|
|||
HOME | MONEY | TAX | Q & A |
February 10, 2000
Books
|
"How do I calculate the tax rebate on my house loan?"The Rediff Money Channel presents everything you wanted to know about tax issues, but didn't know whom to ask. Chartered Accountants from Ganesh Jagadeesh & Co are here to remove all your doubts. I am a software professional in India falling in the 33 per cent tax bracket. My investments under section 88 are Rs 46,000. I still pay a monthly tax of Rs 4000. Please address the following queries:
— Raghavendra B K 1) There is no provision granting any deduction or rebate for a car loan under the Income Tax Act like in a housing loan. 2) Section 10 (13A) of the I T Act, 1961 grants exemption from the House Rent Allowance received by an employee in case where the employee pays such rent. The exemption is not allowed in the following cases.
The exemption is limited to the least of the following: a) Allowance actually received b) Rent paid in excess of 10 per cent of the salary c) 50 per cent of the salary in case Mumbai, Delhi, Calcutta and Chennai and 40 per cent of the salary for other cities An accomodation given to an employee by a company is treated as a perquisite. The valuation of such a perquisite is prescribed by Rule 3 of the Income Tax Rules, 1962. 3) The third question does not relate to personal taxation and cannot be answered by us. Can I claim a deduction of Rs 40,000 under section 80DD irrespective of the amount spent? Or can I claim only the amount spent? — G Natesh Provisions of section 80 DD of The Income Tax Act, 1961 have been amended with effect from Assessment Year 2000-01 so as to allow the deduction of Rs 40,000 where any expenditure has been incurred for the medical treatment (including nursing), training and rehabilitation of a handicapped dependant or any amount paid or deposited under any scheme framed in this behalf by the LIC or UTI. Under the existing provisions of section 80 DD, an amount of expenditure incurred for the medical treatment of handicapped dependent or for payment or deposit made for the maintenance of such dependence is qualified for deduction, subject to the maximum of Rs 40,000. Thus according to the amendment from Assessment Year 2000-01, the assessee shall in accordance with and subject to the provision of this section be allowed a deduction of a sum of Rs 40,000 in respect of the previous year, irrespective of the amount actually spent or deposited, provided the same is done in accordance with the provisions of Section 80 DD of The Income Tax Act, 1961. How do I calculate the tax rebate on my house loan? The loan is for Rs 5 lakh. The interest is 4 per cent on the first Rs 2.5 lakh and 8 per cent on the remaining Rs 2.5 lakh on a reducing balance basis. — Thakur The Finance Act, 1999 has amended Section 24 (2) of the Income Tax Act, 1961 thereby raising the amount of deduction in respect of interest paid on capital borrowed for acquisition/construction of house property. As a result of the amendment, where the property is acquired or constructed with capital borrowed on or after April 1, 1999 and such acquisition or construction is completed before April 1, 2001, the deduction on account of interest will be Rs 75,000 instead of Rs 30,000. The amount of annual outflow on account of interest is a function of factors such as the amount of loan availed, the rate of interest, the tenure of the loan and the schedule of repayment. Further, you are also eligible for a rebate of 20 per cent under section 88 of the IT Act. This rebate is available on the principal amount repaid to an approved Housing Finance Institution, from whom the money has been borrowed for purchase or construction of house property, subject to a maximum amount of Rs 10,000. When is the assessee entitled to trasfer the investment allowance reserve to general reserve? What is the tax treatment in this regard?
— B Chandra Mohan Under section 32 of the Income Tax Act, 1961, an investment allowance reserve is to be created by an assesee in order to qualify for claiming a deduction under the section. The said reserve is to be used for acquisition of new plant and machinery or is to be put to use in the manner as prescribed in the section for business purpose. The reserve cannot be used for declaration of dividend or transferred to the General Reserve before a period of ten years. EARLIER Q&AS: 'Can I gift shares to my daughter on her wedding without any tax liability?' 'How can I prevent tax deduction at source on company and bank fixed deposits?' 'How do I file tax returns if the original Form 16 is lost in transit?' 'Is income from moonlighting for a foreign firm taxable?' 'How much deductions can I claim out of the House Rent Allowance that I receive from my company?' Is PAN a must even if I am not paying income tax? What are the possible ways of planning my tax payments using the Hindu Undivided Family status?
Send in your questions to money@rediff.co.in |
||
HOME |
NEWS |
BUSINESS |
MONEY |
SPORTS |
MOVIES |
CHAT |
INFOTECH |
TRAVEL SINGLES | NEWSLINKS | BOOK SHOP | MUSIC SHOP | GIFT SHOP | HOTEL BOOKINGS AIR/RAIL | WEATHER | MILLENNIUM | BROADBAND | E-CARDS | EDUCATION HOMEPAGES | FREE EMAIL | CONTESTS | FEEDBACK Disclaimer |