Section 80EE: Additional Interest Deduction on House Property Loan

Finance Minister presented Union Budget 2013-14 in parliament. In the Union Budget 2013-14 a new Section 80EE inserted in Indian Income Tax, 1961 for additional deduction of interest on housing loan. An assessee able to take additional interest deduction on housing loan from Assessment Year 2014-15

Additional Interest deduction on house property loan will be allowed on only to new loan sanctioned for house property. The loan sanctioned for house property does not exceed from 25 lakhs. Loan has been sectioned from 01-04-2013 to 31-03-2014. If the loan has been sanctioned before 01 April, 2013 than assessee not able to take benefit of Section 80EE of India Income Tax, 1961

A Brief Summary:

1. Loan has been sanctioned for house by any financial institutions from 01 April, 2013 to 31 March, 2014.

2. Loan amount sanctioned for acquisitions house property does not exceed Rs. 25 Lacs.

3. There are no other house property on the date of sanction housing loan to assessee.

4. Value of house property not exceed of Rs. 40 lacs.

5. Buyer of house property is the first time buyer.

Note: - This is a brief disclosure on Addition Interest Deduction House Property Loan under Section 80EE and under Section 24 (b) of India Income Tax Act, 1961.

Section 194-IA : TDS on purchase of Immovable Properties

Tax Deduction at Source (TDS) on transfer of certain immovable properties (other than agricultural land) for value Exceeding Rs.50 Lakhs.

The Finance Bill 2013 has introduced a new section 194-IA providing for TDS @ 1% to be deducted by purchaser. In case valid PAN of seller is not available , tax deduction will be at higher rate of 20%. This amendment is effective from 1st June, 2013. 

For reducing the further compliance burden on the transferee, it is also provided that a simple one 

page challan for payment of TDS would be provided containing details (including PAN) of transferor and transferee  and also certain details of the property. The transferee would not be required to obtain any Tax Deduction and Collection Account Number (TAN) or to furnish any TDS statement as this would be mostly a one-time transaction. 

The transferor would get credit of TDS like any other pre-paid taxes on the basis of information furnished by the transferee in the challan of payment of TDS. 

The New Payment Challan for TDS requires the Property Purchaser to Furnish following details in the form for payment of TDS :- 

·         Permanent Account No. (PAN) of Transferee (Payer/Buyer) 

·         Permanent Account No. (PAN) of Transferor (Payee/Seller) 

·         Category of PAN of Transferee 

·         Category of PAN of Transferor 

·         Full Name of the Transferee 

·         Full Name of the Transferor 

·         Complete Address of the Transferee 

·         Complete Address of the Transferor 

·         Complete Address of the Property Transferred 

·         Details of amount paid/Credited 

Deposit of tax

Any tax deducted under section 194-IA will be

·         Deposited within 7 days from the end of month in which tax was deducted

·         Deposited by way of Challan-cums-statement in Form 26QB

·         Deposited electronically into RBI/SBI or any authorized bank. Director General of income-tax (Systems) will specify formats , standards and procedure for such electronic remittance

TDS Certificate

·         TDS Certificate in respect deduction under section 194-IA will be issued by deductor in Form No 16B

·         Form 16B has to be issued within 15 days from the due date of depositing tax

·         Form 16B will have to be downloaded from income tax web portal.

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Section 80E : Deduction for Interest on Education loan

Q. Who is eligible for deduction u/s 80E?

A. Loan should be taken by individual for pursuing higher education of self, spouse or his /her Children’s. Hence parents are also eligible to claim deduction of interest paid by them on loan taken for their children’s education. This deduction is not available to HUF.

Q. What is eligible amount?

A. Only interest paid on an educational loan is allowed as deduction u/s. 80E of The Income Tax Act, 1961, out of his/her income chargeable to tax i.e. Deduction will be allowed only when actual interest is paid.

Q. How much amount is deductible?

A. There is no limit for amount of repayment of interest. Unlimited amount of interest can be deducted under this section. However there is no benefit available on the repayment of principal amount of the loan. The assesse can claim the amount of interest in the initial assessment year & carry forward up to 7 assessment years.

Deduction is allowed for a continuous period of eight years, starting with initial assessment year in which the assessee  starts paying the interest on the loan or until the interest is paid in full whichever is earlier. 

Q. Can loan be taken for any education?

A. The loan should be taken for the purpose of higher education.

Q. Can higher studies be pursued outside India?

A. There is no condition that the course should be in India.

Q. Can loan be taken from relatives?

A. The loan should be taken from any financial institution or any approved charitable institution. Interest on Loan taken from relatives or friends will not be eligible for deduction under section 80E.


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Public Provident Fund (PPF): The Tax Advantage.

The Public Provident Fund Scheme has introduced by Central Govt. on 1st July 1961. PPF account cannot be opened in joint names or as company. It also prohibits NRI’s from opening an PPF account.

SUBSCRIPTION & FREQUENCY:

·         The minimum amount on has to deposit in financial year is 500/- not paid in instalment & in multiple of Rs. 5/- and the maximum amount on has invest in PPF is Rs. 100000/-** whether in his name or jointly with minors and in a maximum of 12 installments in that financial year.

