The Hindu Business Line : Is employer inconsiderate to my dad's renal failure?

HITHERTO, at the time of deducting tax at source, my employer has been granting Section 80-DDB deduction on account of medical expenses incurred by me on my father who is suffering from renal failure. But this year the employer has refused to do so, citing the recent CBDT circular. What does it say?

Rajesh R., e-mail

The CBDT comes out with an annual circular exhorting employers on how to go about discharging their TDS function under Section 192. For the financial year 2003-2004, the CBDT has come out with Circular No. 9 of November 18, 2003, which pointedly skips to Section 80E after allowing the employer to allow deduction under Section 80DD.

By implication, therefore, employers are not supposed to embroil themselves in the nitty-gritty of Section 80DDB. The bottomline is: You would suffer tax first, but can recoup it by filing a return. Whether this is an omission or a conscious decision, one does not know. Both Sections 80DD and 80DDB contemplate grant of relief for medical expenses.

While the former deals with disabilities the latter relates to chronic ailments. Perhaps, the CBDT suspects greater scope for foul play with respect to the benefit under Section 80DDB and would, hence, like to keep the reins of control with it.

Vacancy factor

HOW is vacancy allowance calculated in respect of a let-out property?

Pritish Bharadwaj, New Delhi

There is no vacancy allowance as such. But the annual value itself is suitably adjusted for this purpose. Normally, the annual value is the expected rent — the greater of the municipal value or the prevailing market rent.

However, if the actual rent is greater than the expected rent, the former is the annual value.

Likewise, if the actual rent received is less than the expected rent due to vacancy, then the actual rent would be taken as the annual value.

But if the actual rent received is greater than the expected rent, despite the vacancy, the annual rent would be taken as the annual value.

To wit, suppose the expected rent is Rs 1,20,000 per year at the rate of Rs 10,000 a month and the property has been let out at Rs 11,000 a month. Assuming it remained vacant for a month, the actual rent received would be Rs 1,21,000. This would be the annual value.

House afar

I HAVE a house in Bhubaneshwar which I acquired with borrowed funds within three years from the end of the financial year in which the loan was taken. But I work in Berhampur, some 170 km away from Bhubaneshwar.

Am I eligible for the enhanced deduction towards interest of Rs 1,50,000. Am I eligible for claiming pre-acquisition period interest as well?

Bansidhar Arukh, e-mail

You haven't mentioned anything about the occupancy of the house. Is it self-occupied? Such self-occupancy need not be by you yourself. Your parents may be living in it. In the alternative, the house must be under lock and key.

In either of these two cases, the house will be deemed to be having a nil annual value. In such a scenario, the deduction towards interest would be restricted to Rs 30,000/Rs 1,50,000. But if it becomes ineligible for nil annual value, actual interest payable would be deductible without any limit.

Assuming the house to be self-occupied or under lock and key, you would get the enhanced deduction for interest subject to the ceiling of Rs 1,50,000.

As for the pre-acquisition interest, you would get the same as deduction in five equal instalments.

It is, of course, a grey area whether such interest is within the overall ceiling of Rs 30,000/Rs 1,50,000 or in addition thereto.

Rebate for couple

IF THE husband and wife have taken a joint loan, are both eligible for tax rebate and other benefits?

S. Anand Kumar, Bangalore

Section 88 dealing with tax rebate posits grant of rebate to the one who pays. Therefore, if the house is registered jointly, the rebate would be granted to both to the extent they have respectively paid back the instalments subject, of course, to the ceiling of Rs 20,000 per person.

The same would be the case with regard to interest while computing income/loss from house property.

This presupposes clear-cut identification of the respective shares of the husband and the wife in the ownership of the property.

(ASK! Send in your queries on accounting, auditing, corporate law and taxation to ask@thehindu.co.in)

S. Murlidharan

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

Stories in this Section
They want your MD as their MD as well

Cartoon Corner

If you're bored of meetings, read this

Often, arguments are like accelerating against stonewalls

Is employer inconsiderate to my dad's renal failure?

To do CA is to take sanyas to study

Business-a-verse

Story about a great storyteller