30 July 2022
I am a professional earning professional income. I have earned LTCG from selling of shares last FY. It amounts to rs.350000/-(rs.3.5 lakhs). I have paid rs.2,00,000/- towards interest payment for the housing loan that i took from a distant relative. My total taxable income (minus any LTCG) is roughly rs.25,00,000/-. I therefore come in the 30% bracket. LTCG tax I expect would be rs.25000/-(3.5L-1.0L=2.5L. Then 2.5L at 10%=25000). But when i tried to avail 24(b) benefit (deduction for the interest paid towards home loan repayment). it seen that the rs.2,00,000/- is getting deducted from the LTCG. What i mean is when i add loan interest repayment, the rs.2,00,000 is getting deducted from the rs.3,50,000/- for LTCG. LTCG thus becomes rs.1,50,000/- and therefore i think my LTCG tax should become rs.5000/-.
My question is.....is it possible to get 24(b) availed wherein rs.2,00,000/- is deducted from total income (ie from my professional income of rs.25,00,000/-). ?
I do have a CA. But it seems he came across this problem for the first time and is unsure about how this all works. I mean he says, interest repayment is getting deducted from LTCG....because thats how the "system"(ie the software he is using for IT return filing) is autocalculating! He however is unsure as to what would have happened if I did not have any LTCG. He is not aware as to the provisions (if any) that mandates that 24(B) deductions would be made from only LTCG. Further he assures me that the problem is NOT with the software.
The relevant rule he quoted was this: Section 71 of the Income Tax Act: Set off of loss from one head against income from another:
(1) Where in respect of any assessment year the net result of the computation under any head of income, other than “Capital gains”, is a loss and the assessee has no income under the head “Capital gains”, he shall, subject to the provisions of this Chapter, be entitled to have the amount of such loss set off against his income, if any, assessable for that assessment year under any other head.
(2) Where in respect of any assessment year, the net result of the computation under any head of income, other than “Capital gains”, is a loss and the assessee has income assessable under the head “Capital gains”, such loss may, subject to the provisions of this Chapter, be set off against his income, if any, assessable for that assessment year under any head of income including the head “Capital gains” (whether relating to short-term capital assets or any other capital assets).
As it can be seen "house property loss" can be set off against any head including CAPITAL GAINS. The rule doesn't mandate any order to set off. It appears as though you are free to choose any head. That being said the "software" is automatically setting it off from CAPITAL GAINS and there is no apparent way visible to redirect the set off from any other head!!!
I am therefore putting these questions here for clarity.
These are therefore my questions: 1)If there is LTCG and other incomes.....is there any rule as to from which head would the rs.2,00,000/- deduction would be made? 2)In my case, is there any way i could deduct the rs.2,00,000/- from the total income (and not from LTCG)? 3) In case your opinion is that house property loss can be set off against ANY HEAD, I must ask you why the software used by my CA is automatically setting off the loss against capital gains rather than allowing me to set it off against other heads? Does any of you have had prior experience of being able to set off house property loss from professional income when the assessee has CAPITAL GAINS?
30 July 2022
I rechecked with some figures in my software... The loss got set off with salary & IFOS income but not with CG in ITR 2 While in ITR 3 it first setoff with income under PGBP remaining IFOS.... while CG (income) remained intact..
30 July 2022
Thank you so much for the reply. I am using ITR 3. May i ask you...does the software give an opportunity to us to choose the HEAD that we would prefer the set off be made? (or is it autocalculating giving us no option to "choose"?)
If your software could do it.....could it be that each software is designed differently? In other words....if the software is changed, do you think my problem could be solved?
Can you provide the name of the software you used? (i don;t know the software my CA used...i wold have to consult him for that)
CAclubindia
