get clarity finally!!!

    Thanks in Advance..

  103. Ankur

    Slightly different from topic question.

    I left my previous company in Sep2011 and joined new company in oct2012.

    1. I encashed my leave in Aug2011 for 58000 rupees. I thought leave encashment is non taxable. Now I got to know that the leave encashment during service is taxable but relief can be claimed under section 89. Now I am not able to figure out how much relief can I get and what is the procedure to avail that benefit.

    2. While leaving my previous company, I paid 2.1lac against notice pay+service bond+training bond. Can I reduce this (or any partial) amount from my total salary to avail tax benefit?

    Please help.

  104. uma

    hi.. can u tell me wat are all the reimbursement that can be useful for tax benefit.. like petrol bills.. medical bills.. internet/telephone …!!

  105. shiv

    hi Manish,
    no doubt all ur tips are precious for us & i am very thankful to u for this.I need one more advice as I am salaried & falls in 30% tax bracket.I have a flat on loan on which I am showing exemption both intrest & principal but I moved to another city to a rental flat.So can I show this rent also? I am getting HRA.If I pay rent for my parents can I get exemption?

  106. VIBINDAS

    yes in above tips hra is new to me.thanks for u r valuable tips.i have one query.my total income = 402588 i have 100000 in 80c.no housing loan.in this case in my form16 no refund .one of my friend with same status filed his return by some firm and in his itrv he is getting around 5000 rs as refund.they reduced his total income around 50000.in which section they reduced this?

  107. Arun

    Hi,

    I took loan for a house in my home town, where my parents are residing. My father’s income does not come under tax bracket.
    Can I get tax exemption upto 1.5L interest? Do I have to show any notional income on that house?

    thanks
    Arun

  108. gautami

    hi,

    i have some amount of money like 2 lack .
    how can i invest for that i doesnt want to give any tds or tax
    i thought about fd but there is tds and tax

    can u tell me what is the option

  109. Divakara A B

    I have some Fixed Deposits in a Bank and as I am a Income Tax Payee, TDS on the Bank Interest is deducted at Source and also the interest is added to the total income for calculating the IT.
    I propose to take some loan against the Bank Deposit (LTD) from the Bank for few months and I want to know whether the interest on the loan paid to the Bank is adjustable with the Interest on Deposit received, while calculating the IT?

  110. Arun

    Hi,
    Thanks for this informative page….
    I have taken gold loan and educational from bank for my wife pg education. I am claimg tax exemption on educational loan.
    Can I claim tax exemption of the interest paid from gold loan also. I have cost estimate from the college, which shows education loan i got is not sufficient.

    Thanks
    arun

  111. Divakara A B

    I am an Income Tax Payee with highest tax slab.
    I propose to invest (buy from secondary market) in Non Convertible Debenture with coupon rate 12.25% (Annual Payout) with CRISIL AA & ICRA AA maturing on 14-Sep-2016. Face value : Rs. 1,000.00 Market value :Rs. 963.00 and reported YTM yield of 13.50% . Next payout date is 14th sep 2012. Unlike Bank FDs there is an element of Risk and I am aware of it.
    I would like to know the tax implications on the income to be received and on the maturity value during 2016, if I invest Rs.1,00,000 today.

  112. Singla

    Hi Manish,

    Wonderful article!!!

    I have one query:
    Can i give my mother some money, which she will be investing in FD? The income on the that amount will not be my liability, right? Is there any limit on the amount that i can transfer to my mother?

    Thanks,
    Singla

  113. sachin

    I am living in Government flat. My pay is 6 lack per annual. I have taken a loan(1,50,000), ppf(10,000),Medical Policy(15,000),Infrastructure Bond(20,000)
    and several other which can compete to 6 lack.

    It means I don’t have to pay any Tax
    Is it right ?
    And upto which limit i can save tax ?

