Income tax: Benefit available on loan for child’s study abroad

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Published: October 24, 2016 6:11:00 AM

Tax benefit on loan taken for higher study abroad

Is deduction under Section 80E of the Income Tax Act available for interest on loan taken for a child’s study abroad?
—Anirban Nath
Section 80E(3)(c) describes higher education as any course of study after passing senior secondary examination or its equivalent recognised by the gove-rnment (central/state/local authority) or by any authority authorised by the government. However, no condition with respect to place of such study is stipulat-ed. Therefore, deduction for interest on loan taken for higher education abroad shall be available under the said section.

I am a person resident and ordinarily resident in India. I have property in USA from which I earn rental income on which tax is deducted in the US. Should I offer the same to tax in India or would that would amount to double taxation?
—Pramod Gupta
As per the I-T Act, global income of a resident is taxable in India. The source state – the US – may decide its tax liability depending on the DTAA provisions. However, you have already paid tax on the rental income in the US. Accordingly, you will have to include the rental income while computing your total income and claim credit on the taxes paid in the US against the Indian income tax liability.

Is gift received by a HUF from a non-member or an outsider chargeable to income tax under Section 56(2)(vii)?
—Ravindra Singhal
As per Section 56(2)(vii), gift received by a HUF is exempt from tax if it is from any member of HUF, any local authority, under will or inheritance. If given by a non-member/ outsider and in the form of cash /immovable property /other than immovable property, it shall be taxable as ‘Income from other sources’.

The writer is founder of RSM Astute Consulting Group

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