Claim NSC sop every year
THE INTEREST ACCRUED ON NSC HAS TO BE SHOWN AS INCOME EVERY YEAR AND THE SAME AMOUNT CAN BE CLAIMED AS REINVESTED UNDER SECTION 80C.
QI would like you to guide me as to how payment received on maturity on NSC (series VIII) during this financial year is to be treated. Has it to be included as a part of income? If yes, do I need to include only the principal amount or the total amount, inclusive of interest? I have been told that fixed deposits in banks or post offices can be claimed as deduction under Section 80C within the overall `1.5 lakh limit. Is it true? SUBRAMANYAM
Hyderabad The interest accrued on NSC has to be shown as income every year and the same amount can be claimed as reinvested under Section 80C. However, since you have not admitted the interest income in earlier years, the same may be included in the financial year in which the NSC has matured. There will be no liability on the principal amount received back on maturity. Deposits for a minimum period of five years, i.e., time deposits (Fixed) in banks/ post offices with the tax-saver option are also included in the list of admissible deductions under Section 80C.
QMy husband and I jointly purchased a flat in Hyderabad for `25 lakh. My husband utilised his own funds, whereas I took a loan of `8 lakh from my employer to avail the benefit of deduction for interest under Section 24(1). We could not occupy the flat due to some reasons. We continue to stay in the house of my in-laws, who have recently spent about `2.3 lakh on renovation and repairs of the building. Now, they are demanding a rent of `2,000 per month. Please advise whether, for income tax purposes, we can adjust the rent paid against the rent which we may receive by letting our newly purchased flat for a period of 1-2 years? SAVITRI Chennai
According to the scheme laid down under the Act with regard to computation of income under the head “income from House Property”, each property has to be considered separately and income from that needs to be computed according to the relevant provisions of the IncomeTax Act. According to the said scheme, there is no way that the rent being paid by you to your in-laws could be adjusted against the income derived by you from letting out your newly purchased flat. Q permanent My two sons, having residency in Austr-alia, are in highest tax bracket. I would like to save tax for them. I und-erstand that India and Australia have a tax tre-aty. So, what are the ways whereby we can save tax for them, either by investing in India or by postponing tax liability for them? Please advise. CHETAN Bengaluru
A) Since India and Australia are governed by tax-treaty, the income received by your sons will be taxed as per the existing tax laws in Australia. The investment of funds which you are contemplating to make in India is the posttax saving funds. The income generated out of funds invested in India will be taxed as per the Indian tax laws. In my opinion, they may not be able to derive any tax benefit in Australia by making investments in India. Further, the income generated in India also will be liable to tax in Australia as their residential status in Australia will be that of a ‘resident’. Any taxes paid by them on their income in India will also be eligible for set-off against the taxes paid in Australia.