  114. Ajay

    I am planning to buy a home in partnership with my friend in Bangalore. So both of us would be co-owners in the ratio 50:50
    We would be the co-borrowers of the loan as well in the same ratio.

    a.) From what I read, both of us would be able to claim tax benefits – maximum of 1 lakh on principal and 1.5 lakhs on the interest component. Is this correct?
    b.) We are planning to rent out the new property. Since I stay in a rented house in bangalore, can I continue to claim HRA?
    c.) Will the rent obtained automatically go into the taxable income category or any deductions can be shown due to the housing loan re-payment?

    • Ajay

      a) That is incorrect, You both will not be able to claim the tax deductions seperately , its allowed only when its Spouse , Sibling or parent . As far as I understand , along with friend you will only get a total deducation of 1.5 lacs only .

      b) Yes

      c) Yes , but you will be allowed a standard dedcution of 30%

  115. Purna

    Hi Manish,

    I have a doubt regarding capital loss. Say if i have only short term capital loss (Flat purchased @ 50,00000 and sold @ 40,00000). Is it possible for me to claim this 10,00000 at TDS with my employer or do i need to show only at the time time tax return.

    Thanks and Regards,
    Purna

  116. Vinay

    I have gone through your whole article as well as your tax saving tips, in tips 7 u have mentioned that u can claim interest 2 any upper limit on second home only… i would like to know very it is written so…. As far as i am aware of if the home is self occupied than the limit is 1.5 lac & if it is let out then to any upper limit.

    To make it more clear, if suppose i m having 1 home on which i have taken loan & now paying interest which is more then 1.5 lac, but i can avail only upto 1.5 lac since i m residing there, but………………… now if i let out this property and move myself to rented house, than i can claim interest to any upper limit since now the property is let out, as well i can claim HRA since i am staying in a rented property… which can also be done just by paper working also…

    In this whole story i have not purchased any second home…

    think…
    & let me know if i am wrong….

  117. Vinay

    Hi Manish,

    Please mention something about HUF also, through which we can also save lot of taxes..

    Also under new pan card form 49, to create an HUF pan card an affidavit is required stating name of father, karta & co-parcerner.. if you have the format of the same please provide…
    I m looking for that affidavit format…

  118. “Claim stamp duty and registration fees in 80C” – Is it applicable even If i’m going to buy a plot (in Bangalore), not House? What is the procedure?

  119. Kumar

    Hi Manish,
    Thanks for sharing your knowledge.
    I am planning to contribute Rs. 1-2 lakh for my sister’s daughter marriage.
    Can i claim tax rebate on that?
    My sister’s daughter is in a govt. job for past one year.

  120. Pradeep

    Hi Manish,

    Thanks for the valuable information’s on Tax savings. Could you please guide me how to show the money given to Parents as gift. I am about to Pay 14,000 as Income Tax in this year. Please help a little bit.

    Thanks and Regards,
    Pradeep

  121. Sanjay Kumar

    Dear Manish,

    Thank you so much for sharing the tips. Can you please help me in clarifying the below query:
    My father is a farmer. I transfer him a sum of 20000/- per month. He doesn’t have PAN card & all. Can I get the tax benefit on the entire amount transferred to my father during the year. What will be the procedure for that. Also, would my father also need to submit the income details for that. What are the income tax rules for Farmers. Please help me in getting this clarity as I am about to loose a good amount of money due to not investing; can’t invest as a good amount of my income is transferred to my father.

  122. sasmita

    Dear Manish,
    Thanks for ur valuable suggestions…
    But i have some doubt, my father is retired teacher,he is getting pension of only 15,000.and if i transferred some money to him,then can i claim for that amount and wat d procedure

  123. Dear Mr.Manish,

    My father is a retired person with no pension and mother is a house wife, both are living together separately.

    After my marriage, I’m living separately, but, taking care of my parents nicely by all means. I am almost spending 1.75 to 2.00 lakhs per annum to my parents and as such, I am unable to make savings against the annual income of Rs.6.00 lakhs and paying income-tax.

