'Sell a flat and earn long term capital gains'

It's that time of the year, once again, when people grapple to make last-minute tax saving plans.

To help our readers with our various tax queries, Rediff Business arranged a chat with tax experts A N Shanbhag and Sandeep Shanbhag at 4 pm on Tuesday, March 12.

Here is the transcript:

Shanbhag says, Hello everyone - we are here to answer your questions - we shall begin in a moment's time

shamith asked, I had brought a house in june 2012 and it is in construction stage. I had availed a loan and My EMI has also has started in july 2012.Whether i can show the priciple and Interest portion for tax exemption and whether i can HRA also. Whethere availing both is possible ie principle portion +interest portion and HRA benfits
Shanbhag answers,  at 2013-03-12 16:02:41You can get interest deduction only after you take possession of the house. the interest paid prior to this may be deducted in five equal installments beginning from the first year in which possession is taken. both HRA and housing loan tax benefits are possible as long as you pay rent for the particular house you live in

snann asked, sir i have received return cheque form dept. but it got expired unfortunately. now how to get it again?
Shanbhag answers, You can write to the department and ask for a duplicate. It would be better if you or your representative were to visit the particular ward office

Jitesh asked, IS Gift Given by an adopted daughter to any member of family (mother, father, brother, sister) or HUF, taxable on either ends ?
Shanbhag answers, No

debanjan asked, Good Afternoon Mr. Shanbhag(s), can you suggest me 2 good Debt Mutual Funds where I can accumulate particular amount every month and can redeem them whenever I need but without any losses.
Shanbhag answers, Suggesting funds without knowing your financial background, risk profile etc is not wise. However, generally, you may invest in Birla Dynamic Bond Fund / Templeton India INcome Opportunities Fund - these are two good options for short to medium term debt investment

manisha asked, my husaband is a doctor with 200000 income/month as a consultant in a hospital as there is no break up of the salaray how do we go about planning our taxes
Shanbhag answers, For detailed tax planning, it is best to visit a financial advisor, it isnt something that can be done at a chat forum. However, some basics such as getting a major portion of the salary as reimbursemnts, partially taxable allowances etc will help

Jayesh asked, i need to insure myself for risk cover should i just take endowment or is it feasible to take term insurance? and which instrument should i take to save tax and investment as well?
Shanbhag answers, We will always suggest buying term insurance over any other insurance plan. The term insurance premium gives you tax deduction. Over and above this, you may invest in ELSS funds.

dayasagar asked, Sir, Is it a right time to invest in Gold funds? If yes, kindly suggest suitable procedure and name a couple of good Co's. Regards
Shanbhag answers, Earlier, gold used be bought as a hedge against inflation and as a safety net against the potential fall in prices of other asset classes. Over the past 4-5 years, gold has been bought as a capital appreciation investment. In any case, gold should at all times command 5% to 20% of your portfolio regardless of its current price movement. To do this, you will have to purcahse gold piecemeal either regualrly on your own or thru the mechanism of an SIP

Uttam asked, I have sold my flat that I bought 4 years ago and used those funds to purchase a new one. Do I need to pay any tax, and do I need to mention it in my tax returns?
Shanbhag answers, when you sell a flat, you earn long term capital gains. This can be saved byinvesting in another property. so you ned not pay any tax however this has to be mentioned in the tax returns.

manisha asked, my father has sold his house and wants to purchse a joint poperty with my husband with the gains of the proceed kn 50 : 50 ration ..can this be done
Shanbhag answers, As long as your father's contribution into the new property is equal to the long-term capital gain amount, he will not have to pay tax.

madi asked, If I can put aside 25L today for my special child, how best can I invest that money so that it will provide for his living expenses as an adult. Now he is 6..
Shanbhag answers, This is an etreamly critical life decision best accomplished with the help of a professional financil planner. also it is not a one time exercise but something that requires regular monitoring. however, a mix of equity and balanced MFs, Debt funds, gold and FDs are recommended. wjhat ever you do, do not invest in child plans of insurance cos. also take care to invest in your own name and not your child's. this is for the child's and your safety.

