Apportioning of deduction benefit for filing ITR is based on financial ownership of house

For apportioning the deduction under Section 80C of the Income-tax Act, 1961, for principal repayment and under Section 24 for interest on home loan, the financial ownership and not just the legal ownership of the property is considered. The deduction under Sections 80C and 24 should be apportioned between the financial owners in the ratio of the funding done towards the property by each. In your case, the deduction would be accordingly computed in both your and your wife’s hands, in the ratio of your respective funding.

However, in the event of you or your wife opting for the new taxation regime introduced by The Finance Act, 2020, with effect from 1 April 2020, the deduction under Sections 80C and 24 for interest on loan taken for self-occupied property will not be available.

Suppose; All my Provident Fund (PF) accounts are under one universal account number (UAN) since FY13. I changed my job in November 2014, but transferred PF in July 2019. As per the 2016 notification by the labour ministry and the Employees’ Provident Fund Organization (EPFO), interest is paid on inoperative accounts. But EPFO did not transfer interest for 2018-19 and three months until the date of transfer. When asked, they said that my account was inoperative and interest was credited only up to November 2017. Am I eligible to get the interest on my PF account or not?

It is assumed that you are an Indian citizen and have not attained 58 years of age.

As per the notification dated 11 November 2016, the provisions of the Indian PF law were amended, and as per the said amendment, a PF account becomes inoperative and does not earn interest, where an employee retires from service after attaining the age of 55 years or migrates abroad permanently or dies, and does not apply for withdrawal of his accumulated balance within 36 months. Until such time, interest will continue to accrue on the Employee's Provident Fund balances. However, no interest will accrue once the PF account becomes inoperative. In the absence of an express retrospective clause, the said amendment should be considered as prospective in nature.

As per the amended provision, your PF account should be considered operative as on 11 November 2016 and your PF account should never have been an inoperative account. Accordingly, in your case, based on the above premise, you should be eligible to receive interest up to July 2019 (until the funds were transferred).

Know about us - https://thetaxsupport.com

You can find more articles on at https://thetaxsupport.com/blog

You can find tutorial videos on at https://www.youtube.com/c/vipinsanger

Comments

Small Businesses should use mobile apps for filing GST - 9 reasons Why..

GST and Taxation for MSMEs: GST accounting applications have helped in the transition of many small businesses and entrepreneurs in an easier and cost-effective manner to a new indirect tax system and also making them organised in terms of their bookkeeping. GST and Taxation for MSMEs: Since the launch of July 2017, Goods & Service Tax (GST) has been the most important factor for government and businesses with many changes being introduced recently. GST for Indian economy has been an evolving process and has brought advantages for small businesses in many ways by reducing complexities of inter-state taxation, digitization of MSMEs and an online portal for registration, filing and compliance purpose to make indirect taxation convenient and simple in India. There are about 13 million GST payers, out of which, 6-7 million are B2B, and 5-6 million are B2C. India’s MSME sector contributes about 8 per cent of India’s GDP, 45 per cent of the manufacturing output, 40 per cent of the ...

TDS cut to benefit investors in equity mutual fund dividend plans

Investors in dividend plans of equity mutual funds will benefit from the 25% cut in the rates for tax deducted at source (TDS) announced by finance minister Nirmala Sitharaman on 13th May 2020. Tax experts said mutual funds are currently required to deduct a 10% TDS on dividends paid to unit holders. For the remainder of FY 2021 this will come down to 7.5%. The lower rates will come into effect from May 14 and include deductions on dividend, interest, professional fees and brokerage. Investors who route money through alternative investment funds (AIFs), real estate investment trusts (REITs) and infrastructure investment trusts (InvITs), too would get the benefit of the lower TDS rate, say experts. REITs and InvITs are taxed in the same manner as debt instruments. The government had made dividends taxable in the hands of investors in the budget for FY 2021. “The unit holders will get the benefit of reduction of TDS on the dividend declared by mutual funds. This benef...

TDS rate cut to leave professionals, equity investors with cash

The reduction in TDS/TCS is expected to boost cash flows by ~50,000 crore, the finance minister said on Wednesday while announcing the move as part of an economic package. The government’s move to reduce the rates of tax deduction at source (TDS) and tax collection at source (TCS) by 25% will benefit investors and professionals by putting more cash in their hands. While this doesn’t bring down the tax liability of taxpayers, it leaves more money with them during the course of the financial year. Individuals will still have to pay their tax liability -- every quarter, or annually. The reduction in TDS/TCS is expected to boost cash flows by ~50,000 crore, the finance minister said on 13th May, 2020 while announcing the move as part of an economic package aimed at reviving an economy roiled by the Covid-19 pandemic and the lockdown enforced to combat it. Usually, the payee deducts TDS or TCS on behalf of the receiver and deposits it with the government. TDS and TCS are met...

Vipin Sanger

Search This Blog