No tax deduction is available on fee paid to college outside India

Nov 06 2012, 10:55 IST
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SummaryAs per Section 54F of the IT Act, an exemption from long-term capital gains is available if the gains are invested in a residential house property.

My daughter is studying in the US. I send money for her education directly to the university. Can I claim deduction on the payment under Section 80C of the I-T Act?

Rustam Vohra

Section 80C (xvii) of the Income-Tax Act, 1961, provides for deduction on tuition fee payment, provided such fee is paid to any university, college, school or other education institution within India. As you are paying tuition fee to a university/college outside India, you will not be eligible to claim any tax deduction.

I have earned long-term capital gain on the sale of unlisted shares. I want to invest the entire gains in a residential house to save capital gains tax. As I am living with my parents, I will let out the new house. I don’t own any other house. Can I claim tax exemption even if I let out the property?

BM Mahesh

As per Section 54F of the IT Act, an exemption from long-term capital gains is available if the gains are invested in a residential house property. The Section specifies the acquisition of a residential property and does not talk about its utilisation for own purpose. As such, there is no requirement to use such a house property for own residential purposes for claiming the deduction under Section 54F.

My father is suffering from chronic renal failure and I have incurred about R80,000 till date on his medical treatment this year. Can I claim tax deduction on such a medical expenditure?

Suman Arora

The expenditure incurred on medical treatment by an individual for himself or a dependent where the taxpayer is a resident in India will qualify under the Section 80DDB, provided the disease is specified in Rule 11DD. Rule 11DD does not refer to chronic renal failure as a prescribed ailment and, hence, you cannot get the deduction under this Section.

I am a salaried employee and tax is deducted from my salary at source. I made short-term capital gain from sale of shares. What will be the tax payable on such gain?

Jaidev Sen

With respect to short-term capital gain on shares, you will be liable to tax at 15% in case the sale of shares is entered into through a recognised stock exchange and security transaction tax (STT) is paid thereon. In all other cases, the tax will be payable as per the normal slab rate. Further, with respect to the payment of such tax, you have two options:

Option 1: Pay tax on this other income by way of advance tax or self-assessment tax.

Option 2: Give particulars of the gain to your employer and, then, the latter will deduct tax at source on your other income as well.

Under Section 192(2B), if an employee has income under other heads, he may furnish particulars of such income to the employer, who will take it into account in computing the tax to be deducted at source. The particulars of such income are to be furnished in the manner stated in Rule 26B of the income tax rules. It may be noted that declaration of other income to the employer is not mandatory.

The writer is founder of RSM Astute Consulting Group

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