    Could you kindly look into this matter and assist me with your valuable suggestions as to how I can save income-tax, since I’m supporting my parents financially.

    Appreciate your valuable feedback.

    Regards

    Bhanu Prakash

  124. Yuvaraj

    Hi Manish,
    Your contribution is valuable for us.
    I have gone through the most of the communications from the thread below.

    I fall into 30% income bracket after utilizing all basic tax saving schemes.
    My query is around Gift.
    My parents are farmer and have no taxaable income.
    1. I want to gift them some Jwellary by purchasing it from the shop. Now will it help me in any way to claim tax benefit.
    2. Suppose instead of Jwellary, if i gave them cash or cheque of the amount say 1 lakh. Will it help me to claim tax benefit.

    I know the gift I am going to make them, there will not be an another income from it. Like it will not be deposited to FD or else.

    Regards,
    Yuvaraj.

      • Yuvaraj

        Thanks for the quick input Manish, Little disappointed to know the fact but It helped me to clarify the doubt. I’ll not regreat that I never asked on the possibility.

        • Understand the simple rule .. You can never get any exemption like this just by giving away the money to your parents . The only benefit is that now , if they use this money for investments , the interest they earn will be their income, which might be a non-taxable income because of lower limits of your parents, but if it was with you then it might be taxable .

  125. pramod sharma

    Mr. maneesh,

    Many thanks for your information on how to save tax. I have to pay tax on 3.46 lacs. I have purchase 2nd house, in current year i have give around 1.35 lac as principle n interest amount. I have paid around 1.50 lacs of stamp duty. I have got possession also. Can i add stamp duty n registration charges amount to get benefit of income tax. Pl inform.
    Best regards,

    P O Sharma

  126. navneet

    Dear Manish,
    I took Education Loan of 198k (2nd yr + 3rd yr + 4th yr) for B-Tech. I passed out in 2011. Now I pay interest of approx. Rs. 3000 per month and principal amount is still above 1.5L. My salary fall in between 2L to 5L per anum. So please let me know Can I save any tax from this situation ?

  127. uday mishra

    sir ,
    thnx fr sharing these information ..

    sir iam living in london , i have two rented houses in delhi …. can u please advice how can i save tax on them .. should i tranfer it to a company or what … please give me few tips so that tax burden is reduced i would be greatful to u ./….

    • Uday

      If the house are in your name and the rent is coming on your name, then its going to be your income in India, after exhausting the 80C limits, I think there is very small scope left for reducing the tax liability ?

  128. Dipak

    Hi Manish,

    I want to know the procedure of tax saving by gifting money to spouse

    Hi Manish,

    My wife is house wife how can I save money by gifting her?

    please let me know procedure like,
    1) How much amount can I gift to her.
    2) How can I show that I have gifted money to spouse? proof required?
    3) During IT declaration where I have to put (claim) this amount? in which section?
    4) For this is her IT return submission is required?

    • Dipak

      Note that you cant save tax on the money immediately by gifting to anyone . Only the recipient can save paying tax on the amount if its a relative . For wife and minor child , you cant gift assuming that even future income can be tax free in their hands !

  129. Amit

    Hi Manish,

    Thanks for sharing nice tips!

    My question is – Can I save tax by gifting money to my mother? She doesn’t have any income & neither files her return. She is 62.
    As per my understanding, there is no tax for Sr. Sitizen upto 2.4 lac. Hence, if I will pay 2 lac. to my mother & even file her return with zero tax, does it benefit me? Means, does these 2 lac. will come out of my Net Taxable income? And Can I file a refund of ~ 70k in my return (I’m in 30% slab)?
    I have heard about this provision somewhere but not sure how does this work? Pl. clarify! If this is possible than pl. also confirm that is there any particular procedure (tax saving bonds / medical grounds etc.) to gift money to mother or just bank transfer will do?

    thanks in advance!

