Tax saving options for retired persons

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

12 April 2016 Dear sirs .

I am a retired pensioner with a total monthly income of Rs. One lakh and am 81 years of age . I am financially supporting the education of my grandson in US which is costing me about 48 lakhs a year. Can any one PLEASE suggest me a way how to save tax on this huge outlay . ( HUF ? Money gifted to grand son ? son / Joint account with my son / grand son Loan on nominal interest to my grand son _ Payable when able ???)

Please guide , I am a law abiding retd. Defence Officer .

With compliments ,

PL Bajaj ( Wg. Cdr. Retd. )

KAVIRAJA ADDANGADI

KAVIRAJA ADDANGADI (Expert)
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12 April 2016 Here are a few conditions that you must satisfy to claim this deduction -

You must be an Individual Tax Payer. This deduction is not allowed to an HUF or any other kind of tax payer
This deduction is towards the Interest you pay on the loan taken
The loan has been taken from a Financial Institution or a Approved Charitable Institution (not a relative or friend or any other person/entity)
This loan is taken for higher education for you, your spouse or your children or for a student for whom you are a legal guardian
The Interest is paid by you from your income which is chargeable to tax

interestingly, provided you fulfill the conditions laid out above, there is no limit on the amount of interest you can claim as deduction under this section. The deduction is available for a maximum of 8 years or till the interest is paid, whichever is earlier. Therefore, this has to be claimed in 8 successive years by the tax payer or earlier when the interest is paid in full.

Querist : Anonymous

Querist : Anonymous (Querist)

12 April 2016 Thanks for a prompt reply.

Perhaps my question was not clear . I shall therefore repeat the relevant info :-

1. I am the grand father of the student and not a guardian . His parents are alive and kicking , I have taken up the responsibility , under pressing circumstances .

2. I am a retired wing commander and am supporting myself on pension and interests on TDRs. The transfer of money to my grandson is out of my OD on TDRs.

3. I am paying interest on the OD on my TDRs. ( Differential of interest accrued on deposits and interest charged on my ODs.is one percent ) Bank is deducting tax at 10% on interest accrued .

Any loop hole or scheme which will permit savings in my IT ?

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KAVIRAJA ADDANGADI

KAVIRAJA ADDANGADI (Expert)
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12 April 2016 No, it il condition for claiming benefit under Sec-80E, But as per your explanation you will not be able to claim the benefit and deduction.