Your Queries – Income Tax: No HRA tax benefit if only spouse stays in the rented place
By Chirag Nangia
I’m living in Japan on a long-term deputation. My wife stays in India. Can I claim HRA benefit from my company for the rent I’m paying for my wife’s stay in India? My company in India is deducting hypo tax from my salary.
— Sudheer Kumar Reddy
Salaried individuals, who live in rented houses, can claim the House Rent Allowance (HRA). This allowance is for expenses on rented accommodation. If you don’t live in a rented place, this allowance is fully taxable. In your case, since you are not living in the rented house in India, you are not eligible to claim the exemption.
I have a question on LTCG. A person sells a house property in September 2019. He deposits the money in capital gains scheme in a bank in March 2020. He is unable to buy a house within two years of sale due to the pandemic. What are the options to save tax legally on the capital gains?
— Sumathi Sundarvasan
To avail the exemption under Section 54, capital gains on sale of property have to be re-invested in new residential property within prescribed time limit of two or three years. However, since the time frame is long and capital gains are to be reported in the year of sale, the Income Tax Act allows individuals to park the funds in the Capital Gain Account on or before furnishing return of income for maximum two years to purchase a new house property and claim exemption. Further, amount you put in this can be withdrawn at any time to buy or construct a house.
However, amount once withdrawn needs to be utilised within 60 days and cannot be re-deposited in the account immediately.
In the instant case, two years have elapsed from date of deposit in Capital Gain Account for purchasing a new house property, therefore exemption under section 54 cannot be availed. Consequently, liability of tax on entire capital gain arises, which needs to be discharged in the year in which the period of two or three years has elapsed.
The writer is director, Nangia Andersen India. Send your queries to email@example.com