    BR/Amit

    • No Amit

      This will not work this way .. you can gift her Rs 2 lacs, but you cant deduct the money out of your taxable income .. All this gifting is from your “after-tax” income only , just that she will not have to pay tax on the amount she gets . thats the only benefit !

  130. preeti

    hello manish sir,
    i want to know that in my family, me , my mum and mybrother r living , my father has expired recently and nobody is working in our family. whatever we haveeared by my father, nd i want to know that will it come under tax payment .
    if yes then tell me what is the procedure under which we can save tax or pay least.
    plz reply as soon as possible
    thank u sir

    • Hi Preeti

      There are few things which might be earning some interest , that interest would now be your income , I mean if its in your mother name now, then it will be her income , so now its like a normal scenario .. if that interest is less than 2 lac, you dont have to pay any tax ..

  131. Manish

    Hi Manish sir,
    My father is pensioner. His total pension is 3.5 lac. what can be done to save tax or how much to pay? Is the interest from saving account also taxable.

  132. Manish

    One more query sir,
    I am residing with my parents in the house owned by my mother for which I am paying her rent to get exemption from HRA. Will this rent be added in income of my father also or only for mother .
    thanking you in anticipation
    with regards

  133. Rahul

    Hi Manish,

    Need your kind suggestions for my queries.
    I have paid 6000 approx tax for FY 2012-13.I show the rent slips of 84k of the whole year for tax rebate in January at company premises. But as the HRA was of small amount than rent….HRA become the part of tax rebate .
    I bought a ready to move flat in January for which I got loan of 19 lacs having dad as co-applicant.I paid two premiums of 19k for Feb and March 2013.I have some questions below:
    1)Can I have tax rebate for the year 2012-13?
    2)Should I apply for the tax rebate?
    3)If yes how much aprox amount will I get after refund and when?
    3)I think it will be done through ITR?
    4)If yes then What proof do I need to add with ITR.I myself have filled the ITR online for 2012-2013 but missed to send the docs to the specified address.
    5)I have come to know about exemption on stamp duty through your article.Do I need to send the property registration xerox docs to IT dept.

    Regards,
    Rahul

  134. Ravi

    Thanks for such nice tips and a wealth of clarification. My Qs are: I have purchased a site in BLR in 2003. I am planning to sell it in 2013 -this year. There is no construction on this site. When I sell it, I am aware of Long term capital gains tax to be paid at 20% after indexation. There has been a few expenses to maintain the site by periodically getting it cleaned from weeds, security, and association maintenance (since it’s a gated community) etc…Is it possible to deduct these expenses from the total CGT? 2) Can we deduct interest on the loan availed against this property in calculating CGT – if yes, how much? 3. Can we deduct commissions from the purchase and sale of property in our CGT? I wish to clarify that since we have a primary home, we have not availed any tax deductions on the interest payments or any maintenance of this PLOT since the time we purchased. Thank you very much.

  135. Mohd Amir

    Hi Maneesh,
    If i gift 20k per month to my younger brother can i use this for tax saving purpose and How?

  136. Nirmal Singh

    I am paying one lakh insurance premium. And also paying 30000 as Home loan EMI. Also paying 14000 rent monthly. paying two children’s school fee. How much rebate can I claim ?

  137. ANKIT MEHTA

    HIII…
    SUPPOSE MY MOTHER GETS 20 LACS TAX FREE DIVIDEND FROM SOME UNLISTED COMPANY…NOW HER PAST FD AND RENT INCOME IS ALREADY AROUND 150000 PER YEAR…..NOW IF THIS 20 LACS again i go for further fd then she will have to pay tax in 10 % slab…
    now my questions are as follows
    1) if i take int free loan of this 20 lac amount from her and invest in fd & earn via fd then is it allowed? i am a major child so it will be taxed in my hands ?
    2)what difference it will make if instead of int free loan i take gift of this amount and invest in fd?
    3)can my mother give int free loan or gift to sons huf file for above purpose instead of individual file? will it make any difference in taxability point of view
    4)in future if i want to repay all this gift amount or loan amount then whats the better way gift or loan……

