I have an MIG flat in Delhi, which I purchased from the Delhi Development Authority (DDA) on hire purchase in 1986. For the next 10 years, I paid the monthly installments and the total cost came to around Rs 1.25-1.50 lakh. Now I want to sell the flat and simultaneously purchase a bigger flat, which will cost me around Rs 10-12 lakh by becoming an original member of a group housing cooperative society in Delhi. My query is:
1. As the flat is still leasehold (and not freehold), if I sell the existing flat on a Power of Attorney basis to the prospective buyer, will I be legally competent to buy another flat in my own name in a group housing society-that is, will selling the existing flat first clear my title and getting the sale agreement, etc., prepared technically and legally allow me to own another flat in my own name?
2. If the answer to the above question is yes, then can I avail of a housing loan from a bank to finance the cost of the flat?
3. If going very strictly by the rule of law, the answer is no, then what are the legal implications if I still go ahead with the transaction? Also, I would be thankful if you could suggest a practical way out of my problem.

Naresh Kumar, friends-006@usa.net
The Power of Attorney (PoA) system allows one to bypass the Stamp Duty Act, but I strongly feel that it is not worthwhile to avoid stamp duty. I really wonder why the PoA system is so popular and that too only in Delhi. Is it the difference between leasehold and freehold that causes the perplexity? If that is the case why are the authorities not doing anything about it?For fiscal 2000-01, working women and senior citizens have been allowed tax deduction of upto Rs 5,000 and Rs 15,000, respectively. Does this exemption also cover longterm capital gains tax? For example, if a working woman has no taxable income, but has got a longterm capital gain, after indexation, on sale of shares, of Rs 25,000, will she be liable to pay any tax or will she be covered by the Rs 5,000 tax exemption (longterm capital gains tax @ 20 per cent of the longterm capital gain of Rs 25,000)?

-Rattan K. Dutt, DELHI
Yes, you are right. Rebates u/s 88C for all junior women assessees and u/s 88B for all senior citizens, male or female, can be claimed from the total tax, inclusive of normal and longterm gains. It is only the rebate u/s 88 (LIC premium, contribution to PPF, etc.) that cannot be claimed against the tax on longterm gains. The example you have given has very interesting ramifications. Would you be surprised to know that there would be no tax liability even if the assessee were male? Since the assessee has no other income, his total income is Rs 25,000, and since this is under the tax threshold of Rs 50,000, no tax is payable. In other words, the threshold applies to the total income, inclusive of capital gains, longterm or short-term.

1. Can I deposit the US dollars given to me by my company for my return fare to the US in my savings NRE a/c in India?
2. Can I repay a housing loan from this deposit as an NRI loan repayment?
3. When I buy my return ticket, can I prematurely break up my rupees FDR to pay the travel agent?
Damubhai Tirodkar, damubhai@usa.net
The answers to your query depend upon your residential status. Since you already have an NRE account, I presume you are an NRI. Booking of passages for travel to and from India by an NRI for himself, his family members and his dependents using funds in NRO accounts used to require prior permission from the RBI. Now this permission is no longer required. It appears to be a good idea to convert your Indian rupees into foreign exchange. However, by doing this, you will be converting your white foreign exchange into black foreign exchange. Theoretically, this is an illegal activity and therefore, this income will not be tax-free in India. It is very clearly mentioned that income earned abroad out of legal activities is tax-free. You may also have some problems with the tax authorities of your host country. You are allowed to pay for any resident obligation out of your NRE account.

(The author may be contacted at anshanbhag@yahoo.com)