No HRA cut after 80c sop
QMy daughter is working in an IT company in Hyderabad. She had been sent to Australia in March, 2016, for working onsite. This is the first time she is coming under the income- tax bracket. Her total income is ` 5,67,042 for the year 2015- 16, including the salary from Australia. She pays a premium of ` 42,900 for an LIC policy and contributed ` 2,500 in PPF. Apart from salary, she gets ` 86,000 interest on bank fixed deposits. I have approached a local CA for filing the tax return. As per him I have to pay around ` 9,000 as income- tax. Please kindly tell me if my daughter’s income in Australia is also taxed in India. K. D. Mathisuthan
Hyderabad
Her total income after deductions under Chapter VI A is ` 5,67,042. The tax payable works out to ` 39,560. The tax on her total income works out to ` 39,560. The tax deducted by the employer after considering the 80C deduction of EPF ( excluding the amount of LIC and PPF as per your query and Form 16) is ` 21,752 ( including the foreign tax credit as per Form 16). Therefore, assuming tax of ` 8,600 is deducted on your FD interest of ` 86,000, the balance payable works to ` 9,208. So the guidance by your Chartered Accountant on tax payable is in line with the amount determined above.
From the query it appears that residential status of your daughter for FY 2015- 16 is that of a “Resident” in India. Once the residential status is “Resident”, her global income is liable to be taxed in India. The residential status of a person and its chargeability is covered under Section 5, 6 and 9 of the Income Tax Act.
QCan a son take home loan for a house that is to be registered in the name of father? If it is not possible, can the home loan be taken in name of both son and father as co- owners? In such event, can the son claim income deduction for principal under Section 80C and interest under Section 24, while claiming exemption for HRA by using rent receipts from father ( since home was in the name of the father)?
If none of the above is possible, what would be the best way to claim HRA along with loan being taken on son’s name?
It is not clear from your query as to who is the real owner of the property. In case your father is the sole owner of the property, you shall be eligible to claim the benefit of HRA.
Your father has to include the rental income in his total income and will be eligible to claim a deduction of 30 per cent towards repairs and maintenance on the rental income apart from deduction towards housing loan interest under Section 24 and principal repayment of loan under Section 80C.
If you happen to be the owner of the property, you will be eligible to claim deduction towards interest up to ` 2 lakh and principal loan repayment up to ` 1.5 lakh ( subject to the overall ceiling prescribed under Section 80C) and the entire HRA received from your employer will be taxable in your hands since the house is selfoccupied.