The Hindu Business Line : A doc turns author

DR V, authors a book, Liver Transplant Surgery, for which she receives a sum of Rs 4 lakh towards royalty from the publisher during the financial year 2003-04. What are the benefits she is entitled to?

A new Section 80QQB is proposed to be introduced with effect from assessment year 2004-05 to allow deduction for authors of any book being a work of literary, artistic or scientific nature. The deduction eligible under this section shall be up to a maximum of Rs 3 lakh on the income in the nature of lump-sum consideration or royalty received/receivable on such books.

In order to claim this deduction, the amount of royalty income shall not exceed 15 per cent of the value of the books sold during the previous year. However, the benefit of this section shall not be made available in respect of income from textbooks for schools, guides, commentaries, newspapers, journals, magazines, diaries, brochures, tracts, pamphlets and other publications of similar nature.

Senior's interest

MR INDIAN, a senior citizen, is earning interest income of Rs 1,65,000 from State Bank of India on fixed deposits. The bank proposes to deduct tax at source on the interest income in accordance with Section 194A. What is the remedy available?

The tax liability in this case would be nil after claiming deduction under Section 80L amounting to Rs 12,000 on the interest income and tax rebate under Section 88B at Rs 20,000. Prior to the Finance Bill, 2003, a person whose income exceeded the maximum non-taxable limit could not furnish self-declaration for non-deduction of tax at source even though his ultimate tax liability after claiming all deductions and tax rebate was nil. Therefore, the person responsible for paying such income shall deduct tax at source in accordance with the relevant provisions. This has caused genuine hardship to the senior citizens in the context of claiming refund in respect of such tax deducted at source.

The Finance Bill, 2003 has proposed to insert a new sub-section (1C) to Section 197A with effect from June 1, 2003, to provide relief for a senior citizen by allowing him to file self-declaration in the prescribed form to the effect that the tax on his estimated total income will be nil, so that no tax shall be deducted at source. This benefit has been extended to interest on securities, interest other than interest on securities, withdrawal from NSS and income from mutual funds vide this new sub-section.

Cancer cost

MR A spends Rs 25,000 towards treatment of cancer for his brother at a private hospital. Can he claim deduction under Section 80DDB at a flat amount of Rs 40,000?

According to Section 80DDB, an assessee is entitled to deduction in respect of expenditure incurred for the medical treatment of the dependant member in the family. A sum of Rs 40,000 was allowed as flat deduction irrespective of the actual amount incurred towards such treatment. The Finance Bill, 2003 has proposed to amend this section to restrict the amount of deduction to Rs 40,000 or actual expenditure incurred, whichever is lower. Therefore, in this case, Mr A can claim deduction only to the extent of Rs 25,000. In case such dependant is a senior citizen then enhanced deduction of Rs 60,000 can be claimed subject to actual expenditure incurred.

NOR changes

WHAT are the changes made with regard to the status of "resident but not ordinarily resident" in the case of individual assessees?

An individual can be considered as resident but not ordinarily resident, if he is a non-resident for two years out of the preceding 10 years. However, the Finance Bill, 2003 has proposed to replace the existing clause (6) to Section 6 with a new clause with effect from assessment year (AY) 2004-05. Accordingly, an individual can claim the status of "resident but not ordinarily resident" for a particular previous year if he:

a) has been a non-resident in India in nine out of 10 previous years preceding that year; or

b) has during seven previous years preceding that year been in India for a period of 729 days or less.

This proposed amendment will have its impact on any income received and accrued outside India from a business controlled from outside India or a profession set up outside India; and income (other than business or profession income) received and accrued outside India.

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