  138. sudhin

    Hi,
    For the last year my main source of income was from bank fd’s, also my minor daughter got a gift from my father by cheque into her saving a/c, I transferred this amount to my account and put in bank fd’s in MY NAME. Now was this the right thing to do? Secondly some interest has to be paid to my minor daughter how do I make the entry? can this be reduced from the total bank interest I received? and as she is a minor this paid interest is again added to my income? As the 26AS details are easily available, and if I pay her interest from the bank interest received by me will this not create a doubt in the mind of the ITO as my income will get reduced in my hands and once again is added back to my total income? Say next year I return the entire capital to my minor daughter thereby my fd’s get reduced to that extent will this create a problem for me as my minor daughter has given me a loan which is quite big?
    Alternatively can I receive this loan from her as an interest free loan and take the interest earned by me into my account is this a safer option, in the previous year the interest was treated as a business interest payable by me to her and as this year there was no business income what do you suggest? Thanks in advance.

    • Sudhin

      Truely speaking your case is not normal one and only a good CA will be able to suggest you the restructuring. It would be worthwhile to pay him few thousands on this and get it rectified and also get what you should do from where onwards.

  139. Hi Manish,

    I have a question here. My flat is in another city and it is in the name of me and my wife. Now in the current city we are staying in a rented house.
    So, Can I rent out my own flat and add that as my wife’s income, as she is not working.
    And at the same time I will claim HRA and Home loan benefit together, as the Home loan is in my name.

    Is it possible?

    Thanks for your support and guide all the time.

  140. saumitra

    will any other gift, in terms of jewellery, etc , of the same amount help in tax saving if executed with proper gift deed.

  141. Priya

    Dear Manish sir,

    I need your valuable advice in my IT saving plan of AY 2013-14. I had taken home loan in the month of July 2013, but because of some emotional issues, could not shift to the new ready to occupy flat which i have purchased, still i am continuing with my rented home. And new house is not rented also. My taxable income is more than house loan interest that i can show, is there any provision to show both house loan interest and rent in income tax savings? if you could help me, its very greatful sir.

    yours faithfully,
    Priya :)

  142. Priya

    thank you very much for your kind reply Manish….
    Occupancy certificate means what? kind of the certification that, we did not occupy the house yet?
    yours faithfully,
    Priya :)

    • Priya

      Occupancy Certificate is a Certificate document issued by Municipality to the Builder, which you need to obtain from the builder at the time of buying the house or later (after contruction)

  143. Insurenceer

    Can you please update the info Year by year..
    Or at least put that this is applicable for year 2011/12/13…???

    I think HRA (Its now 3000 RS) and gifing point is now a days no more valid…

  144. logmein

    Dear Manish,

    Wanted to ask you about my queer situation.

    I had an older home loan for a flat in Mumbai when I was working there. Lets call it Loan 1. Then a few years down the line I had to shift to Goa branch of the same company for work and hence was forced to stay on rent. Claimed HRA and loan 1 benefits both for a while.

    Now the twist is that I have finally bought a second home here in Goa. Lets call it loan 2. Now I mandatorily have to set one of my homes as Self Occupied and the other as Deemed Let out. In an ideal scenario the choice would have been straight forward by declaring home 2 (goa) as the self occupied one since it is in the same city of work and the other property as Let out.

    But my problem is that this new home loan (loan 2) is bigger and hence a larger chunk of interest/ principal benefits ensue here as compared to loan 1. Would it be possible for me to state I live on rent here in Goa since this new property (loan 2) is far off from place of work and thereby set THIS property (loan 2) as let out and file nominal rent and unlimited interest? the first home in that case should earn me max of 1.5L interest only and I am ok with that.

    Pls note I do not wish to claim HRA benefits in this scenario, only want to LET OUT the property in my city that happens to be out of a second home loan. Pls advise me if this would be possible.

