By Neeraj Agarwala
I am planning to take an education loan for my son’s higher education in a management institute in Mumbai. What tax benefit will I get?
Arvind Kumar Sharma
When you take an education loan for your son’s higher education, you can claim a tax deduction under Section 80E of the Income Tax Act. The deduction is available only on the interest portion of the education loan, not on the principal repayment. There is no upper limit for the amount you can claim on the interest paid. The loan must be taken from a financial institution or an approved charitable institution. Loans from family members or friends are not eligible for this deduction.
You can claim the deduction for a maximum of 8 consecutive years starting from the year in which you begin repaying the loan interest, or until the interest is fully repaid, whichever is earlier. Higher education means any course of study pursued after passing the senior secondary examination.
If I transfer the bonus shares allotted to me to my son, what will be his cost of acquisition vis-a-vis long-term capital gains when he sells them later?
T V Mahadevan
When you transfer bonus shares to your son as a gift, the original cost of acquisition (CoA) and holding period carry over to him. The CoA is calculated based on the cost to the original shareholder, which, in this case, is zero since bonus shares are issued without any cost to you.
Since this is a gift to a specified relative i.e., your son, no capital gains tax arises at the time of transfer, but your son will be liable for LTCG tax upon sale. Since the original CoA is zero, your son’s CoA for these bonus shares will also be considered zero. For determining whether the gain is long-term or short-term, the holding period includes both your holding period and your son’s. Therefore, if the shares have been held (including both your period and your son’s) for more than one year, any gain will qualify as LTCG. When your son eventually sells these shares, the entire sale proceeds (since CoA is zero) will be considered as LTCG, subject to a 12.5% tax if the gains exceed Rs 1.25 lakh in a financial year.
I have filed my income tax returns in July this year but have not got the refund yet. How do I escalate the matter?
Santosh Kumar
If you’ve filed your income tax return (ITR) in July and haven’t received your refund yet, there are a few steps you can take to check the status and escalate the matter if necessary. Ensure that your ITR has been processed by checking the status under the “View Filed Returns” section on the portal. If it’s not processed yet, that may be causing the delay. Confirm that your bank account is pre-validated and linked to your PAN for receiving the refund. This is essential for direct credit of refunds. Log in to the Income Tax e-filing portal, and under the “My Account” section, click on “Refund/Demand Status” to see the current status of your refund. If the refund is still pending after checking the above, you can raise a grievance on the e-filing portal under the “Grievances” tab. Refunds generally take time depending on processing, so ensure that all the details and compliance are in place before escalating the matter.
The writer is partner, Nangia & Co LLP.
Disclaimer: Views expressed are personal and do not reflect the official position or policy of FinancialExpress.com. Reproducing this content without permission is prohibited.