There is no tax on interest income of up to Rs3 lakh a year for senior citizens

This is irrespective of the fact whether her taxable income (i.e., after factoring specified exemptions or deduction) exceeds Rs3 lakh during the said FY and accordingly, she is not required to pay tax


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My mother is 75 years old and earns about Rs30,000 a month from her savings accounts and fixed deposits? Does she have to file an income tax return? This is her only income. The bank cuts TDS (tax deducted at source) when giving the interest sum.

—Chakshu Gupta

For an individual, whose total income during the relevant financial year (FY) exceeds a specified income threshold, it is mandatory to file her personal tax return within the specified due date according to section 139 of the Income-tax Act, 1961.

For a senior citizen (aged 60 years and above) like your mother, the aforesaid income threshold for FY17 is Rs3 lakh.

Your mother’s gross annual interest income is likely to exceed Rs3 lakh (i.e., Rs 3.60 lakh) during the current FY.

Accordingly, if her total income (i.e., before considering the specified exemptions or deductions, for example under section 80C) during FY17 exceeds Rs3 lakh, then she shall be required to file the tax return.

This is irrespective of the fact whether her taxable income (i.e., after factoring specified exemptions or deduction) exceeds Rs3 lakh during the said FY and accordingly, she is not required to pay tax.

Further, if your mother envisages that tax liability during FY17 on aforesaid income would be nil (i.e., after considering specified exemption and deduction under section 80C of the Act), she may submit Form 15H giving a declaration stating that the tax on her estimated total income of FY17 would be nil or the income would be below the amount not chargeable to tax.

In such a case, tax would not be deducted at source by the bank on interest income.

I and my wife want to avail a home loan. Any one of us can pay the full equated monthly instalment (EMI). But we thought if we take a loan jointly, we could both benefit from the tax deduction allowed. Kindly let us know the benefits available.

—Sukrit Behl

The deduction or tax benefit in respect of home loan availed is available against income from the house property in the hands of the individual as an owner.

If you and your wife jointly own the house and also the home loan is repaid by each of you, the tax benefits could be claimed in the proportion of repayment of EMI made by both of you, respectively.

Further, the quantum of deduction towards interest paid on home loan would depend upon whether the property against which the loan is availed is a self-occupied property (SOP); or a let out property (LOP); or deemed to be let out (DLOP).

If the property is an SOP, each one of you can claim deduction towards respective portions of interest paid subject to the cap of Rs2 lakh per FY.

If it is treated as LOP or DLOP, the entire interest paid by each of you, proportionate to the home loan repaid, can be claimed as deduction against the net rental value or the deemed rental value offered to tax.

If the deduction leads to a loss, this can be set off against salary or other income as per specified tax provisions.

Additionally, each of you can claim deduction towards respective portions of principal repaid, subject to an overall cap of Rs1.5 lakh under section 80C of the income tax Act.

If the total income of both you and your wife exceeds Rs50 lakh during FY17, each of you would be required to disclose the cost of house property acquired in the proportion of ownership in the Schedule AL (asset-liability).

Further, home loan outstanding as on 31 March 2017 in respect of aforesaid property has to be disclosed in Schedule AL.

Parizad Sirwalla is partner (tax), KPMG.

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