Financial Daily from THE HINDU group of publications
Sunday, Aug 03, 2003
Financial Daily from THE HINDU group of publications Sunday, Aug 03, 2003 |
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Investment World
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Income Tax Columns - Tax Talk Investing for rebates T. Banusekar
A. Salaivasavan Reply Rebate under Section 88 can be claimed on Rs 70,000 in both the circumstances, provided your gross total income does not exceed Rs 5 lakh. The percentage of rebate and the investments eligible for rebate are given in the tables. Query I am a senior citizen who subscribes to a landline as well as a cellular telephone. I do not have income exceeding the maximum amount not chargeable to tax. Will I be required to file a return in Form 2C? Also, I have taken a loan to pay the fees for my son who is doing his MBA in an evening college. Will the interest and principal repayment of this loan qualify for deduction? P. Muniappan Reply The proviso to Section 139(1) requires that a person other than a company who is not required to furnish a return under the main sub-section, by reason of his income being below the maximum amount not chargeable to tax, must file a return if he satisfies anyone of the following six economic criteria:
The Central Government has specified that in respect of the following class of persons the proviso shall not apply:
The questioner being a senior citizen — that is, a person who has attained 65 years of age — will, therefore, not be required to furnish a return by reason of being the subscriber to a cellular telephone, provided he is not engaged in any business or profession in the previous year. Of course the requirement to furnish the return on the basis of being the subscriber to a landline telephone does not arise. The deduction under Section 80E, which is available for repayment of a loan along with interest on such loan for the purpose of higher education, is available for fulltime studies for any graduate or postgraduate course in engineering, medicine, management or for a postgraduate course in applied science or pure science, including mathematics and statistics. In the instant case, as your son cannot be said to be pursuing fulltime studies, it appears that the deduction will not be available. In any case, neither you nor your son will be entitled to claim deduction under Section 80E. Deduction under the section available only if the following conditions are satisfied: The assessee is an individual; The assessee has, out of his income chargeable to tax, repaid a loan or the interest thereon, taken from any financial institution or approved charitable institution; The loan has been taken for pursuing the assessee's higher education; and
The deduction shall be the amount repaid by way of principal and interest but shall not exceed Rs 40,000 per annum. The deduction is available for eight assessment years commencing from the assessment year relevant to the previous year in which the assessee starts repaying the loan or the interest thereon. From the foregoing it is also clear that the person pursuing the higher education should have repaid the amount. In the instant case, the son is pursuing higher education and the father is making the repayment and, therefore, the latter cannot avail of the deduction under Section 80E.
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