Tax Benefits:

You can avail tax benefits by showing payments on a housing loan. To do so, you must obtain an Income tax certificate which will be issued to you once a year. This will contain the total amount of interest and capital repaid during the year. This is a must to claim a tax benefit in respect of self occupied property.You need to submit this as part of your personal Income tax returns and then calculate your liability.Remember to check the maximum amount that is allowable under current rules for the financial year.
UNDER INCOME TAX ACT 1961a) Benefits to the Borrowers of the Housing Loans: Under second proviso to section 24(b) of the Income tax Act, 1961, a sum of Rs.1,50,000/- is available for deduction as interest paid on the loan availed for the purpose of acquisition / construction of the house property after 1st day of April 1999, provided such construction / acquisition must be completed within 3 years from the date the capital was borrowed. If the property is acquired / constructed out of he borrowed amount, the interest on such loan for the periods prior to the period in which such property has been acquired or constructed shall be deducted in equal Installments from the year of construction / acquisition with four immediately succeeding years.
The above deduction indicated at (i) and (ii) above will be allowed only when the borrower furnishes a certificate indicating the amount borrowed and interest payable for the acquisition / construction of the property. The principal re-payment on the housing loan is liable for deduction for individuals and HUF to the extent of Rs. 1,00,000/- under section 80C of the Income tax Act, 1961.
WEALTH TAX ACT, 1957 a) Under the Wealth tax Act, 1957, Section 5(1) indicates that an assessee can hold one property as a self occupied property and the same be exempt from eligible assets liable to Wealth tax. b) If an assessee, holds more than one property, then the second property for the purpose of Wealth tax has to be valued as per the Wealth Tax Rules 1958 and the value in excess of Rs. 15,00,000/- is liable to Wealth tax. However if there is any liability against the said asset, the same is to be deducted before computing the taxable wealth. c) If the assessee holds more than one property and the second property as let out for more than 300 days in previous year, then such property is not considered as eligible asset for calculation of taxable wealth.
TAX IMPLICATIONS If the property on which deduction claimed under section 80C is transferred by the assessee before the expiry of 5 years from the end of financial year in which possession of such property is obtained by him, then no deduction shall be allowed in the year of transfer and the deduction already allowed shall be added to the income of the assessee in the year of transfer and taxed accordingly.
TAX BENEFITS TO THE COMPANY AND ITS SHAREHOLDERSTo the Resident Member of the Company B. Under the Income Tax Act, 1961 Dividend Income received from Domestic Companies is exempt under section 10(34)
of the Income-tax act, 1961. The shareholders are not liable to pay long term capital gains tax in respect of shares of the company held by then for a period of more than twelve months by virtue of Section 10(38) of the Act, subject to the fulfillment of the following conditions: The transaction of sale of such equity share is entered into on or after 1 October, 2004. The transaction is chargeable to securities transaction tax under Chapter VII of the Finance (No.2) Act, 2004.
Proviso to the section specifies that in case of individual and HUF, where the total income as reduced by such short term capital gains is below the maximum amount not chargeable to tax, then such short term capital gains shall b reduced by the amount by which the total income as so reduced falls short of the maximum amount which is not chargeable to tax and the tax on the balance of such short term capital gains shall be computed at the rate of ten percent.
Short term capital gains arising on transfer of the company’s shares would be liable to tax at the rate of 10% (plus applicable surcharge and education cess) by virtue of Section
111A if the following conditions are satisfied :The transaction of sale of such equity share is entered into on or after 1 October, 2004. The transaction is chargeable to securities transaction tax under Chapter VII of the Finance (No.2) Act, 2004.Further, the public issue of shares of the Company would also qualify as an eligible issue of capital and long term capital gains would qualify for the benefit of Section 54ED of the Act if the capital gains are invested in shares of the Company.