20 September 2014
Please reply soon... (1)my wife have a income from other sources mostly interest income on bank FD if I buy a car in her name can she get depreciation benefits in her return.... (2)if I show sewing and beauty parlour income from this f.y. then will she fall in business category (3) we just have a home loan in joint name then who will get interest benefits both ? Or any one ? If both then in which ratio ?
21 September 2014
Thank you for answer............we make down payment by both accounts but monthly repayment will be by my wife's' acoount then in which ratio it will account? Please answer..
03 August 2024
Let's break down your queries regarding income, depreciation benefits, business income, and home loan interest benefits:
### 1. **Depreciation Benefits on Car Purchased in Wife’s Name**
**Question:** If you buy a car in your wife's name, can she claim depreciation benefits on the car in her return?
**Answer:**
- **Ownership and Depreciation:** Depreciation benefits on a car can only be claimed if the car is used for the purpose of earning income. Since your wife’s income is primarily from interest (i.e., passive income), she typically cannot claim depreciation on a car bought in her name unless it is used for generating income from a business or profession.
- **Income Generation:** If your wife does not use the car for a business or profession (such as for her own business activities or in a professional capacity), she cannot claim depreciation. For depreciation to be claimed, the vehicle should be used for earning taxable income, such as business or professional use.
### 2. **Sewing and Beauty Parlour Income**
**Question:** If your wife shows income from sewing and beauty parlour activities starting this financial year, will it classify her as a business?
**Answer:**
- **Business Income Classification:** Yes, if your wife is earning income from activities like sewing and running a beauty parlour, it will be classified as business income. She will need to maintain proper books of accounts, and her income from these activities will fall under the business or profession category.
- **Tax Filing:** Income from these activities will be reported under the head "Profits and Gains of Business or Profession" in her Income Tax Return (ITR).
### 3. **Home Loan Interest Benefits**
**Question:** You and your wife have a joint home loan. Who will get the interest benefits, and in what ratio?
**Answer:**
- **Interest Benefits:** Both you and your wife can claim tax benefits for the interest paid on the home loan under Section 24(b) of the Income Tax Act, which allows up to ₹2 lakh per annum as a deduction for interest on home loan for a self-occupied property.
- **Claim Ratio:** The deduction can be claimed by both joint owners of the property in proportion to their share in the loan repayment. If you make the down payment from both accounts but monthly repayments are made from your wife’s account, it is essential to allocate the interest deduction proportionately based on the contribution to the loan repayment.
- **Example Ratio Calculation:** - **Down Payment:** If both of you contributed equally to the down payment, then the deduction should be equally divided. - **Monthly Repayment:** If only your wife is making the monthly repayments, the deduction should generally reflect the repayment ratio. If you both contributed equally to the loan and payments, the interest benefit can be divided equally or based on actual repayment contributions.
### **Summary**
1. **Depreciation on Car:** Your wife can claim depreciation only if the car is used for generating business income. 2. **Sewing and Beauty Parlour Income:** Income from these activities will be classified as business income. 3. **Home Loan Interest Benefits:** Both you and your wife can claim the home loan interest benefits. The ratio should reflect the actual contribution and repayment pattern.
For accurate tax treatment and to ensure compliance, consider consulting with a tax professional or financial advisor who can provide advice tailored to your specific situation and help with proper documentation and claim allocation.
CAclubindia
