Personal Finance

Your Taxes

Sanjiv Chaudhary | Updated on December 29, 2019 Published on December 29, 2019

I pay an annual life insurance premium of about ₹1 lakh. In this insurance, my daughter is the insured person and I am the proposer; my daughter is also an employee in my proprietary firm with an annual salary of ₹6 lakh. So, as a proposer, am I eligible for tax benefits even though my daughter is also an employee in my proprietary firm?

Rishika Ashok

We understand that you make payment of the premium for a life insurance policy on the life of your daughter which is eligible for deduction under Section 80C of the Income Tax Act.

As per the provisions of Section 80C of the I-T Act, any sum paid by an individual during a financial year for the insurance on the life of any child of the individual should be eligible for claiming deduction.

In light of the above, since you are making the payments, you shall be eligible to claim deduction under Section 80C of the I-T Act for the life insurance premium paid by you for your daughter.

My wife and I are joint owners of a deemed to be let-out property (flat). We purchased the same through a home loan in which both of us are co-applicants. My wife is employed in the private sector and I am employed in the government sector. The repayment of the loan is currently debited through my SB account.

1. I wish to know how the loss on house property should be split between us (me and my wife) for income-tax benefits. In the purchase deed, we have not mentioned the ownership percentage for both of us though both of our names are mentioned. The ownership certificate issued by the corporation/municipality also indicates both our names.

2. Is there any way to formally state the ownership share percentage, which can be used as a proof for income-tax purposes?

Jaivishnu KS

I understand that your query is in relation to a deemed to be let-out property for FY2019-20, which is co-owned by you and your spouse.

As per Section 24(b) of the I-T Act, while computing income chargeable to tax under the head ‘Income from house property’ in case of a deemed to be let-out property, the taxpayer can claim deduction of interest on a loan taken for the purpose of purchase, construction, repair, renewal or reconstruction of the property.

In case of a deemed let-out property (which is your case), there is no limit on the quantum of interest which can be claimed as deduction under Section 24(b) of the Income Tax Act.

However, loss (if any) exceeding ₹2 lakh, under the head ‘Income from house property’ for FY 2019-20, cannot be set off and will be required to be carried forward as per the relevant provisions of the I-T Act.

In the case of co-owners, each of the co-owner can claim full deduction of interest payment made by them in their return of income.

The deduction of interest under Section 24(b) should be allowed to the extent of the actual interest paid by a taxpayer (which should be in relation to the loan taken by that person).

Therefore, the income from the house property shall be calculated after allowing for exemptions in your and your wife’s hand, to the proportion/extent of the actual repayment of interest.

Please note that if the interest repayments are made only by you, even though your wife is a co-owner in the property, she may not be eligible to claim deduction and interest in her return of income (as she has not made the payment of interest).

Further, in relation to formally include the ownership percentage in the property deed, it is not required, because from a tax perspective, you would still be required to substantiate the proportion of interest repayments borne by you and your spouse.

The writer is a practising chartered accountant.

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Published on December 29, 2019
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