Get rebate on senior citizen savings deposit

I have deposited Rs 1.5 lakh in a senior citizen savings scheme. Can I get any tax exemption under Section 80C of the Income Tax Act, 1961? – PK Bansal

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You are entitled to claim a deduction under Section 80C of the Act in respect of the amount deposited under Senior Citizen Savings Scheme Rules 2004. The maximum deduction permissible for all specified sums under the aforesaid section is Rs 1,50,000.

My son is unemployed. Over a period of time, I have given him Rs 1.5 lakh. A gift deed has not been executed. My son has deposited the money in term deposits of various government-undertaking banks. Is the interest earned on Rs 1.5 lakh taxable in my hands? (My son has no other income except the interest earned).  

In the financial year 2015-16 (assessment year 2016-17), my son transferred the term deposit of Rs 5,00,000 from his account in one bank to another, making the total deposit in that savings bank account more than Rs 10,00,000 for some time, before making the term deposit of Rs 10,00,000 in that bank.  Is he supposed to file an income-tax return for the assessment year 2016-17? (The total income, of course, from the interest on term deposits does not exceed the limit Rs 2.5 lakh.) – DV Kulkarni

(a) The interest earned by your son (who is major) on the amount gifted by you is not includible in your income.

(b)  In case your son’s total income does not exceed the maximum amount which is not chargeable to income tax for the assessment year 2016-17, there is no requirement for him to file an income tax return (ITR) for AY 2016-17.  However, in case your son is intending to claim any deduction under Chapter VI-A of the Income Tax Act, 1961, e.g. insurance premium paid or amount paid towards any other savings scheme specified in Section 80C, he will have to file his return for the relevant assessment year even if his income is below the maximum amount which is not chargeable to tax.

A loan was raised (and paid) from Life Insurance Corporation (LIC) in July, 2015, to defray initial expenses, including tuition fee in connection with a technical course from an affiliated university in India. Later, another loan was raised (and paid) in January 2016 from a bank. Will interest on a loan raised from LIC qualify for tax benefit under Section 80E? Will interest on the entire loan (paid) or tuition fee (paid) alone be eligible for the tax benefit? – Gireesh Kumar Sethi

According to the provisions of Section 80E of the Act, an assessee being an individual is entitled to claim a deduction of any amount paid by him in the previous year out of his income chargeable to tax, by way of interest on a loan taken by him from any financial institution for the purpose of pursuing his high education or for the purpose of higher education of his relative.  The term ‘relative’ means spouse and children of that individual or student for whom the individual is a legal guardian.  Your queries in relation to the above provisions of the Act are replied hereunder: 

(a) LIC has not been notified as financial institution under the aforesaid section and therefore, interest paid to LIC would not be deductible from your total income.

(b) Interest payable in respect of the amount of loan raised from bank shall be deductible under the aforesaid section from the total income provided the same has been paid out of income chargeable to tax.  Deduction from total income in respect of tuition fee is permissible under Section 80C of the Act within the maximum permissible limit of Rs 1,50,000.