The Hindu Business Line : MBA degree at your cost

I WORK for a multinational company at Bangalore. I am doing a part-time course in Management for which the tuition fee is around Rs 1.50 lakh. Will this tuition fee be eligible for any tax benefit?

Monish

Reply

You cannot claim any tax benefit in respect of the tuition fee expended by you.

Query

If a company deducts excess tax at source in one of the months in a year, can the company refund the same to the employee? In the alternative, can the same be adjusted against the tax to be deducted in a subsequent month? Are there any deadlines for submitting proof of investment with the employer to claim the deduction under Section 80C?

Is it correct for an employer to require an employee to give proof of investments to the extent of 50 per cent of the amount, which the employee commits to invest in a year, before September 30 of the previous year?

If an individual has taken a housing loan for purchase of a property in Haryana and is employed in Delhi, will it be possible for him to claim the benefit of exemption under Section 10(13A) in respect of HRA on the basis of the rent paid for a rented premises at Delhi and also claim the tax benefits in respect of the housing loan for the property in Haryana? Please note that the property at Haryana is not let out and is vacant.

Anonymous

Reply

It would not be possible for an employer to refund the excess tax deducted by him from the salary of an employee, back to the employee. Under Section 200 of the Act, tax deducted at source has to be remitted into the account of the Central Government within the prescribed time. An employer can make no refund to an employee. The employer may however adjust the excess tax deducted in one month against the tax to be deducted in a subsequent month, of the same employee. This can be done in the light of Section 192(3) which provides that in making deduction of tax at source, the same may be increased or reduced for the purpose of adjusting any excess or deficiency arising out of any previous deduction or failure to deduct during the financial year. You may however note that such adjustment is only possible within a financial year and also that the excess tax deducted of one employee cannot be adjusted against the shortfall of tax deduction of another employee even in the same month. No adjustment inter se between employees is permissible.

There are no deadlines for furnishing proof of investment with the employer for the purpose of claiming the benefit of Section 80C while deducting tax at source. It would suffice if proof of investment is given before the end of the financial year. However, it would be difficult and impractical if this system were to be followed. This would cause needless confusion since if an employee were to declare a larger investment to be made, while he actually invests a lesser sum, the employer would end up deducting a lower tax than what is required to be deducted.

Keeping this in mind a practical view will have to be taken and different employers follow different yardsticks for this purpose based on their requirements, which will ultimately ensure that they do not deducting less tax than what is required to be deducted. While insistence of proof of investment to the extent of 50 per cent before September 30 of the financial year by the employer cannot be said to be a mandatory requirement, it may be required by your employer to ensure that there is no failure on his part in deducting tax at source on the payment of salary which is an onerous responsibility cast on the employer by the Act.

There should be no difficulty in claiming the tax benefits on the principal repayment and the interest payment on the housing loan taken for acquiring the house property at Haryana. The only issue will be whether you can treat this house at Haryana as self-occupied. You may note that only one residential house can be treated as self-occupied and that the annual value can be taken as nil. If more than one house is self-occupied, only one will be treated as such and the other(s) will be treated as deemed let-out property.

In your case, you can treat the property at Haryana as self-occupied and take its annual value as nil since you areemployed in a different city and also because the same is not let out. This will, however, be possible only if you do not own any house property other than the one at Haryana. If you own more than one house this will not be possible even if none of the houses is let out. In such a case, you can opt to treat any one house of your choice as self- occupied. The other house will be deemed to be let out and the sum for which such property can be let should be treated as the income under the head income from house property. Deductions can be claimed against such notional income in computing the income from the property. In any case, the tax benefits in respect of the interest and the principal repayment of the housing loan will be available to you. You can also claim the exemption under Section 10(13A) so long as you are in receipt of HRA and there is a rent paid by you. This would be irrespective of your owning other houses and should be within the limits laid down in Section 10(13A) of the Act.

(Mail your queries to taxtalk@thehindu.co.in or by post to `Tax Talk', Business Line, Kasturi Buildings, 859, Anna Salai, Chennai-600002.)

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