Addressing Queries on Taxation

V. B. Prabhu Verlekar, provides insights to questions and doubts that people of Goa have on matters involving taxation

Q.I am a Goan girl by birth, as also my parents. I am married to a person who is a non-Goan. Our marriage is registered in Goa. We are running a restaurant in Goa. Are we entitled to claim benefit u/s 5A by splitting our income in equal share and claim permissible deductions separately?

Alva Colaco, Calangute

  • No. As per Article 1107 of Portuguese Civil Code, you will be governed by personal law of male spouse. Though you and your parents are Goans governed under Portuguese Civil Code, you will not be able to take benefit of section 5A. You and your husband will be required to file tax returns independently declaring own income.

Q.I have a minor son. He earns interest of Rs 3 lakhs on fixed deposits gifted by his grandfather and this is added in my income while filing tax returns. If I deposit Rs 1.50 lakhs in PPF account out of this interest in the name of my son, will I be able to claim deduction u/s 80C?

Rajesh S. Naik, Taleigao

  • U/s 64(1A) of the act, income of the minor is required to be included in the hands of parents whose income is higher. Accordingly, minor’s income of Rs 3 lakhs has been rightly included in your income. You will be eligible to claim deduction of Rs 1.50 lakhs for PPF deposited in son’s name. However, total deduction you can claim u/s 80C is restricted to Rs 1.50 lakhs only. This is held by Madras High court in case of V. S. Chelliha (147 ITR 590.)

 Q.I have received notice under section 143(2) of the Income Tax Act. What action I am required to take?

Jacob Valadares, Margao

  • This is a scrutiny assessment notice to verify the income returned by you in respect of discrepancy noticed by the tax department. Currently, all assessments are conducted via the income tax portal. In response to this notice, you have to reply and upload documents in support of your reply on the income tax portal after logging in. Non-compliance by specified date can result in “best judgement assessment” or penalty of Rs 10,000/- under section 271(1)(b) of the Act.

Q.I am a retired person. I have taken loan on my fixed deposits of Rs 50 lakhs to meet the marriage expenditure of my daughter. Will I be able to claim deduction for interest paid on loan from fixed deposit interest?

Yeshwant P Dhond, Panaji

  • Under Section 56 of Income Tax Act, 1961 you are required to declare the entire interest received on fixed deposit as income from other sources. There is no provision in the Act to claim deduction of interest paid on loan secured against these fixed deposits utilised for non-business.

Q.I am sending my son abroad for post- graduate course in medicine. I have taken education loan of Rs 30 Lakhs from a commercial bank, is there any tax benefit for loan amount?

Arun Jaswal, Sambhaji Nagar

  • Under section 80E of the Income Tax Act,1961, you will be able to claim deduction for entire annual interest on loan taken for education purpose, for higher studies by way of deduction from your gross income for a period of 8 assessment years. This section is silent about place of education. Therefore, even if higher education is outside India, there should not be any difficulty. Note that you will not be able to claim any deduction for principal repayment under any sections of Income Tax Act.

Q.I have given an interest free advance of Rs 50,000/- in cash to my friend to meet his very urgent need to pay salaries of staff. How will this be treated for the purpose of Income tax?

Suhas Virnodkar, St-Cruz

  • Under provisions of section 269SS of Income Tax Act, any amount in excess of Rs. 20,000/- in cash by way of loans or advances irrespective of interest is required to be given either by crossed cheques, drafts or through electronic payments. Failure attracts maximum penalty equivalent to advance made in cash. However, assessing officer has power to condone the penalty, considering the situation on case to case basis.

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