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Available on  gplay  » Getahead » ASK ANIL: How do I SAVE TAX?


Last updated on: August 25, 2021 12:39 IST
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'If I close my housing loan, are there any investment avenues to save tax?'

Illustration: Dominic Xavier/

Anil Rego, CEO, Right Horizons, answers your personal income tax queries.

Kachhal Prabhakar: I have gone through your expert guide on Kindly deliver your advice in my case as well. Thanks Sir.

I am a salaried class employee and filed ITR 1 for FY 2019-20 in Aug 2020. Inadvertently, I paid self-assessment tax twice through online (Rs 17,000 paid twice amounting total of Rs 34,000).

I wrote to the IT deparment for refund of the excess amount of Rs 17,000. The IT department advised me to file rectification online through my IT account. I tried in vain.

Kindly guide me in this regard.

Anil Rego: A person can file revised income tax return anytime before the expiry of one year from the end of the relevant assessment year or before assessment of your ITR by an assessing officer, whichever is earlier.

You can claim refund in the revised ITR and provide necessary proofs that you paid excess tax (challan details and date of when both the self-assessment taxes were paid). If the claim holds good, a refund can be issued for the excess tax paid.

Aman Ghosh: My mother's age is 62 years. Can I claim exemption under 80D for the medicine she takes for her treatment? Please advise.

Anil Rego: Yes, you can claim exemption under Section 80D for medical expenses incurred on family members aged 60 years or more, who do not have health insurance coverage.

Family members include self, spouse, dependent parents. One can claim a maximum deduction of Rs 50,000 in a financial year.

To claim the deduction, all the medical expenses need to be paid in any valid payment mode like net banking, digital channels, etc, except cash.

Vishwanath M B: My monthly salary income is Rs 1.15 lakhs. I have a housing loan of Rs 30 lakhs in SBI and am paying Rs 30,000 as EMI. This is the sixth year I am paying the loan.

So far, I have paid Rs 9 lakhs towards the loan amount and have parked Rs 21 lakhs in the MaxGain account.

In SBI, the amount in the MaxGain account is also considered for loan interest rate. I can withdraw this amount anytime. But I don't have any intentions to withdraw.

If I move the amount in the MaxGain account to the loan account, my loan will substantially reduce. Is it a wise decision to do that?

With my other savings, if I close my housing loan, are there any investment avenues (the investment should provide liquidity) to save tax.

Anil Rego: Considering that interest rates are low currently, that you are getting a tax benefit and that the MaxGain account allows you to net off your account balance, it is a good idea to continue the loan.

You can choose to maintain the balance in the account and, if your balance is to the extent of your principal, you will not pay any interest in the worst case scenario.

You can calculate the net cost to you after the tax saving. For example, if your interest rate is 7 per cent and you are in the 30 per cent bracket, your net cost is 4.9 per cent. If you are able to invest and get a return higher than 4.9 per cent, then it is beneficial to invest.

You can calculate the net cost to you on similar lines, based on the tax bracket and the surcharge levels.

You could look to start a SIP in mutual funds or make any other investment from this account if your return is higher than the net cost. This will make your money work for you.

While investing money from the account, keep in mind that it is not a good idea to invest in FDs or other debt options if your post tax return is lower than 4.9 per cent. Worse still is to park your money in a savings bank account.

K K Middha: The bank auctioned our factory for Rs 3 crore and the auction purchaser paid the amount to the bank which was credited in our account. The bank debited TDS @ 1 per cent from our account and deposited the same online by filling challan no ITNS 280 under major head 0021 and minor head 800.

The bank did not provide Form 16 B nor is the TDS is appearing in the income tax site of the firm. In spite of asking many times, the bank did not supply a copy of the Form 26 QB.

On filing an RTI, it is now revealed from the copy of the Form 26 QB filed by the bank that they have mentioned the name, address and Pan No of the purchaser and, for the seller, mentioned the particulars of the bank.

My Pan No or name and address of the firm is not mentioned.

Please guide as to what should be done so that the credit of the TDS deducted from my account appears in our income tax site.

Thanking you in advance.

Anil Rego: The bank becomes to owner of a property under the Sarfaesi Act, hence the bank is liable to pay the tax.

Alok Baishya: I currently own two properties, one apartment and an ancestral house in two different cities.

I have 1/3rd share in the ancestral house along with my siblings.

We are planning to sell the ancestral house shortly. Can I utilise my house selling LTCG amount u/s 54 for purchasing another apartment either as a single owner or jointly with my son?

If yes, do I have to purchase in the same city as the ancestral house?

Eagerly awaiting your expert views to the above question.

Many thanks in advance.

Anil Rego: You can consider reinvesting the gains in another property.

These investments are to be made within the specified time limits of upto one year prior to the sale or upto two years after the sale (three years after the sale, for an under-construction property).

You can construct/buy a house anywhere in India within the specified time period. You can go ahead and purchase the property in the joint names of yourself and your son.

To get the benefit of reinvestment, your contribution should keep in mind the deduction that you would like to claim.

