The Hindu Business Line : Rebate for both dad and mom from one receipt

TUITION fee of Rs 15,000 each has been paid by father and mother of their child but there is a consolidated receipt for Rs 30,000 from the college in favour of the ward. Can both parents claim tax rebate?

Pramod, Bangalore

Yes. But the qualifying amount for both will be restricted to Rs 12,000. Section 88 allows tax rebate on tuition fees subject to a maximum of Rs 12,000 per child subject to a ceiling of two children. The receipt would evidently have been issued in the name of the ward. But that is no bar for claiming rebate. One can prove payment from one's own sources through bank statements.

Employers' load lightened

AS PER the CBDT circular 9 dated November 18, 2003, employers should not grant deductions under Sections 80G and 80DDB while computing the tax liability of employees for TDS purposes. What could be the possible motive?

G. S. Bharatesa Maiya, e-mail

While the move could be disconcerting for the salaried class, especially if it heralds the beginning of unburdening the employers to the extent possible of their onerous duties, the employers must be clearly relieved. When all deductions and rebates are granted by the employer himself, it obviates for the employee the need to wait for refund from the tax administration. But is it fair to fasten the employer with unreasonable responsibilities?

It is one thing to ask the employers to deduct tax on ad hoc basis from salary in a spirit of national service but another to morph him into the role of the assessing officer (AO) practically for which role unfortunately he neither has any inclination nor time. Section 80G deals with deduction for donations. And Section 80DDB, for expenditure incurred by the assessee on certain disease or ailments. Both are fraught with grave responsibilities as to verification of the genuineness of the expenditure. Perhaps it is for this reason that the CBDT has shifted responsibilities from employers to AOs.

Loan from father

I AM doing MBA and my father has taken a loan for paying my fees from his PF. He is repaying the said loan through monthly deductions from his salary. Is he eligible for deduction under Section 80E?

Krupa Shanker, Coimbatore

No, because Section 80E allows the benefit thereunder to the student and not to his parent or other benefactor. While this teaches children to stand on their own feet, genuine cases such as your father's are given a thumbs down by such rigidity. Why should the Government be the arbiter of who will finance children's educational career — the student himself or his parent?

Many parents take pride in stretching their financial resources for the sake of their wards. Section 80E puts cold water on such noble intents. There is, however, a lesser tax benefit awaiting your father. The tuition fee paid by him to the extent it does not exceed Rs 12,000 qualifies for tax rebate under Section 88.

Foreigner's income

AN AUSTRALIAN citizen is employed in an Indian company at Delhi. His salary of $5,500 a month is credited to his bank account in Australia. Is tax deductible at source? He is likely to be with the Indian company for two years.

R. Srinivasa Rao, e-mail

Very much. As per Section 9(1)(ii), salary earned in India is deemed to accrue or arise in India. The double taxation avoidance agreement (DTAA) with Australia also says so. Income deemed to accrue or arise in India is taxable in the hands of non-residents as well.

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

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