The Hindu Business Line : Is investment in retirement plan eligible for rebate?

I understand that the total deduction that can be claimed under Section 80CCC is only Rs 10,000. When I discussed this aspect with an agent he tells me that I can claim the investment made in ING Vysya as being eligible for rebate under Section 88. Is this correct?

I pay a premium of Rs 15,242 towards life insurance for my son who is a student. Will this qualify for rebate under Section 88?

C. N. Krishnan

Reply

It appears that your queries relate to the assessment year 2005-06 since you have mentioned claiming rebate under Section 88. In so far as the investment made in ING Vysya is concerned, it does not appear that you will be eligible for rebate under Section 88.

Section 88 permits the claim of rebate in respect of an investment if the same is in an annuity plan of the LIC or any other insurer notified in the official gazette.

It does not appear that investment in an annuity plan of ING Vysya has been notified and therefore the investment will not qualify for rebate. The premium paid for insuring the life of your son will qualify for rebate under Section 88.

Section 88(4) specifically provides for the premium paid to insure the life of the individual, the spouse of the individual or the child of the individual as qualifying for rebate.

It will not matter whether the child is dependent on you or not and the premium paid will qualify for rebate.

You may note that what is stated with reference to rebate under Section 88 will apply with equal force to the deduction under Section 80C with effect from the assessment year 2006-07.

Query

I am an employee of the Government of Orissa. I received arrears amounting to Rs 3,32,000 in the financial year 2004-05.

The arrear relates to the financial years 1996-97 to 2004-05. Out of the arrears a sum of Rs 2,77,000 was transferred into my GPF account and only the balance was paid in cash.

Can the investment in GPF account be split into the various years, to which the arrears relate, for availing the rebate under Section 88 in the respective years?

Rajib Majumdar

Reply

You will not be able to claim the rebate in the relevant years since the investment is made only in the financial year 2004-05.

You will able to claim the rebate under Section 88 only in this year, that is, in the assessment year 2005-06 subject to the limits specified in the Section.

Query

I purchased a house in 2000. The house was purchased in the names of my wife and myself. The loan was also taken jointly.

I am paying the EMI. I am claiming the interest as a deduction in computing the house property income, but I am not claiming rebate under Section 88 in respect of the principal repayment since my other investments exceed the limit stipulated in Section 88.

I now understand that where the husband and wife are joint owners of a property, they would both be able to claim the tax benefits.

Can my wife also claim the tax benefits?

Ajith

Reply

If in fact you and your wife are joint owners of the property, it is possible that the tax benefits can also be claimed in the proportion of your ownership in the property. You have stated that you have paid the entire EMI in the earlier years. This might prevent claiming of the tax benefits by both your wife and you.

It does not, however, mean that if in reality you are the joint owners, the entire tax benefit cannot be claimed by both of you.

If the EMI to the extent of your wife's share is treated as a loan owing from her to you, it would still be possible that both of you could have claimed the tax benefits.

You would, however, face difficulty in terms of the procedure, since the returns would have been filed.

Also, since you have claimed the entire interest, a portion of this which is attributable to your wife's share will have to be disallowed in your hands for which you may have to pay tax along with interest.

You would face this difficulty even if you take this stand in the years that follow.

Mail your queries to taxtalk@thehindu.co.in or by post to `Tax Talk', Business Line, Kasturi Buildings, 859, Anna Salai, Chennai-600002.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page