      • logmein

        So first loan in Mumbai will give me 1L Principal/ 80C and upto 1.5L Interest/ 24(b). While the second loan in Goa will give me ZERO Principal/ 80C and UNLIMITED Interest/ 24(b). I wont be eligible to claim HRA though. Is the summary correct?

        I also wanted to know if you could help advise on the Goan/ Portuguese law which mandate every asset/ income/ taxation to be shared between husband and wife.

        My query is I want to understand if I am liable to be subject to it. Given that I am originally from Maharashtra staying in Goa since 6 yrs and married my wife who happens to be a Goan.

        • No , I think you can either choose to claim 1.5 lacs interest on loan 1 , or unlimited on loan 2 , not both ! ..

          I am not aware about goan/portuguese law myself, You need to get in touch with some lawyer on this . Also its based on religion and not location based

          I dont think tax laws change for you based on any thing else., Its same for everyone ! Hindu or Muslim or Christian !

  145. Sunil

    Hello,

    Myself and my father owns a home (Ground & 1st floor), selling it for 1 crore. I am planning to buy next home for 80 lakhs in my wife’s name, there would some other expenses of approx. 9-10 lakhs e.g. Registration charges and commission. Can I buy home in my wife’s name, I want to avoid income tax. Please help urgently.

  146. Pranav

    Hi,

    Very nice article. I have a couple of doubts related to education loan.

    1. I pay for my sister’s B.Tech education fees. Can I claim this by declaring her as a dependent ? My father retires from govt. service Feb’ 2015 and I will be the sole earning member of the family. Can I declare them as dependents as well ?

    2. I am pursuing CFA. Cna that be claimed under tution fees ?

    Thanks in advance.

  147. Hi Manish,
    I read your article on clubbing of income, I have certain doubts, request to clear.
    1)I got a property on my wife’s name ( Money was paid from my account). The rental income generated from property was coming to my wife account directly , was it supposed to be clubbed with my income?
    2) We sold the property with small profits after 2 & half year, who will pay the STCG (me or my wife).?
    3)The capital generated from selling the property will be invested in bank FD, will the interest will be clubbed with my income or it will become my wife income now as the property was on her name only and the amount was directly transferred to her account by buyer.

    What can i do to avoid clubbing in above situation?
    Thanks and rgds
    Sandesh

  148. Akhilesh

    Dear Sir/Madam,

    I am going to Ghana for 9 to 12 months in the month of January 2015. My salary will be 3,000 US dollars when I will be at Ghana. The government organization will deposit my salary in my saving account in India when I will be in Ghana.

    Condition is this I am working at Ghana and staying in Ghana and I am receiving my salary in Indian saving account in India, the organization is Indian and I have only stay visa at Ghana not working visa.

    My question is this how much tax I have to pay in India. How much money will be deducted from my salary every month.

  149. vivek

    Hi,
    I have one query about rent. House is on my name. Can my wife take the house rent and show in her itr as an income and I will not.

  150. Sateesh

    I work in Bangalore. I stay in rented house. I get HRA. I have property outside Bangalore which I bought taking home loan. I earn rent on that property. So far, while filing return I have taken benefit of HRA deduction and also took the housing loan interest benefit limited to 1.5L.

    In this financial year(14-15) my second property got completed and took possession in Bangalore and that is also bought with home loan. I am planning to actually
    shift to this house starting in next financial year.

    Now question is for this financial year return (14-15) can I consider my Bangalore property as “Deemed rented” and the property which I have outside as “Self Occupied Property”? I want to do this to maximize the tax benefits. Because home loan on this Bangalore property is very recent the interest component is very high where as the interest component in the property outside
    Bangalore is relatively very low.

    • Yes Sateesh

      You can surely do that, and that’s called “tax planning” :) . The way you structure it will help you save more tax . However I strongly suggest, consult a CA on this . He will take some fees, but be doubly sure on this .

