Do I have to pay tax for the capital gains earned by my homemaker wife?

My wife is a homemaker and she has invested Rs 40,000 of her savings in stocks. If she sells these stocks and earns short-term capital gains, will I have to pay tax on these gains?

Amit Maheshwari, Partner, Ashok Maheshwary and Associates replies, "Yes, you will have to pay tax on the capital gains earned by your wife from the sale of the stocks, which appear to have been bought by her from the amount transferred by you to your wife. However, if she reinvests the capital gains and earns any income, such income will be taxable in her hands."

If I take a loan to buy a plot of land, will I be able to avail of tax deduction on my home loan interest outgo?


Jayant R. Pai, CFP and Head of Marketing, PPFAS Mutual Fund replies, "No, you cannot avail of the tax deduction under Section 24 of the Income-Tax Act. Housing loans are given to borrowers for constructing or purchasing a house. You are not permitted to divert the proceeds of a housing loan for the purchase of land, unless you intend to construct a house on it."

My house was acquired under the National Highway Act, 1956. Will the compensation received by me be taxable? Under which head am I required to show it when filing my tax return?

Shubham Agrawal, Senior Taxation Advisor, TaxFile.in replies, "The National Highway Act, 1956 comes under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act. According to the CBDT circular issued in 2016, such compulsory acquisition of land is exempt from income tax. You may calculate the capital gain and report it under the Exempt Income head when filing your tax return."