I had taken an schooling mortgage for my son, who has accomplished his research within the US and is at present employed. I’ve been paying the curiosity portion until now. Now he needs to repay. Should I ask him to pay direct to the mortgage account? Also, advise me concerning the tax implication and remittances mode for the quantity to be transferred.
—Name withheld on request
It has been assumed that the schooling mortgage was taken by you in India and your son is at present above 18 years of age.
From a tax perspective, as per the provisions of part 56 of the Income-tax Act, 1961, the place a person receives any sum of cash, with out consideration from a specified relative, the identical will not be thought-about as taxable earnings of the person. Hence, the switch of funds to your account by your son (thought-about a specified relative), for the aim of mortgage compensation, won’t be taxable earnings for each your son otherwise you.
Separately, as per the provisions of part 80E of the Act, the curiosity part on schooling mortgage taken by a person for the aim of upper schooling of self or relative (consists of youngsters), could also be eligible for deduction below part 80E of the Act, as much as a most of 8 monetary years (beginning with the 12 months wherein curiosity compensation begins) and topic to fulfilment of specified situations. Availability of this deduction in your/your son’s arms might be evaluated, relying upon whose identify the mortgage continues to be in, tenure of the mortgage, eligibility of the lender establishment and different prescribed situations.
Please observe that the foreign exchange implications of any of the above transactions ought to be reviewed individually, in case any of you’re residing outdoors India.
I’m a senior citizen and want to put money into the senior residents financial savings scheme. Please advise if I can ebook income in a number of of my shares and switch the proceeds in the direction of SCSS this fiscal, and on tax implication.
—Manish Mankad
We perceive that you’re a senior citizen beneath the age of 80 years and want to make investments the sale proceeds from share of listed fairness shares (held for greater than 12 months) in senior residents financial savings scheme, 2019.
Section 112A of the Income-tax Act, 1961, says capital features arising from switch of a long-term capital asset being an fairness share in an organization shall be taxed at 10% (plus relevant surcharge and cess) on capital features exceeding ₹1 lakh, if STT (securities transaction tax) has been paid on the time of acquisition and switch of such capital asset. The long-term capital features on this case is to be calculated with out giving profit for value inflation index. Where shares have been acquired previous to 1 February 2018, grandfathering provisions as per provisions of part 55 shall be allowed whereas calculating value of acquisition for such asset.
Please observe that funding in SCSS is eligible for deduction below Section 80C(2) of the Act (topic to the general most restrict of ₹1.50 lakh), nevertheless from incomes apart from capital features. Hence, investments in SCSS shall not be eligible for any tax profit towards taxable LTCG (i.e., features exceeding ₹1 lakh) and also you shall be required to pay tax @ 10% on taxable LTCG. There are different exemptions obtainable towards taxable LTCG below Section 54EC, 54F and so on., in the direction of reinvestment in prescribed bonds, residential home, and so on., which can be explored.
Parizad Sirwalla is accomplice and head, world mobility companies, tax, KPMG in India.
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