The Hindu : Increased deduction u/s 80L for AY 2003-04

Online edition of India's National Newspaper
Monday, Feb 17, 2003

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Increased deduction u/s 80L for AY 2003-04

QUESTION: This is as regards increase in deduction under section 80L of the Income-tax Act announced by the Union Finance Minister in Parliament while passing the budget vide The Hindu dated August 1, 2002, deduction increased from Rs.12,000 to Rs.15,000, that is, Rs.12,000 on interest income from bank deposits and Rs.3,000 from Government securities. Since no amendment seems to have been made under Sec.80L in the Finance Act, what is the authority under which the claim can be made?

ANSWER: Press release dated August 2, 2002 had informed the public about the enhanced limit after referring to the Finance Minister's assurance in the following words:

"Accordingly, the maximum amount of deduction available under Sec. 80L would now be Rs. 15,000. Out of this, Rs. 12,000 shall be allowable from income by way of interest of NSCs, fixed deposits, savings bank accounts, deposits under the Post Office (Monthly Income Account) Rules, 1987, dividends from any Indian company, income received in respect of units of the Unit Trust of India or mutual funds, etc. Earlier this limit was Rs. 9,000. The additional deduction of Rs. 3,000 from interest on government securities shall continue to be available as in the past. This enhanced deduction of Rs. 15,000 shall be available from the assessment year 2003-2004 onwards".

For tax on income for AY 2003-04, the deduction is, therefore, available up to Rs. 12,000 for all the specified incomes under Sec. 80L with extra deduction of Rs. 3,000 for interest from Government securities.

A question may arise whether a press release can authorise a relief in excess of what is spelt out by law. Probably, the intention is to back up the press note by a retrospective amendment in the next Finance Act. Taxpayers would be justified in reckoning this enlarged relief for purposes of payment of advance tax for the year.

S. Rajaratnam

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