Income Tax Questions & Answered: Pay tax on income from shares held abroad

#Q.1) How capital gains arising out of shares held in a foreign country are treated in Indian Income Tax Act?

I am a resident in India and is indexation of the cost allowed in stocks?

—Sanjiv Kumar

Answer:- Any income arising to a resident of India from any source shall be taxable in India.

Hence, income earned from the transfer of shares held by a resident of India in a foreign country will be taxable under the head “income from capital gains” in India.

The capital gains shall be computed by deducting from full value of consideration, cost of acquisition and expenses incurred on such transfer. However, certain exemptions can be claimed as stipulated in the Income tax Act, 1961.


#Q.2) * I have taken housing loan from LIC Housing Finance repayable in 10 years. What are the tax benefits of the loan?


Answer:- Amount paid, during the previous year, towards principal repayment of loan taken for construction/ purchase of residential house is eligible for deduction under section 80C of the Act subject to maximum amount of Rs 1,50,000.

Further, interest portion of the home loan is allowed as deduction from income under head ‘house property’, under section 24 of the Act, subject to the maximum limit of Rs 2 lakh in a financial year. However, the loan must have been taken for purchase/ construction a house property and the construction should be completed within five years from the financial year in which the loan was taken.

From Assessment Year 2018-19 onwards, the maximum deduction for interest paid on self occupied house property is Rs 2 lakh. For let out property, there is no upper limit for claiming interest. The maximum loss that one can claim under the head of House Property is limited to Rs 2 lakh only. This deduction can be claimed once the construction of the house is completed.

Moreover, section 80EE of the Act allows deduction with respect to amount paid towards interest on loan taken for acquisition of residential property up to Rs 50,000, provided the value of loan does not exceed Rs 35 lakh and value of residential property does not exceed Rs 50 lakh.

Further, the loan must have been sanctioned between April 1, 2016 and March 31, 2017 and on the date of sanction of loan, individual must not own any other house.

However, where a deduction under this section is claimed for any interest, deduction shall not be allowed in respect of such interest under any other provision of this Act for the same or any other assessment year.

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