Vijay, an Indian Citizen, was living in Delhi since 1972, he left for France on 1st August, 2017 and comes back on 2nd April, 2022. On the same day he joined BGH Industries Ltd., Delhi as a Chief Mechanic. He went to Chi

CS Executive · Tax Laws and Practice · PYQS · December 2023
Vijay, an Indian Citizen, was living in Delhi since 1972, he left for France on 1st August, 2017 and comes back on 2nd April, 2022. On the same day he joined BGH Industries Ltd., Delhi as a Chief Mechanic. He went to China for 15 days during the year in the month of July 2022. He furnishes following details for the previous year 2022-23 about his salary income: Basic Salary: ₹1,22,000 p.m. Dearness allowance (eligible for retirement benefits): ₹60,000 p.m. Fixed medical allowance: ₹5,000 p.m. House rent allowance: ₹25,000 p.m. Transport allowance: ₹2,000 p.m. Bonus: 2 months basic salary + DA Club membership fee reimbursed by employer: ₹14,000 p.a. Residence telephone bill paid by employer: ₹22,000 p.a. Contribution of employer to recognized provident fund: 15% of basic salary + DA Two children of Vijay study in the school run by the company. The cost of education in the similar school for the year would be ₹1,24,000 and the employee paid ₹50,000 to the school by way of fee. Vijay gives the following information with respect to two loans taken by him from scheduled banks for various purposes: (i) A housing loan of ₹34,00,000/- taken on 12th March, 2022 for the purchase of a house to be used for self-residence at a cost of ₹44,00,000/-. The stamp duty value of the house was ₹41,00,000/- at the time of purchase. Amount of repayment of loan during P.Y. 2022-23 was: (A) towards principal - ₹1,22,000/- (B) towards interest - ₹3,60,000/-. This is the first and only residential house owned by Vijay. (ii) A vehicle loan of ₹18,00,000/- taken on 29th May, 2022 for the purchase of new electric car for personal use. Amount of repayment of loan during P.Y. 2022-23 was: (A) towards principal - ₹80,000/- (B) towards interest - ₹1,75,000/-. Besides these loans, he has also paid a sum of ₹9,000 to a political party as contribution. The entire amount was paid in cash. With reference to loans taken and contribution to political party, compute the amount of tax benefits/deduction(s) available to Vijay under various provisions of Income-tax Act, 1961 for A.Y. 2023-24, so that he gets the maximum benefits assuming that he does not opt to pay tax under section 115BAC.

Answer & Explanation:

Computation of amount of tax benefits/ deductions available for Mr. Vijay for A.Y. 2023-24 Sr. No. Particulars Amount (₹) Amount (₹) 1. Deduction allowable while computing income under the head "Income from house property": 2,00,000 Deduction under section 24(b) for interest on home loan of ₹3,60,000 in respect of self-occupied property restricted to ₹2,00,000. 2. Deduction under Chapter VI-A Deduction under section 80C: For repayment of Home loan principal to bank (actual subject to maximum of ₹1,50,000). 1,22,000 Deduction under section 80EEA: Since stamp duty value does not exceed ₹45 lakhs and Mr. Vijay does not own any residential house, so Mr. Vijay is eligible for deduction of upto ₹1,50,000 in respect of such interest on loan (which is not claimed under house property head) since loan is sanctioned between 1.4.2019 and 31.3.2022. 1,50,000 ₹3,60,000 - ₹2,00,000 [claimed as deduction u/s 24(b)] = ₹1,60,000 restricted to ₹1,50,000, being the maximum permissible deduction. Deduction under section 80EEB: Deduction for interest on loan for purchase of electric vehicle of ₹1,75,000 restricted to ₹1,50,000, being the maximum permissible deduction, since loan is sanctioned between 1.4.2019 and 31.3.2023. [No deduction in respect of principal repayment of loan for purchase of electric vehicle.] 1,50,000 Deduction under section 80GGC: Contribution of ₹9,000 to political party not allowable since the sum is paid in cash. Nil Deduction under Chapter VI-A from Gross Total Income 4,22,000 Total Deductions 6,22,000

Topics: Income Tax

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic