ITR Required If LTCG Exemption Claim Under Sec 54 Exceeds Rs 2.5 Lakh

I am 55. Am I required to file an income tax return (ITR) if I only have long-term capital gains (LTCG), exempted under section 54, and if there is no refund to claim? I do not have any other taxable income.

As per the provision of Section 139, you are required to file your ITR if the aggregate of all your taxable income before claiming any deductions under Chapter VIA of the Income Tax Act exceeds the basic exemption amount, which is Rs 2.5 lakh in your case. Chapter VIA comprises sections like 80C, 80CCD, 80D, 80G, 80TTA, etc.

Please note that any LTCG with respect to which an exemption is being claimed, though strictly speaking, is not taxable, needs to be included in the total income to determine the threshold of basic exemption limit for the purpose of liability to file ITR. Though you do not have any other taxable limit, you will still have to file your ITR if the amount of LTCG being claimed exempt under Section 54 exceeds Rs 2.5 lakh, which it is likely to be.

Q. Am I eligible for a deduction of Rs 2 lakh for interest paid on my home loan comprised in EMI (This is not pre-EMI; I pay regular EMI, and the interest portion of my EMI exceeds Rs 2 lakh) for the financial year 2024-2025 while filing my ITR. If I get possession of the house in March 2025?

A. Yes, you can claim the interest for the whole year provided the house is completed during the financial year and you have taken possession of the house anytime during the year. The claim amount would vary depending on whether you use the house or let it out. If it is self-occupied, you can claim interest on a home loan of up to Rs 2 lakh in a financial year, including one-fifth of the pre-EMI interest, if any. You can claim full interest if the house is let out, but you will be entitled to claim set off of loss under the head “Income from house property” against other income only up to Rs 2 lakh during the year. Any unabsorbed loss can be carried forward for set off in eight subsequent years against house property income. The interest deduction for a self-occupied and let-out property is available only under the old tax regime.

If you opt for the new tax regime, you can claim any interest deduction for your self-occupied house. Moreover, for a let-out house, only interest to the extent of taxable rent is allowed to those who opt for the new tax regime, as no loss under the house property head is allowed to be set off against other income under the new tax regime.  

Q. I purchased a plot of land in June 2024 and have paid a stamp duty of Rs 37,000 during registration. Can I claim any deduction for the stamp duty paid under Section 80 C? Further, I applied for a home construction loan on this plot; the loan is being processed and will be approved in a few days. I also got the construction plan approved by the authority.

A. As per Section 80C of the Income Tax Act, the registration charges and stamp duty paid on a residential house only are eligible for deduction, so the amount of stamp duty and registration charges paid by you for the land transfer do not qualify for deduction under

Section 80 C. What you have registered is a plot of land and not a residential house. Even stamp duty paid for registration of an agreement with a builder is also not eligible for deduction under Section 80C.

The author is a tax and investment expert and can be reached on jainbalwant@gmail.com

(Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)