No 80c sops for grandkids
QI purchased a house by taking a loan from a bank in July 2019. However, I will receive the possession of the house at around October 2020? I want to know whether the interest benefit will be available to me for the Assessment Year 2020-21 (FY 2019-20). NAVEEN GARG Via email
A) You will not be entitled to claim interest on housing loan for the Assessment Year 2020-21 (FY 2019-20).As per explanations to provision of Section 24 (b) of the Income-Tax Act. “Where the property has been acquired or constructed with borrowed capital, interest, if any, payable on such capital for the period prior to previous year in which the property has been acquired or constructed, as reduced by any part thereof allowed as a deduction under any other provision of this Act, shall be deducted under this clause in five equal annual installments, commencing from the previous year in which the house was acquired or constructed and each of the four immediately succeeding previous years.” So the interest pertaining to AY 2020-21 (FY2019-20) shall be deductible in five equal installments beginning with AY 2021-22 (FY 2020-21).
QI took voluntary retirement and invested my benefits of `12 lakh in a joint account, with my wife being the other account holder. An interest of `35,920 on investments is credited to my wife’s savings bank account. Her total income is `1,78,500. My wife is not an income-tax assessee as her total income is less than the taxable limit as per income-tax rules. As such Form 15H was submitted to the bank asking it not to deduct TDS. I am an income-tax assessee. So, I wanted to know if the interest earned on investments should be shown as a separate income earned by my wife or should it be added to my income. Kindly clarify. Only sums paid by an individual on his/her life or on life of his/her spouse or, on life of any child qualifies for deduction under Section 80c; A Hindu undivided family (HUF) can buy for on life of any member of the family.
A) As per the provisions of Section 64(1) (iv), in computing the total income of any individual, there shall be included all such income arising directly or indirectly to the spouse “where an asset is transferred to the spouse by that individual otherwise than for adequate consideration or in connection with an agreement to live apart, the income arising from such asset”. Hence, the interest earned on investments made out of the amounts contributed by you shall form part of your income.
Q■ YASH MISHRA Via email
I am a senior citizen. I wanted to buy insurance on the life of my grandson, aged 25 years, for `45 lakh. Will I get the deduction benefit under Section 80C for the contribution made towards premium of LIC of my grandson? JEEVAN SINGH Via email
A) Under Section 80C, following sums paid or deposited by an individual/ a Hindu undivided family, at any time during the previous year, qualifies for deduction:
■ Any amount paid by an individual, on his/her life or on life of his/her spouse or, on life of any child; and
■ By a Hindu undivided family, on member of the family.
Therefore, you will not be eligible to claim the deduction under section 80C for life insurance premium paid for your grandson. life of any
(The writer is a Hyderabad-based chartered accountant. He can be reached at info@rathiandmalanis.com)