      Manish

  151. Mahesh

    What would be the tax implications if I were to receive gift of Rs 1,50,000/- from my sister’s son. Will this gift be treated as gift from relative and will it be exempt or shall be taxed under the head “Income from other sources?”

  152. Ramesh

    Hello Manish,

    I have taken the personal loan 10 lacks for my home construction from different banks and paying 15.5 % interest .
    I have already paid the EMI for 2 yrs. ( actually tender was 5 yrs )
    Now other bank guy is asking go for balance transfer you will get 13.5 % interest rate.

    is it helpful for me. i am not sure please clarify me .

    thanks regards
    Ramesh

  153. sunil

    Hi,

    Nice info. I am selling my plot abt 1.5 km from Lohegaon, which itself is undefined as Pune DP is yet to be approved and notified.

    In such a case how do you define this agricultural plot 4R in a layout.
    Are there any capital gains out of this transactions?

    Can I set gains off in a planned flat buy in same year

  154. Siddharth

    Hi Manish,

    First of all i must say jagoinvestor is a complete encyclopedia for financial planning. Hats off to you :)

    I want to know the following case:

    Say I am working in Bangalore and paying rent of Rs. 13000 per month. I am given HRA by company and I show the same for tax benefit. Now I get permanently transferred to Ahmedabad and now my company provides me accommodation their and hence my company is not giving me HRA…its not reflected in my payslip. However, my family still stays in Bangalore due to some personal reasons and I end up paying the same rent. Can I show the rent paid (Rs. 13000) in Bangalore for tax benefits although my company is not providing HRA? Or I can avail only Rs. 2000/month under 80GG for tax benefits?

  155. Ayushi Jain

    Hi Manish,
    I and my spouse have a house in co-ownership and co-borrowing which we have rented . Since I am in low tax slab bracket currently complete rent is being transferred to my bank account.
    What will be tax implication for this – do my husband need to show 50% of the rent as his income or I can show the complete rent earned as my income?

  156. Santanu Ghosh

    Hi,
    I am a salaried person and had bought an apartment on loan that will be completed by this year. I have been claiming tax benefit for the last few years for this loan. I have also bought, on March 2015, a 2nd apartment in resale (ie. not directly from the builder) before it is being registered by the first party. This 2nd apartment is bought jointly by my mother and myself (I am the 2nd name of the co-owner). The builder has endorsed our name on the possession letter sale agreement and other documents of the first party. I have also taken 20Lakh loan from my mother in buying the same, the rest of the amount being paid by me.
    My questions are:
    1) Can I get tax benefit on the interest for the loan taken from my mother?
    2) What kind of documentations will be required? Any link to sample documents is appreciated.
    3) Can I claim tax benefits on both the loans? Since second home loan can have unlimited deductions on interest how does this work out?
    4)My mother’s income in this year, considering her pension and the above interest paid by me, will be within 3 lakhs (Sr. citizen). Does she have to file return next year or later years?
    Thanks
    Santanu

    • 1. No. you can claim only for the interest part of your loan

      2. Not applicable

      3. yes, you can do that. One loan you have to declare as self-occupied and the other one as the rented

      4. What matters is TAXABLE income, if that’s above the limit of 2.5 lacs, then she has to file the returns

      Manish

  157. Rominder Singh

    Hi Manish,
    I have a ULIP policy for 6 yrs now, and is reached its maturity. my query is:
    a) Can I redeem this total amount (about 14 lacs) without any tax implications. I ask because the new budget has put 2% tax on it, is it true?
    b)can I(if I want to avoid paying tax), gift this whole policy to my own sister?
    Thanking you and regards,
    Rominder

  158. Jagannathan s

    Hi Manish
    Pl clarify- can i invest the proceeds out of sale of a land for any improvement in a house already in my name by constructing vertically or should be invested in a sepetate property to avail long term capital gains tax exemptions

  159. Jagannathan s

    If it is not available can i demolish the existing old building and construct a new one with the entire sale proceeds as the land with building is in my name

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