Tax Query: What is the tax deduction available on interest on house loan for repairs?

I got my house repaired and took a bank loan for funding the repairs. I incurred an interest payment of Rs 40,000 in the financial year 2019-20. I occupy the house property for my residence. Can I claim a deduction for the interest payment while filing my income tax return?

The income tax law allows you to claim a deduction for interest paid on loan taken for repairs or renovation of a property. The deduction is available in the case of a self-occupied property. Accordingly, you can claim a tax deduction for the interest paid on loan taken for house repairs. The maximum deduction for interest payments is Rs 30,000 per year. You should obtain an interest certificate from the bank certifying the amount of interest paid for the financial year.

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I received bonus shares from a company in June 2019. My original investment in the shares of the company was in November 2017. After the bonus issue, I later sold all the equity shares in November 2019. Can I know the tax implication of the sale of the shares?

In the case of listed equity shares, the gains on the sale are long-term for a holding period of more than one year. In the given situation, the original investment is more than one year old, and the gains are long-term capital gains. The long-term capital gains are tax-exempt up to Rs 1 lakh. The long-term gains above Rs 1 lakh get taxed at 10% (without indexation benefit). 

However, for bonus shares, the holding period begins from the date of allotment of the bonus shares. The sale of bonus shares is within one year from the allotment date, and hence the gains are short-term capital gains. The tax rate is 15% on the short-term capital gains arising on the sale of bonus shares.

For any clarifications/feedback on the topic, please contact the writer at sweta.dugar@cleartax.in