Q. I am 75 and have a fixed deposit (FD) with Canara Bank for ₹4 lakh. Till last year, they were deducting 10% TDS for the interest accrued. Suddenly, for FY20, they did not deduct TDS though I had not given Form 15H. When I enquired, they said ₹50,000 is allowed for senior citizens (80 TTB) and hence, TDS was not deducted. I have FDs with other banks and they have all deducted TDS. Please let me know if I am right in demanding Canara Bank to deduct TDS?


A. Section 194A of the Income Tax Act deals with tax to be deducted at source (TDS) with respect to payments made in the form of interest from other than securities. This includes interest payable by banks/co-operative societies/post office to deposit holders among other similar natured payments. Banks/co-operative societies/post office are required to deduct tax at 10% if the aggregate interest payouts in a year exceeds or is likely to exceed ₹40,000 (₹50,000 for senior citizens). If the interest payout from your Canara Bank deposit is not likely to exceed the prescribed limit, then they are not required to deduct TDS at the time of interest accrual or payment irrespective of submission of Form 15H.

Q. I am a pensioner, owning a self-occupied house. The loan for building the house was repaid and the interest thereon was also paid in before retirement. There is no rental income. But, I pay property tax. While calculating taxable income, what prevents me from deducting the tax amount from my salary income (pension). From my income, I have to pay property tax even in the absence of earning any property income and if this is not deducted before calculating my taxable income, will it not amount to payment of income tax on an amount paid already as property tax?

Kuppuswamy N.

A. Generally, under the Income Tax Act, deductions in the form of expenses of any nature are allowed only when a taxable income is generated out of a particular avenue. As your house property is self-occupied and does not generate taxable income, expenses of any nature incurred on the same are not allowed under “Income from House Property” barring interest on housing loan which is also restricted to ₹2 lakh per annum. As there is no loss (negative income) from “Income from House Property”, there is no scope of setting off the same with your salary/pension income.

Q. My annual earnings come to ₹10 lakh and I have paid tax of ₹25,000 for FY20. I am investing about ₹20,000 per annum in PPF and have an insurance policy for ₹30,000. Kindly advise on ways to reduce tax further.

J. Ragunath

A. A resident individual has the following popular options to invest to save tax under Section 80C up to ₹1.50 lakh per annum and an additional ₹50,000 under Section 80CCD(1B) apart from what you have done – Life Insurance for self and dependents, Equity Linked Savings Scheme (ELSS), Tax Saving Fixed Deposits, National Pension Scheme (80CCD(1B)), Unit Linked Insurance Plans (ULIPs) , Sukanya Samriddhi Yojana and National Savings Certificate.

Apart from the above, if applicable, deductions can be claimed under Section 80C towards children’s tuition fee and repayment of housing loan repayment. It is to be noted that each investment option aforementioned has riders and restrictions in terms of applicability, minimum investment, lock-in period, treatment of maturity, treatment of accruals, among others, and must be carefully gone through while you are considering availing of the benefit.

Interest from savings bank accounts up to ₹10,000 under Section 80TTA can be claimed while filing your income tax return.

Further, donations towards social causes can be done. Certain donations are allowed 100% deduction while others are allowed 50%. Deductions towards donations will be restricted to 10% of gross total income in case the donated amount exceeds 10% of the gross total income.

Donations under Section 80G do not come under the limits prescribed for Section 80C deductions.

(The author is a partner, GSS & Associates, Chartered Accountants, Chennai)

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Printable version | Nov 26, 2020 9:15:26 PM |

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