·         A PPF account will be discontinued if minimum amount of Rs. 500/- not deposited in year but it can be restored with deposit of Rs. 50/- per year of default plus minimum subscription.

·         The account under this scheme can open in any branch of State Bank of India, and its subsidiaries, or in any Head Post Office or any Selected Post Office or any of Nationalized Bank.

TERMS:

·         The term/duration of PPF account is 15 years from the end of financial year in  which the account is opened but can be extended for one or more block of 5 years after 15 years

·         Subscriber can avail the withdrawal facility from the PPF account after the expiry of the 5 financial years from the end of year in which the initial subscription was made by applying in form C.

·         Only one withdrawal in a year is allowed.

TAX BENEFITS:

·         The interest recoverable against loan taken from PPF account shall accrue to the Central Government.

·         U/s 80C of Income Tax Act, 1961 investment in PPF is qualified for deduction. Investment in PPF account earns interest 8% per annum compounded annually.

·         The interest earned in PPF account is tax free U/s 10(11) of the income tax act

·         Deposits credit balance under in PPF account is free of Wealth Tax.

OTHER BENEFITS:

•    Loan can be taken after the expiry of one year from the end of the year in which initial subscription is  made but before expiry of five years from the end of the year in which initial subscription was made. Application for the same has to make in the form D.
•  Loan is allowed up to 25% of balance of PPF account including interest at end of second year immediately preceding the year in which the loan is applied.
• Subscriber can avail the withdrawal facility from the PPF account after the expiry of the 5 financial years from the end of year in which the initial  subscription was made by applying in form C

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Digital Signature (DSC) in India

A Digital Signature (DSC) is an electronic security mark.This certificate ensures that you will not be sending sensitive data to a hacker or imposer site the browser also makes sure the domain name matches the name on the CA and that the CA has been generated by a trusted authority like us. PKI based digital signature(DSC) is cost effective with low price compared to other digital signature in the world. Digital signature reduce paper consumption as well as costs of transmission and storage.

Why is Digital Signature Certificate (DSC) required?

Like physical documents are signed manually, electronic documents, for example e-forms are required to be signed digitally using a Digital Signature Certificate. Transactions that are done using Internet if signed using a Digital Signature certificate (DSC) becomes legally valid.

A Digital Signature Certificate(DSC) is not only a digital equivalent of a hand written signature it adds extra data electronically to any message or a document where it is used to make it more authentic and more secured. Digital Signature ensures that no tampering of data is done once the document has been digitally signed. A DSC is normally valid for 1 or 2 years, after which renewal is required.

What are the types of Digital Signature (DSC) -

• Class2 DSC - For Income Tax Returns e-filing, MCA 21 & ROC, LLP, TDS Certificates, VAT Returns.
• Class 3 DSC - For MCA21, ROC, Income Tax, DGS&D, Northern Railway, IRCTC, e-Tendering, Trade Mark,e-procurement and other departments & organisations. Digital Certificates shall be used to access the website and authenticate the vendors. Vendors like E-Tendering etc. Vendors shall have to procure legally valid Digital Certificate issued by a Licensed Registration Authority (LRA).
• DGFT - For Importers & Exporters.

What is the legal status of a Digital Signature? 

Digital Signatures are legally admissible in a Court of Law, as provided under the provisions of IT.

How much time do CAs take to issue a DSC?

The time taken by Certifying Authorities to issue a DSC may vary from three to seven days.

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INTIMATION U/S 143(1) OF THE INCOME TAX ACT

Finance act 2008, had introduced section 143(1) of the Indian Income tax. This is the new scheme of processing of returns. Suppose if the return is filed within the due date or if the return is not filed and the assessing officer issues notice to the assessee requiring him to file the return of income, then such return of income gets processed under section 143(1).

While processing such returns , following adjustments are made to the total income:
a. Total income is adjusted for any arithmetical mistake in the return or
b. An incorrect claim which they observe from the information given in the return.

Meaning of incorrect claim I am giving as follows:
a. Conflicting data at different places in the return
b. Difference in data specified in the return and the actual documents(evidence)
c. If the deduction claimed by the assessee exceeds the limit specified in the act/rules either in value or in percentage.

After adjusting the income for the above two adjustments( i.e arithmetical mistake and incorrect claim), the adjusted total income is arrived at.
On this adjusted total income, income tax authority calculates the tax which is further adjusted for tax reliefs and taxes already paid. Then the final output is either the tax payable or tax refundable.

We have to interpret the Intimation u/s 143(1) as follows:-

a. If “NET AMOUNT REFUNDABLE” mentioned in Intimation u/s 143(1) letter more than Rs 100, there is a tax refund due from income tax department to tax payer. Refunds amounting less than Rs 100 won’t be refunded. 

b. If “NET AMOUNT DEMAND” mentioned in Intimation u/s 143(1) letter more than Rs 100, there is tax amount due from tax payer. This will be treated as demand notice for the payment of income tax due. This Intimation letter encloses challan form to pay income tax if the due is more than Rs 100.

If “NET AMOUNT REFUNDABLE /NET AMOUNT DEMAND”  is less than Rs 100, you can treat this Intimation u/s 143(1) as completion of income tax returns assessment under Income Tax Act. It can be useful for the proof of Income/ Completion of income tax returns assessment.