The Hindu Business Line : Sharing the cost of education

My son is studying in an engineering college. Can both me and my wife claim deduction under Section 80C on account of tuition fee, which is Rs 2 lakh per annum, by paying Rs 1 lakh each?

Prashant Dikshit, Allahabad

Yes, that would be the most sensible thing to do because it would obviate for both of you the need to invest in other tax-saving avenues under Section 80C.

The scrapping of the limit of Rs 12,000 per child has come as a boon for people like you. Enjoy! Had one of you taken up the entire burden, the deduction would have been restricted to Rs 1 lakh only because that is the overall limit under Section 80C per person.

By dividing the burden equally you will reap the full benefit of this expenditure which is arguably an investment.

Senior citizen's worries

I am a senior citizen in the highest tax slab. Please clarify the following doubts: If I purchase agricultural land can I claim stamp duty and registration expenses under Section 80C. If I gift the agricultural land to my sons and my grandchildren can the stamp paper and registration expenses for the gift deed be claimed under Section 80 C?

M. A. Khader, email

No. Section 80C deduction is available only for payments towards residential house. It is not available for purchase of agricultural land. It might make the grade if the agricultural land is admittedly not used for cultivation but purely for residential purposes because in that case the exemption from tax available for farmhouses won't be on thus making the house property subject to assessment under the head income from house property. That I am sure is not your case.

PPF on EEE lines

If I open a PPF account in my wife's name, who is a homemaker with no income of her own, will she be taxed on the principal part of the lumpsum proceeds available at maturity? I have read that the interest is tax-free, but I am not clear about the principal. I will be contributing the principal payments for her and I have already reached my Section 80C limit with other investments.

Pankaj Srivatsav, email

At present PPF is one of the tax-savings scheme that is operated on EEE lines — exempt at the time of contribution, exempt at the time of accrual of interest and exempt at the time of withdrawal.

But the Government is threatening to convert this and other schemes into EET, the idea being to impose tax on maturity. But it has not happened yet.

Taxes and deductions

I pay municipal tax as well as water and sewerage taxes. While I claim municipal tax as my deduction while computing the annual value, I am not sure of my grounds regarding the latter. Advise

P. Veerabadran, email

The latter cannot be deducted. Section 24 brooks only two deductions — a 30 per cent standard deduction and interest, if any, on borrowings for purchase, construction or renovation.

In the event, water and sewerage taxes, as indeed all other expenses on house property, though genuine, would fall by the wayside.

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

S. Murlidharan

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