My daughter wishes to sell some gold jewellery that I had given to her at the time of her marriage nine years ago and invest the proceeds to purchase land for house construction jointly with her husband. The bills for the original purchase of the jewellery was made out in my name. Will the sale proceeds be taxable?
—P K Govinda
Yes, the sale of gold jewellery shall entail tax under head capital gains in the hands of your daughter and the cost at which you acquired it shall be treated as the cost of acquisition for your daughter as well, since the same was gifted upon her marriage. As the jewellery has been held for more than three years, this will be long-term capital gains so the sale proceeds shall have to be reduced by indexed cost of acquisition, to arrive at capital gain, which shall be taxed at the rate of 20%. However, if the sale proceeds are re-invested to purchase a residential house property, then capital gains proportionate to the amount re-invested may be claimed as exempt from tax under Section 54F.
I am in the 30% tax bracket. So can I transfer all my savings in my spouse’s name as gift and invest the same as fixed deposit? Is there any limit on gift to be considered as tax free?
—Kamlesh Ghind
Although the money transferred by you shall not be considered as a taxable transfer and shall entail no tax in the hands of your spouse, however, the interest earned thereon shall be clubbed in your hands as per the Income Tax Act.
I want to prepay my home loan as I have some money from selling a flat. Is there any tax benefit for pre-payment and how will I claim it?
—Girish Kumar
Prepayment of home loan does not entail any specific benefits whereas benefit on repayment of home loan is provided. However, these benefits differ based on timing of repayment of loan. If repayment is made after acquisition/ construction, total amount of principal paid in a financial year can be claimed as a deduction from gross total income under Section 80C before calculating net taxable income. Interest payment can be claimed as deduction under Section 24 , up to Rs 2 lakh for self-occupied property if construction is completed within five years from end of financial year when property was purchased/ constructed.
