Tax Planning


Tax Q & A

18 Apr, 2014

1. Claiming HRA is paying rent to parents considered for claiming HRA?

Yes it is. Provided one actually shows a bank entry to this effect.

If you are staying with your parents and the house is in the name of the Parent/s, this is an effective tax
saving tool. (The rent you pay will be subjected to tax  for the parent/s who could be in lower tax bracket)

This however does not apply if your spouse is owning the house.

2. Sec 54F not available if construction of house takes place prior to the date of transfer:

As we are  aware  the time limit for sec 54 and 54F is 2 years(3 in case of house construction) from  or 1 year prior to the date of transfer ,for investment in a house property to claim exemption.
However u/s 54 F( i.e when the asset transferred is any long term asset other than a residential house property) , the exemption is not available if the construction takes place before such sale.
Eg: If I sell a land on 1.3.2014 , I can claim exemption if I have bought a house between 1.3.2013 and 28.2.2014 but not if constructed a house on a land before 1.3.2014 .

3. Can an NRI register an agricultural land in his name?

Yes he can provided he has received it from inheritance. An NRI cannot buy agricultural land in India.
He can sell such land held by inheritance  to a resident Indian.

Further even for a resident Indian it is  essential to understand the state laws pertaining to agricultural  land in different states. While states such as Maharashtra and Karnataka insist on being a Pani holder as a prerequisite to buy such land some states like Andhra do not. ( A Pani  is an identity given to a person who belongs to a lineage of an agriculturist)

The author - Lovaii Navlakhi, CFP is the CEO of International Money Matters and The Financial Alphabet

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