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Author: Don Obrien

Ask us: on personal finance and investing


Readers can send in queries on personal finance and investing to moneywise@thehindu.co.in. Our experts who write on personal finance will answer these queries. Moneywise will not give specific recommendations for investment in a particular mutual fund scheme, share or fixed deposit.

Q. I am a State government employee earning ₹60,000 per month and haven’t opted for any tax saving scheme (except those made compulsory by government such as NPS; am also not interested in other tax-saving schemes). My wife is also an employee of a State government PSU earning ₹80,000 a month.

She hasn’t opted for tax-saving schemes either. We are interested in buying an independent house (within ₹80 lakhs). But the problem regards taking a home loan; my wife will not be getting HRA which will be ₹20,000 per month as we are living in rented house.

Is it better to take home loan only on my salary; and, by saving some money on my wife’s income repay some amount yearly, or is it better to take home loan jointly? My wife can save tax by taking home loan but she will lose more by not getting HRA. Also, we are not really interested in insurance or mutual fund schemes. Kindly advise.

A. By applying for a home loan as joint owner-cum-applicant, you can each claim a deduction up to ₹3.5 lakh from your total income. Up to ₹1.5 lakh by way of principal repayment and up to ₹2 lakh by way of interest repayment. HRA exemption cannot be claimed by your wife.

Q. I am having a Senior Citizens Savings Scheme deposit with the post office. Annual interest from the deposit is less than ₹50,000. So Form 15H need not be submitted. But post office staff insist on submitting the form; otherwise, the system will deduct tax, they say. Kindly advise on the matter.

A. TDS is not required to be deducted by banks, co-operative societies and post office if the interest payable to such senior citizens is less than ₹50,000 in one assessment year. Irrespective of submitting Form 15H or not, TDS deduction does not apply. You may raise a complaint with the respective authority in the Post Office regarding this issue.

Q. I worked in Saudi Arabia for 8 years and came back in November 2021 after resigning from the company. I was in Saudi Arabia continuously for 227 days in the financial year 2020-2021. I am have NRE and NRO accounts with a bank for transactions. I am hoping, if the situation becomes conducive I would get another job in the Gulf. I have some NRE fixed deposits.

My enquiry is: how long will the NRE status be available for me in 2021-22? How long can I keep the NRE account and the deposits as NRE deposits?

I wrote to my tax consultants who advised me to approach the bank. The bank has not given any proper reply.

[Should I have withdrawn] all the amount in NRE fixed deposit before this March ended? Will it get be taxed if I withdraw in 2021-22? If NRE status continues in 2021-22, I feel there should not be a problem. I request you to suggest what can be done.

Narve Nagendrabhat Jagadeesha

A. For the FY2020-21, you will be treated as a Non-Resident. Interest from NRE accounts/FD will be non-taxable in India as long as you are Non-Resident (NR) or Resident but Not Ordinarily a Resident (RNOR). For FY 2020-21, the interest from NRE account/FD will be non-taxable in India. Further, Interest from NRE account/FD will be non-taxable in India if you are a Resident in the successive financial years for up to 3 financial years.

Q. I am a 53-year-old CISF employee. Is GPF (general provident fund) contribution up to ₹5 lakh per annum by employees of paramilitary force such as CISF and CRPF exempted from tax deduction? Please also suggest better alternative investment or savings options that inflation proof and tax-efficient.

A. General Provident Fund contributions are allowed as deduction under Section 80C of the Income Tax Act, 1961. The limit of the deduction is subject to the limits prescribed in Section 80CCE of ₹1.5 lakh per annum. GPF deductions can be claimed by all government employees for whom GPF is being deducted by the employing government body/authority.

A resident individual has the following the popular options to invest in order to save tax under Section 80C up to ₹1,50,000 per annum and an additional ₹50,000 under Section 80CCD(1B) –

1. Life Insurance for self and dependents

2. Equity Linked Savings Scheme (ELSS)

3. Tax Saving Fixed Deposits

4. National Pension Scheme (80CCD(1B))

5. Unit Linked Insurance Plans (ULIPs)

6. Sukanya Samriddhi Yojana

7. National Savings Certificate

It is to be noted that each investment option aforementioned has various riders and restrictions in terms of applicability, minimum investment, lock-in period, treatment of maturity, treatment of accruals, among others, and must be carefully gone through while considering investing in any of them.

(N. Sree Kanth is a partner, GSS Associates, Chartered Accountants, Chennai)



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