Interest on study loan gets deduction

– Parul Gupta

The principal amount repaid towards education would not be eligible for deduction under Section 80E. However,the interest on such loans would be eligible for deduction under Section 80E provided that the assessee takes the loan from any bank,financial institution or charitable institution (approved under Section 10(23C) or Section 80G(2)(a)). As you do not fulfil this condition,you will not get deduction.

I work in India for an MNC based in the US. During the previous financial year,I was on leave for two months in Australia. Kindly advise whether salary received for leave period is taxable in India.

– Vinod Sharma

As per explanation to Section 9(1)(ii),any salary for the rest period or leave period,which is preceded or succeeded by services rendered in India,forms the part of the service contract and is regarded as income earned in India. Hence,the salary earned while on vacation in Australia is taxable as Indian income.

I am currently staying on rent in Bangalore. I purchased a flat in Pune in August 2009. The property value has almost doubled and I want to sell the property. I also wish to buy a home in Bangalore. How can I claim the tax benefit by investing in new house property.

– Rahul Singh

The flat that you own in Pune has been held by you for a period of less than 36 months. Therefore,the gain on the sale will be treated as short-term capital gains. There is no income-tax exemption available for sale of short-term house property. As such,you will not be able to claim any income-tax benefit by purchasing a new property in Bangalore. The short-term capital gain will be charged to tax at the normal rates applicable to you.

I have booked a residential property which is under construction and have been paying pre-EMI interest. I am expecting the possession of the flat by May. Please let me know how I will be able to claim deduction of the pre-EMI interest.

– Gopal Kumar

The interest payable by you for the period prior to the previous year in which you have acquired or constructed the property is deducted in five equal annual instalments commencing from the year in which the property was acquired or constructed. In simple words,whatever interest you have paid up to March 31,2011,will be allowable to you in five equal annual instalments starting from financial year 2011-12. In addition to the pre-construction interest,interest for financial year 2011-12 will also be allowed as entire deduction in that itself

* The writer is founder of RSM Astute Consulting Group

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