Will education fees paid by an individual for his child’s higher education in the US qualify for deduction under Section 80-C? — Chandravijay Shah

No deduction can be claimed in respect of fees paid for higher education of an individual’s child in the US.

Section 80-C only allows a deduction in respect of tuition fees paid to an university, college, school or other educational institution situated within India and for the purpose of full-time education of a child of the individual.

I recently went on a vacation to Kochi. I travelled by air from Hyderabad to Kochi and back.

My employer states that the exemption under Section 10(5) in respect of LTA can be claimed only for the onward journey or for the return journey but not both. Is my employer correct? — Vivek

There is nothing in section 10(5) which prohibits the exemption from being claimed in respect of both the onward and return journey.

Your employer does not seem to be right in saying that the exemption would be available only in respect of the trip one way and not both ways.

I own a property which is let out on rent. My tenant insists on deducting tax at source on the service tax component payable on the rent as well.

Will tax have to be deducted at source on the service tax on rentals? — Imran Husain

Section 194-I which requires tax deduction at source on rent provides for the deduction on the income payable by way of rent.

Since the language used in that section talks of income by way of rent, it may be possible to take a view that no tax needs to be deducted at source on the service tax element of the rent.

However, such a view may lead to litigation and is certainly bound to create difficulties to the payer.

It is therefore advisable to deduct tax at source on the service tax element of the rent as well or alternatively for the recipient of the rent to obtain a certificate for lower deduction of tax at source from the Assessing Officer.

If the tax deduction at source on the service tax element creates genuine hardship to you it will be advisable for you to obtain a certificate from your Assessing Officer for lower deduction of tax at source rather than to drag your tenant into needless litigation.

I am one of the legal heirs of my father. My father had acquired a property by inheritance from his father in the year 1945. My father has since been the sole owner of the said property.

After my father’s demise, the property vested with legal heirs of whom I am one.

I now propose to sell my share in the said property to a developer.

My grandfather expired in 1945 and my father in 2006.

How will the capital gains be computed on the money that I receive from the sale of may land? Are there any investments that I can make to avail of an exemption on the capital gains? — Mrs Sunanda G. Bhokare

On the sale of your share of the land to the developer, a long-term capital gain will arise in your hands.

The long-term capital gains is to be computed by reducing from the full value of consideration, the indexed cost of acquisition as well as any expenses incurred wholly and exclusively in connection with the transfer.

You can also reduce the indexed cost of improvement of the asset.

The indexed cost of acquisition is determined by multiplying the cost of acquisition with the cost of inflation index of the financial year in which the asset is transferred and dividing it by the cost inflation index of the financial year in which the asset was first held by the assessee. The indexed cost of improvement is arrived at by multiplying the cost of improvement with the cost inflation index of the financial year in which the asset is transferred and dividing it by the cost inflation index of the financial year in which the improvement took place.

The gain arrived at will be a long-term capital gain since the asset has been held by you along with the previous owners who had acquired it by inheritance for a period exceeding 3 years.

Since the asset has been held by the previous owners even prior to April 1, 1981, the fair market value as of April 1, 1981 may be substituted at your option as the cost of acquisition of the asset.

The capital gains so arrived at will be eligible for exemption either under section 54F or 54EC. The exemption under Section 54F can be claimed by making investment in a house property and subject to satisfying the conditions in that section.

The exemption under Section 54EC can be claimed by making investment in bonds of the National Highway Authority of India or the Rural Electrification Corporation and subject to satisfying the conditions in that section.

You may, however, note that the maximum amount that can be claimed as exemption under Section 54EC can only be a sum of Rs 50 lakh.

I recently retired from the Delhi University and I am entitled to a monthly pension of Rs 19,500.

While I was told that such monthly pension is not taxable, my tax consultant says that the pension is taxable under the head salaries. Which is correct? — Dr Menon

Your tax consultant is right in stating that the pension received from your former employer will be taxed under the head salaries.

Section 15 makes it clear that any salary due from an employer or former employer will be taxable and hence the pension which is received from your former employer will be taxable as salary in your hands.

My wife has around Rs 50,000 with her, which she received as gift at the time of our marriage.

We recently opened a joint account and deposited the money.

If I use the funds for buying shares, will the gains from the same be clubbed in my hands? — Meghesh Kumar

Since the initial investment belongs to your wife, the income from the dealing in shares will not be clubbed in your hands.

The clubbing provisions will only be attracted if the funds for investment are given by you to your wife without adequate consideration.

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