The deduction shall be the amount repaid by way of principal and interest but shall not exceed Rs 40,000 per annum. The deduction is available for eight assessment years commencing from the assessment year relevant to the previous year in which the assessee starts repaying the loan or the interest. It is clear that the person pursuing the higher education should have repaid the amount. In the reader's case, while the children are pursuing the education and that too in a school, which is not higher education, the repayment is made by the reader, and therefore the deduction under Section 80E cannot be obtained.

Query

Is tax to be deducted at source on the following?

Sharad Bhargava

Reply

There is no provision in the Income Tax Act to require deduction of tax at source on royalty except where it is paid to a non resident or a foreign company, in which case the requirement arises under Section 195. There would, therefore, be no requirement to deduct tax at source on royalty paid to an author of a book except in the cases mentioned above.

As regards editorship fees, the exact nature of the service rendered will have to be examined. If the service rendered is in the nature of professional or technical then tax will have to be deducted at the rate of 5 per cent (as increased by a surcharge) under Section 194J. If the same is in the nature of a contract, tax will have to be deducted at the rate of 2 per cent under Section 194C. Tax will have to be deducted at source under Section 194C only if the payment per contract exceeds Rs 20,000 while deduction under Section 194J would be required if the payment per annum exceeds a sum of Rs 20,000. If the same does not fall under either, no tax will have to be deducted at source under the Act. It may, however, be noted that if the payment is made to a non-resident or a foreign company then the provisions of Sections 194C and 194J will not be applicable but the provisions of Section 195 would be applicable and tax would have to be deducted at source under that section.

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