Tax sops on SB interest

QMy daughter is pursuing higher studies in Australia. Can I claim deduction for her university fees under Section 80C? What is the maximum deduction allowed under 80C for children education?

The deduction allowed under Section 80C is restricted to `1.5 lakh. There is no restriction on the amount of deduction towards the payment of tuition fees for the education of any two children of such individual — subject to the overall ceiling of `1.5 lakh as per Section 80C. However, the deduction under Section 80C is allowable only for pursuing wholetime education in India. The deduction for interest on loan obtained for higher education from specified institutions can be claimed under Section 80E without any ceiling for a period up to eight years.

QMohd. Ali Khan Hyderabad I have received `2.2 lakh from the public works department of the state government as a compensation for damages caused to my building during road widening works. Is this amount taxable in my hands?

It appears from your query that no part of land or building is taken over by the government. Hence the amount received by you would be treated as “capital receipt” and will not be chargeable to tax. However if any part of the land owned by you was “taken over” by the government, the amount received by you would be chargeable to tax under the head “capital gains”.

QGanpat Rao Hyderabad I am 45 years old. Please tell me if there is any tax relief for interest earned from savings account, fixed deposit, tax-free bonds and dividends and shares. K. Lakshmi Bai

Bengaluru

Interest from savings bank is allowed as a deduction up to `10,000 under Section 80TTA of the Income Tax Act and anything over and above the limit specified above will be taxable. The income from fixed deposit is taxable.

Tax-free bonds are mostly issued by government enterprises and pay a fixed coupon rate. The proceeds are generally invested in infrastructure project. They may have a long-term maturity of typically more than 10 years. The income by way of interest on tax free bonds is fully exempted.

Dividend income received from a domestic company is exempt in the hands of the shareholders under Section 10(34) of the Income-Tax Act. However, with effect from assessment year 2017-18 (FY2016-17), where the total income includes any income in aggregate exceeding `10 lakh by way of dividends declared, distributed, paid by the domestic company would be taxed at rate of 10 per cent.

The exemption on the sale of equity shares or units of an equity-oriented fund will be applicable, if they are held for more than one year subject to certain conditions that STT is paid on such transactions. If the holding period is less than one year, they are taxable at a flat rate of 15.45 per cent.

INTEREST FROM SAVINGS BANK IS ALLOWED AS A DEDUCTION UP TO `10,000 UNDER SECTION 80TTA