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Interest & 80C Deductions Allowed to Non Residents Too!

shankers_1999@……com Asked : I was NRI and working in DUBAI till Dec 14th 2007 ( Went to Dubai in 26th July 2003). Returned back to India on 15th Dec 2007 and joined an MNC here. I have 2 question for filing my Income tax return,( FY 2006-2007)

  • a) I am paying interest on Housing loan amounting to Rs 72076/- for the full year of 2006-2007 & principal Component of Rs 39944/- for the full year 2006-2007. Can i take the full interest component of the whole year for deduction and exemption for computation of Income tax or only on prorata basis of 3Months and 14 days ?
  • b) LIC Policy premium also should i consider for the full year 2006-2007 or only for the prorata period of 3 Months 15 days?
The interest as deduction of expense is allowed to all who has borrowed loan for construction of a house which is assessable under the head “Income from House Property”. The residency status does not effect the taxation of the house property situated in India. Therefore, if a Non Resident has property assessable under the I T Act , shall be allowed Deduction of Interest u/s 24 of the I T Act. Therefore, as far as interest of Rs 72076 shall be allowed in your case. You should read this

The deduction u/s 80C of the I T Act of Principal Amount and LIC premium is subject to restriction that it can not exceed Gross Total Income and that maximum allowed is Rs 1,00,000. Exact wording of the provision contained in Section 80C simply states that the deposit should be made in the financial year for which income is taxable. In fact previous restriction that the said deposit should be made out of taxable income , has also been withdrawn. Thus , as the provision stands today, a resident or non resident whose income is taxable under the I T Act can claim deduction u/s 80 C of the I T Act for any amount limited to Rs 1,00,000 for any specified investment made during the financial year. The extract of the relevant portion of Section 80C is given as under
80C. (1) In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted, in accordance with and subject to the provisions of this section, the whole of the amount paid or deposited in the previous year, being the aggregate of the sums referred to in sub-section (2), as does not exceed one lakh rupees. (2) The sums referred to in sub-section (1) shall be any sums paid or deposited in the previous year by the assessee”


Therefore, if your gross total income salary is more than LIC and principal amount, both the amount is claimable.

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