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T. Banusekar

WHERE an employee has interest from a recognised provident fund in excess of 9.5 per cent of the balance standing to his credit , it is understood that the same would be chargeable to tax.

Will such interestqualify for deduction under Section 80L?

A. K. Pandey

Reply

You cannot claim a deduction under Section 80L in respect of the interest from a recognised provident fund which is chargeable to tax. Section 80L provides for a deduction in computing the total income of an assessee.

This deduction is available on certain kinds of income, such as interest from banks, NSCs, NSSs, post office monthly income scheme, and so on. The deduction can be claimed by an individual or HUF.

The maximum deduction that can be claimed is Rs 12,000. A further deduction of Rs 3,000 would be available on interest from government securities.

The deduction, however, cannot exceed the income that is included in the gross total income.

Query

I am the drawing and disbursing officer (DDO) of the company in which I work. I understand that the employer can take cognisance of any income not being a loss under any head (except a loss under the head income from house property).

What are the documents to be verified by a DDO before taking into account the loss, if any, shown by an employee under the head income from house property.

What should be done if the municipal tax receipts bear the joint names of the employee and the spouse of the employee?

V. N. Venugopal

Reply

You as a DDO need not verify such documents as municipal receipts and those relating to the interest on housing loan.

Section 192(2B) provides that an assessee in receipt of salary may send particulars of his income under any other head, including a loss under the head income from house property, to the employer.

Rule 26B of the I-T Rules requires that the assessee may send particulars of the income, including a loss under the head income from house property, to the person responsible for paying salary in Form No. 12C.

All that is required from the employee's point of view is the furnishing of Form No.12C, which requires that if there is an income from house property the same must be stated in the form.

While if the same is a loss, the form requires that the assessee must enclose the computation thereof.

The said form does not require the employee to give any evidence for the claim for deductions against income from house property even where the same is a loss.

This would automatically mean that a DDO does not have to verify any of the documents relating to a claim for deduction against income from house property given by the employee in Form No.12C, as the same is not even required to be given by the employee to the employer.

On the issue of the municipal tax receipts being in the joint names of the spouses, since the employer has no obligation to verify the claim for deduction, the DDO does not have to take cognisance of the fact that the municipal tax receipts are in the joint names of its employee and the spouse where the former has claimed it as a deduction fully against his income under the head income from house property.

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