T. Banusekar

I have paid annual fees for my child who is in nursery, which is as follows:

Tuition Fee: Rs 1,500; Term Fee: Rs 1,000; Exam Fee: Rs 500; Other Fees: Rs 1,000 . My other child is in play school for which I pay a tuition fee of Rs 5,000. The play school has given a consolidated receipt as tuition fees. Will I be able to get deduction under Section 80C in respect of both these payments for my children's education? Ramesh

Under Section 80C, tuition fees (excluding development fees, donations or other payments of similar nature) paid for full time education of any two children of an individual will qualify for deduction. This payment of tuition fee should be to a university, college, school or other educational institutions in India. The amount that will qualify for deduction will be only such sums paid for two children of an individual. Further, the Section requires that the purpose of the payment of fee should be towards full time education. In your case the fee paid for your child studying in nursery will qualify for deduction to the extent of Rs 3,000. The sum paid by way of other fee to the extent of Rs 1,000 would not qualify for the deduction. The sum of Rs 5,000 paid for your second child in play school will not qualify for deduction since this cannot in the strict sense be called a tuition fee nor can it be called a school irrespective of the nomenclature used in the receipt given by the institution.

I am retired; I am 67. I have made investments in shares both through the primary market and the secondary market. I have also made investments in equity-oriented mutual funds. I hold some of the shares for more than a year and others for less. I usually hold mutual fund investments for more than 12 months. For the purpose of investment I have taken a personal loan and also a loan against the shares as security. The interest for this year works out to Rs 40,000. Will this interest be allowed as a deduction in computing the gain from sale of shares? What are the tax deductions available to a person who is 65 years or more? What is the maximum amount not chargeable to tax in my case? Ashok Kumar Maheshwari

In your case given the facts stated by you it appears that the gain will be taxable under the head profits and gains of business or profession. In such a case, the interest will be allowable as a deduction in computing your income under this head. If the gain is taxed as capital gain, the interest cannot be claimed as a deduction. The interest that is payable may, however, be added to the cost of acquisition in computing the capital gains. The view that the interest can be added to the cost of acquisition is supported by the decisions in

CIT v Maithreyi Pai 152 ITR 247 (Karnataka); CIT v Mithilesh Kumari 92 ITR 9 (Delhi); ACIT v K.S.Gupta 119 ITR 372 (Andhra Pradesh); Naozar Chenoy v CIT 234 ITR 95 (Andhra Pradesh)

There are no separate tax deductions available to a person who is 65 years or more. However, the maximum amount that is not chargeable to tax in the case of a person who is 65 years or more will be Rs 1,85,000.

Mail your queries to taxtalk@thehindu.co.in or by post to `Tax Talk', Business Line, Kasturi Buildings, 859, Anna Salai, Chennai-600002.

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