Tuition fee paid for wife will not earn deduction

Q) I am a salaried person. I have paid tuition fees for the post-graduation of my wife, who is a homemaker without any income of her own. I would like to know if I can claim rebate on tuition fees paid for her under Section 80C.
Vardhaman, Via email

A) According to the Income-Tax Act, any payment made by an individual as tuition fees whether at the time of admission or thereafter, to any university, college, school or other educational institution situated in India for the purpose of full-time education of any two children of such individual can be claimed as a deduction under Section 80C.
Therefore, you are not eligible to claim deduction under Section 80C for the tuition fees paid by you for your wife’s post-graduation.

Q) I have purchased land in 1966. I have been told that if I sell the land, I — being a senior citizen — need not pay any tax. Kindly indicate the section under which I am exempted from paying the tax. I am not a tax assessee.
Ramaswamy Iyer, Via email

A) There is no such provision in the Income-Tax Act which discriminates the taxability of a particular source of income for different kind of individual assesses. However, if the land in question happens to be agriculture land (subject to fulfillment of certain conditions) the sale proceeds received on such transfer will not attract any capital gains tax liability.

Q) Can you clarify on tax deduction at source (TDS) on interest. Who are required to deduct tax and whether there is any limit beyond which it has to be deducted?
Umesh Deshpande, Via email

A) According to Section 194A, any person other than an individual or Hindu Undivided Family (HUF) — not being an individual or HUF subject to tax audit under Section 44AB in the immediate preceding previous year by reason of exceeding the specified turnover or sales or gross receipts — must be at the time of payment or credit of interest, whichever is earlier, deduct tax at source.

Such deduction of tax will have to be done where the payment or credit by way of interest exceeds Rs 5,000 per annum. This ceiling for tax deduction is an aggregate ceiling and not in respect of each payment.

Tax deduction at source in case of banking companies or co-operatives societies engaged in banking or housing finance companies arises only at the time of payment or credit of interest on time deposits. TDS provisions shall be applicable when the interest amount payable by such banking firms exceeds Rs 10,000.

Further the limit is in respect of each branch of the banking company, co-operative society or housing finance company. This provision is not attracted when income is credited or paid to either a bank or a financial institution established under any Act or Life Insurance Corporation or Unit Trust of India or any company or co-operative society engaged in insurance business or a partner of the firm or a member of a co-operative society.

Tax needs to be deducted at source on interest at rate of 10 per cent.

Kamal Rathi is a chartered accountant, representing Rathi & Malani, a Hyderabadbased accounting firm. Readers can mail their queries on income tax to kamalrathi.ca@gmail.com [1]