Tax Deduction at Source - TDS

 Tax Deduction at Source - TDS

-Dr. Lalit Kumar*

The income tax is sometimes deducted at source, by the person who is making payment to another person for whom, it is an income. The payer deducts the tax and then deposit into the Income Tax Department and it is known as Tax Deducted at Source. This system is incorporated by Income Tax Department to reduce the theft of tax. In Income Tax Department, all types of payments on which it is required to deduct the TDS, are detailed and accordingly the person making payment (known as Deductor), required to deduct the TDS and remit the same in Income Tax Department. The payments include salaries, interests, commissions, brokerages, professional fees, royalties etc.​

Registration as Tax Deductor in Income Tax Department:

The persons who are required to deduct the TDS, also required to firstly take the Tax Deduction Account Number i.e. TAN which is of 10 characters. 3 characters of Jurisdiction code, 4^th for initial of the name of person followed by 6 characters generated by system including 5 numeric and 1 alphabet.

The TAN number can be obtained by applying on the website of NSDL-TIN. It’s fee is only Rs. 55 plus GST as processing fee.

Quoting of TAN:

Whenever a deductor deducts the TDS, it is required to be deposited in the Income Tax Department quoting the TAN Number. Thereafter, a return is required to be filed by the deductors, quoting the TAN number and details of challans through which the payments were made. It is also required to generate TDS Certificate and provide it to the person on whose income, the TDS was deducted and deposited in the Income Tax Department.

Penalty for not realizing TAN or not quoting accurate TAN Number:

Rs. 10,000 penalty is imposed upon a person who have not applied for TAN and making the payments without deducting TDS or if the person has obtained TAN but not quoting the same accurately in the TDS returns and certificates.

*This article is contributed by Dr. Lalit Kumar, an Expert on Financial Management accessible on https://wa.me/919416382720 

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Deduction on amount of Interest on Home Loan

Deduction on amount of Interest on Home Loan

-Dr. Lalit Kumar Setia*

Income Tax Act provides benefits of exemption on payment of Interest on Home Loan. There are two cases either it is a self-occupied property for which the home loan has been taken or it is a let-out property for which the home loan has been taken. An individual can declare only single property as self-occupied.

In case of self-occupied property: 

(i) The amount of principal portion of EMI for the year and stamp duty & registration charges paid during the year, can be claimed as deduction u/s 80C to the maximum of Rs. 1,50,000. 
(ii) Interest portion of loan EMI for the year and 1/5^th of total pre-construction interest can be claimed as deduction u/s 24. If home loan had been taken for construction then upto Rs. 2,00,000 deduction can be claimed but if home loan had been taken for repairs or renovation then upto Rs. 30,000 can be claimed.

One more important point to be considered is that the home should be fully constructed within 3 years from the end of the financial year in which loan has been taken. In case construction is not completed within the 3 years then deduction upto Rs. 30,000 can be claimed.

In case of rented or let-out property; 

the standard deduction u/s 24 is provided i.e. 30% of the rental income of property. Further, (i) The amount of principal portion of EMI for the year and stamp duty & registration charges paid during the year, can be claimed as deduction u/s 80C to the maximum of Rs. 1,50,000. (ii) Interest portion of loan EMI for the year and 1/5^th of total pre-construction interest can be claimed as deduction u/s 24 without the restriction on maximum amount; means the amount whichever is paid or become due as interest on Home Loan during the financial year will become eligible for the deduction u/s 24.

Conditions to claim deduction u/s 24: 

(a) The individual should be an owner of the house property; in case the house property is under the ownership of spouse or parents then no deduction can be claimed by the individual. (b) The individual should be a borrower of Home Loan. (iii) The deduction can be taken only from the financial year in which the construction of property be completed. (iv) Before financial year 2016-17; the deduction u/s 80EE was not available.

In case of jointly owned property: 

Deduction on home loan interest can be claimed equally by the owners if both are co-owners and co-borrowers and both have paid the interest payment equally.

Before financial year 2016-17; in case of rented house property; an individual was allowed to claim entire payment of interest on Home Loan as deduction and the loss from House Property was allowed to be adjusted from remaining incomes without any limit. But from financial year 2016-17; such losses have been restricted to be adjusted up to an amount of Rs. 2,00,000.

In case, the amount of loss from House property is more than the remaining incomes during a particular financial year; then the non-adjusted loss can be carried forward to next 8 years. If in next 8 years, it is not adjusted then it will not be carried forward further.

Deduction u/s 80EE: 

An additional deduction of Rs. 50,000 on interest of Home Loan, is applicable for the financial year 2016-17 if a few conditions are satisfied: (i) The loan is taken during the financial year 2016-17. (ii) The loan is taken for the first self-occupied house property means on the date of sanctioning loan to the individual, he or she should not own the house property. (iii) The loan is taken from any financial institution including banks and housing finance companies. (iv) The house’s value for which loan is taken; should be less than Rs. 50 lacs and (v) the loan value should be less than Rs. 35 lacs. The deduction u/s 80EE will be an additional deduction of Rs. 50,000 after availing the deduction u/s 24 upto an amount of Rs. 2 lacs.

*Copyright © 2018 Dr. Lalit Kumar. All rights reserved.