Q I am also a senior citizen. I wanted to take term insurance policy for my 23-year-old grandson for Rs 1 crore. Will I get the deduction benefit under Section 80C for the contribution made towards premium of LIC of my grandson?
K. Subhash, Hyderabad
Under Section 80C, following sums paid or deposited by an individual or a Hindu undivided family, at any time during the previous year, qualifies for deduction:
- Any amount paid by an individual, on his/her life or on life of his/her spouse or, on life of any child; and
- By a Hindu undivided family, on life of any member of the family.
Therefore, you will not be eligible to claim the deduction under Section 80C for life insurance premium paid for your grandson. Further for taking an insurance policy for the amount mentioned by you, the total income of the insured is an important factor considered by the insurer before approval of the policy.
Q Will HRA exemption and interest deduction be allowable in full? Can the loss arising out of house property be set off against the income from salary?
Kiran, Bengaluru
House rent allowance can be claimed by a person even if he owns a property at the place of his occupation. The amount of exemption allowable shall be subject to the conditions laid down under Section 10 (13A).
The deduction for interest paid on the borrowed capital on the let out property shall be fully allowable and can also be set off against the salary income.
Q I am an NRI. My mother has been trading in shares using funds from my NRI account and incurred a loss of about Rs 3 lakh in 2015-16. She has no other income. During this period, she was with me staying abroad for about two years. My question is whether my mother needs to file any return as she did not have any income at all.
Is it necessary for her to file an IT return even if she has incurred a loss?
Sameer Baig, Bengaluru
According to Section 139 (1), an individual is required to furnish a return of total income within the due dates if his total income exceeds the maximum amount which is not chargeable to income-tax. It is not mandatory for your mother to file her return of income but it is suggested that she files it since she has incurred loss.
A loss return needs to be filed before the due dates stipulated under the Income-Tax Act since the benefit of carrying forward the loss incurred during the year to be set-off against subsequent years income, will otherwise have to be foregone. Therefore, she is advised to file her return of income before the due date, clearly specifying the loss incurred in share trading for set off against profits in subsequent years.
(The writer is a Hyderabad-based CA. Send you queries to info@rathiandmalani.com)