yellow asked, Hi, want to know if there are any changes with effect to taxation in Keyman insurance in this budget. Is the premium paid by the employer on behalf of the employee taxable inthe hands of employee after assignment to him?
Shanbhag answers, keyman insurance policy was being misused by assignning the policy in the name of the keyman. this rendered the assigned policy as a normal insurance policy and the keyman got the taxfree matured amount. normally, this amount is taxed in the hands of the company. Now in the budget the keyman policy cannot be anymore assigned

Neeraj asked, Hi Shanbhag, My query is related to deduction of both part of EPF i.e. employer contribution as well as employee contribution is deductible under 80C? My employer only deducted employee contribution not employer contribution while calculating TDS
Shanbhag answers, your employer is correct. only employees contribution is deductible u/s 80C whereas, employers contribution is not considered as your income

ketan asked, Can I claim deduction from HRA in my Return of Income by showing rent payment to dependant parents with whom I am staying. How document are needed as proof. What if I am paying by Cash?
Shanbhag answers, yes, you can do so provided the house that you are living in belongs to your parents and you actually pay them rent. this can be ascertained by entries in their passbook. The document needed is rent receipt. avoid paying cash.

aniyt asked, Sir, my father has a HUF, can I also form a HUF
Shanbhag answers, Yes. provided you are married to a Hindu. There is no bar on a person belonging to two HUFs.

mac asked, Good Afternoon Mr. Shanbhag(s), I had Ibought a house worth Rs. 51 lakhs by selling two inherited properties worth 49 lacs, whether I had to pay any tax?
Shanbhag answers, In our opinion, the capital gain can arise from different sources- as long as it is invested in a residential house, exemption is available.

xyz asked, The stamp duty and registeration charge paid while purchasing a property can be used for gaining tax benefit
Shanbhag answers, Stamp duty and Regr charges can be considered as a part of cost of the property for CG purposes while selling. also, the same is available for 80C benefit.

bhavani asked, Sir I wanted to a flat for rent in Hyderabad .But I already own a flat in Hyderabad itself Is it possible to claim HRA and Tax benifits at the same time .I want to give my own flat for rent to my own brother who is living with my parents Please advice
Shanbhag answers, yes, it is possible. You have to be paying rent. The rent received has to be submited for tax. The IT Act doenot disallow availing of both together.

rajan asked, Hello Sir, do you see rupee at 62-64/USD one year from now ? If yes, what can we do to protect ourselves ?
Shanbhag answers, They say either predict a rate or a date but never both. so yes over time the rupee will depreciate given the state of the nation's finances. However, the international situation is not too good either. so it would be interesting to see how things pan out. In the meanwhile, all we can do is invest in a mix of quality equity, gold, fixed income instruments and hope that the return we get beats inflation

luxram asked, I am a consultant operating from home. How much of my house rent can I show as office expense.
Shanbhag answers, you can show 50% provided your other expenses are also proportional.

Anil asked, Hi Guys, thank you for helping us out. Can you let us know the tax structure around an NRE account?
Shanbhag answers, interest on NRE account is tax-free. the capital is freely repatriable the only risk factor is exchange rate.

Bharat asked, In my HUF FDs there is tax deduction , and i havent recived refund from govt since last 5 years wht do i do , now i have started commodity trading will my tds be adjusted in commodity profit
Shanbhag answers, TDS can always be taken as part and parcel of your tax payable. As regards your past refund due you may approach the commissioner related with your ITO.

Ranjit asked, Sir, Which is the Best ELSS Tax saving scheme? I want to put 5,000 per month.
Shanbhag answers, ELSS is a good product and some funds like HDFC taxsaver, Reliance taxsaver and franklin taxshield have shown good performance over the past few years.

Shanbhag says, sorry we are completely out of time. however, we will be back same time on Thursday 14th of March. Be sure to login then. Bye for now.