Tax Sops On Home Loans Only For Owners

Updated: Jun 29 2003, 05:30am hrs
I had opted for VRS on September 30, 2002. As per the terms of the scheme, the ex-gratia payment was to be paid in five equal half-yearly instalments i.e. @1/5 of the ex-gratia amount payable on 30.09.2002, 31.3.2003, 30.09,2003, 31.3.2004 and 30.09.2004 by way of post-dated cheques.

However the TDS was computed on the entire ex-gratia amount of Rs 14.75 lakh (as if had been paid in one go) and deducted from the first instalment. I feel deduction of TDS on the entire amount of ex-gratia (a substantial part of which was to be received in subsequent years) is not correct. Please give me your views on this aspect.

The Income & TDS figures are as follows:

Preview for 2002-03
Income from salary Rs 1.7 lakh
Ex-gratia received by way

of first two instalments (as on 30.9.2002 & 31.3.2003) Rs 5.5 lakh
Notice pay Rs 0.75 lakh
TDS Rs 3.30 lakh

In my opinion, my liability towards income tax should have been Rs 30,000 and I am entitled for a refund of Rs 3 lakh (i.e. Rs 3.30 - 0.30). I shall be thankful for your advice. Subhash Chander Aggarwal, schander52@rediffmail.com

The total amount payable for the VRS will be taxable at the rates applicable for the FY 02-03 and exemption of Rs 5 lakh claimed on the total amount received and receivable including the salary and other payments, if any. However, the TDS should be on the actual amount received at the rate arrived at as above.

I do not understand how you have come to the conclusion that you are entitled to a refund of Rs 3 lakh.

I wish you had given me your computations. You appear to have made some error while computing the TDS and so has your employer.

Please give me a photostat of the Form-16 that your employer has given you. Such photostats are never clear. Give me the individual figures in a tabular format to enable me come to my own conclusion. Give the basic figures without rounding them off. Do this ASAP.


Recently, I bought 6.5 per cent tax-free GOI savings bonds at SHCIL (Stock Holding Corporation of India). I invested because of the safety these bonds offer.

But when I received the certificate from SHCIL, I found that the certificate was not issued by RBI as I had presumed. It was issued from SHCIL stating my holdings. When I enquired about this, I found that it was something to do with demat.

Now my doubt is whether my investment is at risk. If SHCIL gets involved in a scam or becomes sick, is their a chance that I might lose my money. Kindly reply as this will be of enormous help to me. Arunachandra Babu, rracb@yahoo.co.in

These are the RBI Savings Bonds. SHCIL has been authorised by you, and only by you, to hold these bonds in their custody in demat mode on your behalf. Yes, in theory, if SHCIL gets involved in a scam or becomes sick, there is a chance of your losing money. And this is the case with each and every company or organisation. Supposing RBI gets involved in a scam...


I have got a query on personal taxation. An employee is working in a government department in Hyderabad. He constructed a house at Warangal (another place) and has taken a loan of Rs 2 lakh from a bank on his wifes name for construction of house (She is a housewife and has no income source). He pays interest and repayment of principal amount for this loan.

Can this employee claim tax exemption for the interest and principal amounts paid to the loan which was taken on his wifes name. If allowed, please quote the section number. Mohan Reddy Pinninti, mrpinninti@rediffmail.com

No, he cannot. The tax concessions is available only in the case of loans taken in the name of the owner of the property. I fail to understand the reason behind the property belonging to husband and loan taken by the wife or vice-versa. I hope you had asked this query to me before the loan was taken by the employee and definitely not after. It is too late now to amend the action. Your friend indeed has a callous attitude towards investment.

(The author may be contacted at anshanbhag@yahoo.com)