The Hindu Business Line : Tuition fee is in a class of one

Does this mean that the items not specifically excluded, such as fees for games, magazines, stationery, Parents' Teacher Association fees, Staff Benefit Fund, Gratuity Fund, and hostel will not qualify for the deduction? — M. S. Abraham

None of these will qualify for deduction under Section 80C of the Income-Tax Act, 1961.

The deduction available under this Section is for sums paid as tuition fees (excluding any payment towards any development fees or donation or payment of a similar nature) whether at the time of admission or thereafter to any university, college, school or other educational institutions within India for the purpose of full-time education of any two children of an individual. The principle requirement for qualifying for deduction under this provision would be that the fee paid should be in the nature of tuition fee. All of the items enumerated by you are essentially not in the nature of tuition fee, and so cannot qualify for deduction.

You may note that the development fee or donation or payments of a similar nature even if they are in the nature of tuition fees will not qualify for the deduction under this Section.

The advance tax which I had to pay on or before March 15 was paid to the bank on March 14, 2007 for the financial year 2006-07. Though I presented the cheque to the collection bank on March 14, the challan I received shows the date as March 20.

In such circumstances will it be construed that there is a five-day delay in the payment of advance tax and will I be liable for payment of interest for the delayed remittance? — Ramkumar

It will not be construed that there has been a delay in the payment of advance tax. The advance tax will be deemed to have been paid on the date the cheque was presented to the collecting bank. Rule 80 of the Treasury Rules provides that the date of presentation of a cheque will be treated as the date of payment.

As you presented the cheque on March 14, that date should be taken as the date of payment though the cheque may be cleared on March 20. This view is supported by the following cases: K. Venkata Reddy v CIT & Anr [2001] 250 ITR 147 (AP); Kangold India Ltd v CIT [1991] 239 ITR 842 (Guj); and Vardhaman Chemicals v Commissioner of Central Excise and Customs & Anr [2003] 263 ITR 460 (Bom).

I have been contributing to a 15-year Public Provident Fund account. I would like to know whether the interest earned from the PPF is taxable and if so at what rate and under which head will it be taxable and whether the interest which automatically stands reinvested also be eligible for tax benefits under Section 80 C? — K. K. Chandramohan

The interest earned from the PPF account will be exempt under Section 10(11) of the Act and will not be taxable.

The interest that is reinvested in the PPF account will qualify for deduction under Section 80 C.

There is no prohibition on the claim of deduction under Section 80 C on interest credited and reinvested in the PPF account.

Section 80 C allows a deduction for sums paid or deposited in the PPF account and therefore such interest should also qualify for the deduction. You may note that the old Section 80 C, which has since been amended and the benefit of rebate under Section 88, which is no longer available, used to provide that the payment or deposit should be out of income chargeable to tax.

When such was the provision, since the PPF interest was exempt, the tax benefit could not be claimed. However, with this condition relaxed, there appears no longer a prohibition on the claim of deduction under Section 80 C on the sums credited and reinvested in the PPF account.

When I quit my last employment, I had to pay Rs 15,000 as I had not given adequate notice as per the terms of employment.

This amount was reimbursed to me by my current employer, who has, however, treated this sum as part of my salary and deducted tax at source on it.

But I think that this sum should not be taxable in my hands as it is only a reimbursement of the amount paid by me to my previous employer. Is my view correct? — Preeti Ladha

The view taken by you is not correct. The sum received by you from your present employer will be taxable in your hands.

There is no provision in the Act to treat such sum as not taxable though you may term it as a mere reimbursement of a sum incurred by you to get relieved from you former employer and to take up employment with the present employer.

I reside in Pune, in a rented premises that is close to my place of work. I pay a rent of Rs 7,500 per month. I propose to purchase a flat for Rs 15 lakh on which I would be paying an EMI of Rs 16,000.

I will continue to live in the rented premises and I propose to let out the flat that I will be buying. Can I claim the tax benefits in respect of House Rent Allowance on the rent paid as well as claim tax benefits on the EMI? — Vinay

There is no prohibition on making such claim for deduction under Section 24 in respect of the interest on the housing loan, the deduction under Section 80 C in respect of the principal repayment of the housing loan as also the claim for exemption under Section 10(13A) in respect of HRA so long as you are paying rent.

The exemption under Section 10(13A) is available if you receive HRA and also paying rent. The deduction under Sections 24 and 80C are available on the interest and principal repayment respectively on the loan taken for the purchase of the flat. The provisions are independent of each other and the tax benefits can be claimed without any difficulty.

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