My wife has deposited Rs 70,000 in our child?s PPF account out of her annual income of Rs 1.2 lakh. My annual income is around Rs 8 lakh. Can I claim deduction on the PPF amount under section 80C?
Jitender Sharma
To claim deduction under section 80C, the taxpayer needs to contribute to the PPF account in his, his spouse?s or names of his children. As your wife has deposited money in the PPF account of your child, you cannot claim deduction under section 80C against your taxable income.
I pledged gold jewellery for a bank loan to purchase shares of listed companies/mutual fund units. Can I claim deduction against the loan while calculating my net wealth for the purpose of wealth tax?
Sukbhir Singh
Only debts incurred with regard to taxable assets are eligible for deduction while computing net wealth for the purpose of wealth tax. Since shares and mutual fund units are not taxable assets under the Wealth Tax Act, you cannot claim deduction for the bank loan.
I recently sold, for a profit, a residential flat that I inherited in 2010. My late father had purchased it in 2003. Will I get indexation benefit from the year I inherited it or from the year my father purchased it?
Sunil Kulshestra
If an assessee inherits a capital asset (a residential flat), the cost to the previous owner is taken as the cost of acquisition in the hands of the assessee. The indexed cost of acquisition is reckoned by taking the cost inflation index for the first year in which the asset was held by the assessee. In certain court rulings, judicial authorities have taken the view that the indexation benefit shall be available even for the period of holding such capital asset by the previous owner from whom the asset was obtained by means of succession, inheritance or devolution. Hence, you can claim the indexation benefit from 2003,when your father bought it.
I am a retired civil engineer, aged 62. I earn a pension of R35,000 per month.
I have no other income. Do I need to
file a tax return?
Rohit Bhola
Every resident individual aged 60 or more is required to file a return of income if his total income before claiming deduction under Chapter VI-A exceeds the basic exemption limit of R2.5 lakh (for FY14). As you are a senior citizen (62 years of age) with annual pension income of R4.2 lakh, you will be required to file a return. Further, you can invest in tax-saving instruments such as the Senior Citizen Savings Scheme Rules, 2004 or five-year term deposits with a scheduled bank. These instruments qualify for a maximum deduction of up to R1 lakh under section 80C.
Which deductions can one get against property income?
Amit Gupta
There are tax benefits available against house property income. A standard deduction of 30% of the net annual value is allowed as deduction irrespective of the quantum of the actual expenditure. However, the same is not allowed in case of self-occupied property. Deduction is available if property tax is borne by the property owner, and it is actually paid during the previous year. The principal component of the EMI qualifies for deduction under Section 80C (except under-construction property). For home loan interest repayment in case of self- occupied property, the maximum deduction permissible for an assessee is R1.5 lakh per annum. If the property is given on rent, the whole interest is allowable as deduction against rental income and there is no cap on the interest allowable.
The writer is founder of RSM Astute Consulting Group
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