From tax on inherited property to FD interest and home renovation loans—here’s a clear guide to navigating the most asked income tax queries
Can You Claim Tax Benefits on a Home Renovation Loan?
A home renovation loan can help improve your living space—but what about tax benefits?
- Under the old tax regime, Section 24(b) allows a deduction on the interest paid for such a loan, up to ₹30,000 per annum, only if the property is self-occupied.
- However, the principal repayment for a renovation loan does not qualify under Section 80C, as this section is reserved for loans taken for purchase or construction of residential property.
Key takeaway:
Only the interest component (with a cap) qualifies for tax relief—not the principal.
Is Inheritance Taxable in India?
If you receive property or money through a Will or inheritance, here’s the good news:
- No tax is levied on the movable or immovable assets received via inheritance. This includes jewellery, shares, property, or land.
- But if you sell an inherited asset later, capital gains tax applies.
- The original purchase cost and holding period of the previous owner are taken into account when calculating gains.
Key takeaway:
Receiving inheritance isn’t taxable, but selling inherited assets will trigger capital gains tax.
Do You Have to Pay Tax Again on FD Interest at Maturity?
When your fixed deposit (FD) matures, you receive both the principal and the cumulative interest. Here’s how taxation works:
- If you’ve already reported and paid tax on the accrued interest annually, you won’t be taxed again on the full amount at maturity.
- If not, and you report the entire interest only on maturity, the entire interest amount becomes taxable in the year of receipt.
- Banks report interest quarterly in your Annual Information Statement (AIS), so cross-verify with your tax returns.
Key takeaway:
Avoid double taxation by declaring accrued FD interest each year, not just at maturity.
Can Capital Gains Be Included in the ₹12 Lakh Rebate Limit?
The popular tax rebate up to ₹12 lakh (under Section 87A) applies only to tax payable on salary income, not on capital gains.
- Short-term capital gains (STCG) and long-term capital gains (LTCG) from mutual funds or stock trading are taxed separately, even if your total income is below ₹12 lakh.
- So, if your capital gains are ₹2 lakh and your salary is ₹10 lakh, only the tax on salary income may be eligible for rebate—not the capital gain tax.
Key takeaway:
Rebate under ₹12 lakh is not applicable on STCG or LTCG—it only offsets tax on certain incomes like salary.
