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My husband and myself have taken a joint loan for buying a house. But the loan document does not spell out the respective shares of loan sanctioned. Is that all right?

Lalita, email

The very idea of sanctioning a joint loan is two-fold — increase in the quantum of loan in view of the heightened repaying borrowing and, by extension, the repaying capacity and greater security for the lender in view of the liberty to take recourse to either of you. In fact, this is the reason why housing finance companies are comfortable lending to joint borrowers.

Obviously, the respective shares would not be spelt out under the very scheme of things in such an arrangement. But both of you can claim deduction under Section 80C for repayment of loan subject to the condition that you are joint owners as well.

An employee submitted his resignation in February and started serving his notice period of three months. The employer did not pay him salary for February and March because of an outstanding loan against the employee and intends doing so whi le making the final settlement which would be in the next financial year. Would it be all right for the employer to deduct tax at source?

K. Sankarasubramaniam, Chennai

The employer would be right in doing so because the mandate of Section 192(1) is to deduct tax at source at the time of payment — and not at the time of payment or when the income became due, whichever is earlier as is the case — with quite a few other payments subject to TDS. Sub-section (3) does not convert this requirement to deduct at the time of payment into a requirement to deduct at the time of salary becoming due.

All that it says is should there be a shortfall in deduction or should there be an excess deduction in the preceding months for some reasons at the time of payment, the omission can be made good in the subsequent months.

While this is the position regarding the employer, the employee himself cannot postpone the denouement because he has to account for his salary on due or receipt basis, whichever is earlier, as per the mandate of Section 15. In the event, he ought to have paid advance tax on or before March 15 to the extent tax was not deducted by the employer on his salary income. And in all fairness to him, the employer ought to have advised him accordingly.

My friend wants to file a return for an income below the tax-free limit merely to convert his black money into white. Will it work?

Rohit Keswani, email

I am afraid there are some misconceptions that need to be allayed. There is no need to file a return if one’s gross total income (GTI) is below the tax-free threshold. Earlier, under the economic criteria scheme, one was required to file a return despite having no taxable income if he was covered by one or more of the criteria. Now that he scheme has been abolished there is no scope for filing a return if the GTI is below the tax-free threshold. It is wrong to believe that filing of return exorcises one of all his tax-related sins.

My employer is insisting on receipt for the rent paid by me. Is he justified in doing so despite the fact that the house I pay rent for comes under the purview of rent control law and I have given my employer the PAN of the landlord? < /p>

Nathan, Chennai

Your employer obviously cannot accept the declaration given by you at its face value. Remember, he is practically the assessing officer and has to take all the precautions lest he is hauled over coals for granting any unmerited exemption. He is perfectly justified in asking for receipts for payment of rent.

S. MURLIDHARAN

More Stories on : Income Tax | Income Tax | For the Asking

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