Mahesh Tulshiram Hande: I was working abroad since June 2009 and returned back to India permanently on October 28, 2020.

I changed my NRE bank account status to that of resident saving account in November 2020. Also, the FDs in the NRE account status were changed to resident saving account FDs.

The interest accrued on these FDs on December 31, 2020, on quarterly basis and the bank cut TDS on the same. Also, TDS deducted in the March 2021 quarter on FD interest/ matured FDs in this quarter.

My questions are:

1. While filing tax for the financial year April 2020 to March 2021, will the interest income on the savings account and the FDs be considered from the date of account status changed from NRE to resident saving account? Or will the interest income be considered from Mar 2020 (ie, for whole year)?

Anil Rego: As per the RBI's master directions, upon returning to India permanently, the existing NRE FD account of the NRI account holder is required to be converted to a resident account, without any changes in the promised rate of interest.

The interest earned from the NRE FD is not taxable. However, after it is converted to a resident FD, the interest earned is taxed as per your income tax slab. TDS will be deducted if applicable.

2. If the answer of the first question is from the date of account status change, then the total income for the year will be less than exempted income. In this case, can I get tax return on deducted TDS on FDs after filing ITR?

Anil Rego: Yes. Once you file ITR, you can claim a refund for any extra tax paid.

Subramaniam Natraj: Kindly let me know if a senior citizen can claim deduction of Rs 50,000/U/S 80L towards domiciliary medical treatment expenses while filing his ITR for AY 2021- 2022.

Shall be grateful for an early reply on the above matter.

Anil Rego: You can claim deduction under Section 80D and not 80L.

Yes, senior citizens aged 60 years or more can claim exemption under Section 80D for medical expenses, if you do not have health insurance coverage.

You can claim maximum deduction of Rs 50,000 in a financial year for the expenses incurred as per the limit of Section 80D.

Dibyendu Talukdar: I am a 50-year-old teacher. I have an investment Rs 50,000 in NPS per FY and Rs 1,50,000 (80 C) along with standard deduction of Rs 50,000 and PTax. I guess my tax will be same in the regular tax regime and the new tax regime.

Can you kindly confirm my assumption?

Anil Rego: We would need your income details to exactly calculate the same. But, with the given information, you will have almost similar tax implication on both tax regimes.

There are a number of tax calculators which you can use and accordingly decide which suits you better.

Siva Subramanian: I have invested in 10 equity funds more than five years ago in my name, costing above Rs 10 lakhs in total from my taxed salary earnings.

I want to gift these MFs to my two adult sons. Please advise about tax liability for me and my sons, both of whom are in 30 per cent tax bracket. I am in the 20 per cent tax range.

Anil Rego: There is some grey area on transfer of mutual funds as the SEBI regulations allow it, but there are restrictions on making third party payments. So, mutual funds only execute transfers through transmission, on demise of the person in whose name the units are held.

You maybe thus be forced to sell the units and transfer the money in your sons's names, from which they can invest.

There is no gift tax to relatives.

Equity mutual funds are not taxed as per tax slabs, but under capital gains, based on whether it is long term or short term capital gains.

Niranjan Patel: I had purchased some stocks in 2015. I have sold them in 2021. I would like to know the tax implications as there was no long-term gain on equity before 2018. In your previous column, you answered the query regarding grandfathering clause and purchase price calculation.

I would like to know that, if the total gains in my stocks plus MF do not exceed the Rs 1 lakh threshold, do I need to report the gain in my IT returns? I am in the 30 per cent tax bracket.

I have two more questions:

1. Is it beneficial for me to invest in NPS for the Rs 50,000 tax savings, since this will be locked in until I turn 60 years -- ie approximately 15 years from now. As I am utilising Rs 1,50,000 in my PPF savings, an additional Rs Rs 50,000 saving will be useful.

2. Are the returns on NPS equal to or better than other saving instruments?

Kindly guide.

Anil Rego: You are required to provide details of long-term capital gains (LTCG) from any mutual funds or stocks sold in a financial year during your ITR filing, even if it is below the Rs 1 lakh threshold. You can claim this deduction and would not need to pay tax.

Answer to question 1: The deduction that can be claimed on NPS is for Rs 50,000 which is over and above the deduction of Rs 1.5 lakhs under section 80C. Since you fall under 30 per cent tax bracket, you can consider this option to save tax. It can anyways be towards your retirement need, which is a long term requirement for you.

Answer to question 2. NPS is a good option for investors who are looking for longer tenure of investments.

It is one of the lowest cost investment options. You can choose funds/equity allocations within the limits. However, it does not allow 100 per cent investment into equity.

If you choose higher equity exposure options, the returns would be closer to an equity hybrid fund. In the long term, returns are likely to be much higher than debt options, but lower than a 100 per cent equity fund in the long term.

Do you have any personal income tax query? Please mail us at with the subject line 'Ask Anil' and Anil Rego will answer all your tax queries.

Anil Rego is the founder and CEO of Right Horizons, an investment advisory and wealth management firm that focuses on providing financial solutions that are specific to customer needs.

You can find more of Mr Rego's answers here.

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