In a chat with readers on April 23, Get Ahead tax expert Mahesh Padmanabhan answered these and many more queries related to tax claims on home loans, HRA benefits, capital gains tax and how to plan and invest your money in 2008-09?

For those of you who missed the chat, here is the transcript.

anupam asked, Is there any lock-in-period in Mutual Fund(with out tax benefit) ? Can i redeem my amount at any time when i'm in the position of benefit ? Plz clear is the amount which i got depend on the NAV of that day on which i file the application for redemption.One thing more which option is better to neutralized risk : Dividend or Growth ?

Mahesh Padmanabhan answers, There is no lock in period for non elss mutual funds. However, in case you do not hold the same for a period in excess of 12 months, the gains that may arise on such redemption would be treated as short term capital gain and be taxed at 15% (as currently proposed in the finance bill 2008) else the same would not be taxable.

amit asked, My wife is house wife & i am salaried. Can i take home loan in my wife's name by clubbing my income, as i am planning to have the house in her name. Or if house is in her name can i take home loan for that

Mahesh Padmanabhan answers, You can be a co-applicant in the home loan for acquisition in your wife's name. In case you wish to avail of the home loan benefits then you would also need to be a co-owner. You would need to be clear on the point that your wife should have income to service the loan and in case you are planning to make the repayment, then it may be liable to be construed as a benami holding and you could be treated as the beneficial owner.

san1 asked, what date is considered for calculating capital gain tax? Registration date or possession date? I bought a flat in Mar05-registration date and got its possession in Feb06. If I sell this flat now then my capital gain will be long term or short term?

Mahesh Padmanabhan answers, In case of immovable property though the transfer of property is deemed to be completed on the date the agreement is registered, in case the property is under construction, the same needs to be completed to determine the date of actual possession. Hence in your case you would need to calculate the holding period in excess of 36 months from Feb 2006, for the asset to be treated as long term asset. Else it would be a short term asset liable to be taxed at your slab rate.

Kunal asked, Hi. I want to ask 3 queries 1. While taking home loan, what should one go for Fixed or floating? 2. Is it good to take loan for longer duration, I feel in long run the cost of rupee will decrese so we will be paying less amount also it will be useful for tax planning. Am i right or wrong? 3. I hav invested Some amt in Sundaram taxsaver & some in principal personal taxsaver in last yr. Yesterday again I invested Rs 5000 in Principal. Should i continue investing in these two mumtual funds, or look for others? Thanks.

Mahesh Padmanabhan answers, A1 � While it's a personal choice to go in for fixed or floating rate loan, generally such individuals who want to freeze their outgo and want to insulate themselves against upward movement of interest need to go in for fixed rate. However, generally Home loan institutions do not have an open ended commitment for fixed rate and accordingly have a fixed time frame for such rates after which the same is reviewed and reset. Hence in our opinion, currently it is better to go in for a floating rate interest loan. A2 � The longer the time frame, the larger is the interest that you would be needed to pay. Generally, the meaning of EMI is misinterpreted. In reality the interest component is higher in the initial years and the principal component is lower and as time progresses the principal component increases. Hence you have to be careful in selecting the time frame of the loan as the interest would be inherently linked to the tenure. A3 � While most of the ELSS funds are reasonably good, it would be advisable to split your total investments in 3 � 5 funds if the investment size is large. Else you could stick to 2 � 3 funds. The best way of going about the investment is to use the SIP route so that the risk is minimized.

Ganesh asked, Hi, i am paying Rs. 1450 toward Employee PF. will it be calculated with one lakh tax relaxation we got under 80C?

Mahesh Padmanabhan answers, Yes your contribution to the EPF would be included for the purpose of eligible investment for section 80C

THREDDY asked, After maturity, NSC amount is taxable?

Mahesh Padmanabhan answers, You have an option of including the interest on NSC on accrual basis each year or in totality on maturity. You would generally get the annual interest accretion details from the post office

Nitinsharma asked, is it right time to put money in ELSS scheme

Mahesh Padmanabhan answers, If your investment is for a long term horizon, then equities (including MFs) are the best bet. However, it is always advisable to go in for the SIP route of investment so that you further marginalise the risk of market fluctuation

shah asked, how is tax calculated on long term capital gains arising out of selling property. What if the same is invested in another property but which takes more than three years to built?

Mahesh Padmanabhan answers, An immovable asset is treated as a long term asset if it is owned by the individual for a period in excess of 36 months. Long term capital gains is taxable at a flat rate of 20% (plus applicable surcharge & cess) and short term capital gains is taxable at the applicable slab rate. In case of long term capital gains, you could avail of exemption by reinvesting in a new property of other eligible investments. In case the reinvestment is in a new property being constructed, then the same has to be completed within a period of 36 months else the exemption would not be available

sachi asked, If I have a housing loan taken and is shown as a tax saving instrument can I present Rent receipt inorder to get more benefit in tax also let me know what is the maximum amount applicable as a rent receipt for saving tax and also in which section does this reflects.

