Your questions – Income tax: No HRA tax benefit if only the spouse stays in the rented accommodation

By Chirag Nangia

I live in Japan on a long-term deputation. My wife stays in India. Can I claim HRA benefits from my company for the rent I pay for my wife’s stay in India? My company in India deducts hypotax from my salary.
— Sudheer Kumar Reddy

Employed persons, who live in rented houses, can claim House Rent Allowance (HRA). This allowance is intended for rental accommodation costs. If you do not live in rented accommodation, this allowance is fully taxable. In your case, since you are not living in the rented house in India, you are not eligible to claim the exemption.

I have a question about LTCG. A person sells a house in September 2019. She deposits the money in a capital gains scheme in a bank in March 2020. She is unable to buy a house within two years of the sale in due to the pandemic. What are the options for legally saving capital gains tax?
— Sumathi Sundarvasan

To qualify for the Section 54 exemption, capital gains on the sale of property must be reinvested in new residential property within a prescribed period of two or three years. However, since the delay is long and the capital gains must be reported in the year of the sale, the Income Tax Act allows individuals to place the funds in the capital gains account in later when providing a return of income for up to two years to purchase a new home property and waiver of claims. Plus, the amount you put into it can be withdrawn at any time to buy or build a house.

However, the amount once withdrawn must be used within 60 days and cannot be immediately redeposited into the account.

In this case, two years have passed from the date of deposit in the capital gains account for the purchase of a new home, so the exemption under section 54 cannot be invoked. Therefore, liability to tax on the total capital gain arises, which must be paid in the year in which the period of two or three years has elapsed.

The screenwriter is the director, Nangia Andersen India. Send your questions to [email protected]

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