Deduction for house repairs not flexible

Kamal Rathi

Q I have invested Rs 12 lakh of my retirement benefits in Senior Citizen Saving Scheme in April 2006. In June 2007, I foreclosed the deposit. Following which, bank authorities paid me Rs 19,583 towards interest and deducted Rs 18,000 for foreclosure charges. However, they deducted Rs 2,017 as TDS, despite my effective income from the deposit is Rs 1583 only. Please let me know how I can claim refund of the excess tax deducted?

K.V. Krishnamoorthy

Via email

A In my opinion, the amount of penal charges of Rs 18,000 for foreclosure of your Senior Citizen Saving Scheme may not be allowable against the interest income of Rs 19,583.

Q My income from house property is Rs 80,000 and this year I have incurred expenditure Rs 1.4 lakh towards repairs. The usual deduction of 30 per cent allowed as per Section 24(a) may not be ample to cover the actual expenditure. Can I claim the actual expenditure incurred as ‘Loss from House Property’ or do I have to restrict my repairs expenses to 30 per cent?

Parmeshwaran

Via email

A According to Section 24(a), income from house property has to be computed after making a deduction of 30 per cent from the annual value. The deduction pertaining to Section 24(a) is restricted to 30 per cent of annual value irrespective of the actual amount incurred. Hence, the actual expenditure of Rs 1.4 lakh will not be allowed as deduction. The maximum deduction you can claim is Rs 24,000, i.e. 30 per cent of Rs 80,000. You should also note that deduction of 30 per cent is allowed irrespective of the fact whether the expenditure is incurred or not.

(Kamal Rathi is a chartered accountant, representing Rathi & Malani, a Hyderabad-based

accounting firm. Readers can mail their queries on income-tax tokamalrathi.ca@gmail.com)