Mahesh Padmanabhan answers, In case you are actually staying in a rented premise due to reason of your employment, you can definitely claim the benefit of both HRA exemption and home loan benefit.

nilesh asked, Hello sir can u tell me investment made in bank FD can tax exepted?

Mahesh Padmanabhan answers, Interest on bank deposits are taxable. However, if your total income is below the threshold exemption limit then the same would not be taxable

hiten asked, what exactly is the benifit of HRA component

Mahesh Padmanabhan answers, House Rent Allowance (HRA) is a taxable component of your salary structure. In case you actually stay in a rented premise, then you could avail of certain exemption from your total taxable salary. You would need to provide rent receipts to your employer for the rent being paid by you so that they could incorporate the eligible tax exemption

Dinesh asked, (Repeat) I am taking house loan adavantage.My House & Offfice distance is approx 50 KM (i.e Noida to gurgaon) .If I stay in gurgaon whether i can claim both rent at Gurgaon house and Housing Loan Adavantage for Noida house?

Mahesh Padmanabhan answers, Yes you can claim the benefit for both HRA & home loan benefits

taxplan asked, The trading amount includes Share value + STT + Brokerage + Service Tax. Which components to be used to calculate short term capital gain? Please advise.....

Mahesh Padmanabhan answers, In case of working the capital gains of share transactions, you could include all cost excluding STT to determine the purchase value and exclude all cost except STT to determine the sale amount

rakesh asked, plzzzzzz do answer my question...i am going to join HAl,Banglore in january. My pay will be around 6 lakhs per annum.What should i do right away in one or two months of joining to plan for a better future in terms of investments or savings????plzzz do enlighten me. ..... THANK YOU MAHESH

Mahesh Padmanabhan answers, While there is no general mantra to save tax, here are the broad parameters to save tax. You would need to consult a good tax practitioner to move further on tax planning. The preliminary activities would be to declare the tax investment that you would do through the year and also provide your new employer with your previous employer earning details. The tax deductions and exemptions are based on your salary structure but definitely you could invest in section 80C eligible investments upto Rs. 1 Lakh and the other deductions such as medical insurance premium etc to enhance the tax benefit. Go about your investments in a very disciplined way

srinivasulukarnati_99@rediffmail.com asked, Hello, Plot is my wife's name, she is a house wife. I am salaried, can I take a loan for house construction. plz

Mahesh Padmanabhan answers, Yes you can take a loan for construction of a house property on the plot owned by your wife and thereafter avail of the home loan benefits

ra asked, My name is Ganesh Sharma If My Salery is Rs. 180000/- in Accounting Year 2008-2009 Asstt. Year 2009-2010. My LIC [Get Quote] is in this year paid of Rs. 22020/- Pleas tell me How much I shall be paid Income Tax.

Mahesh Padmanabhan answers, Apparently the total tax for the financial year 2008-09 would be Rs. 830. However, you would need to check if there is any exemption available by virtue of your salary structure

g asked, a proprietory firm doing a annual turnover of below 40 lakhs is necessary to deduct TDS or can be eligible for non-deduction ?

Mahesh Padmanabhan answers, A sole propreitor not falling in compulsory tax audit bracket need not deduct tax at source on payments made by him else all such payments other than for personal nature is covered for the purpose of TDS

satihchhangani asked, Hi, I have purchased property on 14th May 2006 and date of possession is also the same. The cost of Property was Rs.5.00 lacs. Now I want to sell it and purchase new property for Rs.20.00 lacs. The sale value of present property is Rs.12.00 lacs. How can i save this Short term capital gain o Rs.7.00 lacs.

Mahesh Padmanabhan answers, Short term capital gains have limited exposure to eligible exemptions and in your case there is no scope of saving on the short term capital gain tax.

sandyg asked, Hi mahesh..just a query on the budget 2008...Whats is the revised total tax exumption limit now under 80C.does it mean that we can invest upto that limit to avail of the tax benefits..?

Mahesh Padmanabhan answers, the total exemption under section 80C has been unchanged and the same benefit of upto Rs. 1 Lakh continues

ashish asked, Generally how should be the division of Savings? I mean how much percentage in LIC, how much percentage in MF, SIP, ULIP, PF, Health Insurance, etc. for a person earning more than Rs. 500,000 per annum?

Mahesh Padmanabhan answers, Our suggestion has always been that do not mix life & health insurance with your tax investments. Do not limit your insurance coverage because you have exhausted the eligible exemption limit. Plan out your life insurance need first and determine the total premium that needs to be paid then go about making other tax investments.

Rahul B asked, Hi, I have been working as a Software Consultant for the past 2 years. Am i liable to pay Professional Tax on the same ? What are the tax slabs for the Professional Tax ?

Mahesh Padmanabhan answers, Profession Tax is a state tax and accordingly the tax rates for each state might differ with also some states not having any profession tax. In your case, first we need to know the place where you render services and accordingly determine the slabs of tax

Mahesh Padmanabhan says, Thank you friends for the lively session, it is time to sign off, we would be back next time to answer further queries - Team RelaxwithTax