I find that I do not have enough funds left over by the end of the year to claim the full deduction of Rs 1 lakh under section 80C. In this regard, my father has a housing loan (in his own name). I send money to him and he pays Rs 8,000 per month to the housing finance company. I had requested the company to transfer the loan to my account so that I can claim the interest deduction but they are not agreeable to do so. I myself pay house rent of Rs 7,200 per month; but the owner of the house does not give any receipt. Can I claim HRA deduction or can I claim any deduction for paying the EMI on behalf of my father?
?Parag
1. You will get the deduction up to Rs 1 lakh only if you contribute to the avenues covered by Sec 80C; not otherwise. You may invest only so much that you can afford to.
2. The housing finance company is very much justified in not transferring the loan in your name. Even if it did, you are not eligible for the benefit since the house is in the name of your father.
3. If you do not have any proof of paying house rent, it would be difficult for you to claim any concession either u/s 10(13) against HRA or u/s 80GG if you do not get HRA.
Presently the expenses of my family are shared in my personal and my wife’s files. Is it possible to apportion some or all of the expenses in my HUF file, as the money there is lying unutilised.
?Tanmay
Yes, HUF has a right to spend money for maintenance and subsistence of its members.
However, I personally do not like the idea. The main purpose of the existence of an HUF is that it is a separate unit of assessment, distinct from all the members. It has the same right to claim all the exemptions, deductions, and rebates as an individual has. Even the tax rates, both for income and wealth, are the same. The maximum advantage arises from the fact that its income up to the tax threshold of Rs 1,50,000 escapes tax. A taxpayer should allow the total income (after deductions) to increase until the tax zone of the HUF becomes higher than that of the Karta of the HUF in his individual capacity. Thereafter, your suggested strategy becomes useful.
I had availed for the purpose of construction of a house in addition to an SBI loan, my employees co-operative society loan at a fixed rate of interest. I want to claim deductions for these loans. The house has been completed within three years from date of acquisition and is self-occupied. Is there any format for claiming the interest and principle for the housing loan towards income tax?
?M Kumar
The interest payable on capital borrowed for acquiring or constructing a self-occupied residential property is deductible with a ceiling of Rs 1,50,000. The acquisition or construction should be completed within 3 years from the end of the year in which the capital was borrowed.
The assessee should obtain a certificate from the lender that such interest was payable on the amount advanced for acquisition or construction of the house, or as refinance of the principle amount outstanding under an earlier loan taken for such a purpose.
In the application form of the PPF account it is mentioned that we can extend our account without any loss or profit after the initial period of 15 years. What does that mean? Does it mean that we will not get any interest after 15 years if we extent the same account?
For how long can we extend our PPF account? I mean the maximum time limit to continue my account.
In case if I change my PPF account from one city to another or from one bank to any other bank or post office, will I loose any interest of that transaction period in shifting the account?
In case I close my account after 15 years can I open a fresh account after that?
?Dr. S Sharm
The account can be closed on completion of the term or it can be continued for a block of 5 years. This facility is available for a further block of 5 years on expiry of 20 years and yet another 5 years on expiry of 25 years and so on for any number of blocks – Yes, any number of blocks. The continuation can be with or without contribution. Once an account is continued without contributions for more than a year, the subscriber cannot opt to change over to continue the account with contributions. [Notification F.3(6)-PD/86 dt. 20.8.86].
A subscriber, continuing his account with fresh subscriptions, can withdraw up to 60% of the balance to his credit at the commencement of each extended period in one or more installments, but only one per year. On the other hand, the balance can be merely retained in the account without contribution till it is needed. Any amount, in part or full, can be withdrawn in installments, not exceeding one in a year. The balance will continue to earn interest till it is completely withdrawn.
Form-H is to be used to declare the intention of continuing the account with subscription, whereas no special intimation is necessary to continue the account without subscription.
You may find difficulty in transferring the account to another bank or even the branch of the same bank, unless you have good reasons to do so. However, you do not lose interest.
Yes, you can open another account after closing the first account. Though you have not asked whether it is wise to do so, allow me to give you an unsolicited advice that you will do well by opting for post-maturity continuation. The 8% tax-free interest coupled with its absolute safety is very attractive.
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