Your Income Tax queries: Do you need to pay tax on tuition fee paid to an overseas college?

By Chirag Nangia

If I pay tuition fee to an overseas college, do I have to pay any tax for that payment? Do I have to submit a statement for SFT for sending money to my child abroad as living cost?
—Apurba Bhattacharya

With effect from October 1, 2020, an authorised dealer shall be required to collect tax at source (TCS) at 5% on any overseas remittance (under LRS) of Rs 7 lakh or more or aggregate of the amounts in excess of Rs 7 lakh in a financial year. If PAN or Aadhaar is unavailable, the rate shall be 10%. Credit of TCS can be set-off against final tax liability of the payer in India. Therefore, if tuition fee or living expenses paid by you exceed Rs 7 lakh, tax shall be collected at source by the dealer.

For question B, a ‘Statement of Financial Transactions and Reportable Account’ (SFT) is required to be furnished by specified persons such as banks, companies, authorised persons under the Foreign Exchange Management Act if nature and value of transactions of account holders crosses the prescribed thresholds. You shall not be required to submit the statement. The prescribed person will report your high value transactions to the government.

l Last year I sold a property at a loss. Do I need to file ITR for this? I am a pensioner. In absence of this capital loss information, can I use ITR 1?
—Subal Basak

While filing a return of income one must disclose income from all sources, irrespective of the amount. Else, at the time of processing of return, the tax department could raise a question or make adjustments on account of mismatch. You may declare your income from pension and Capital Gains in ITR 2. You have to disclose sale consideration, cost of acquisition and resultant capital gains on account of sale of property.

l What is tax benefit on study loan?
—Deepak Kumar

As per Section 80E, any individual who takes a loan from any financial institution or approved charitable institution for higher education, whether in India or abroad, can claim deduction on interest paid for eight years, starting from the assessment year in which he has started paying interest on loan or until the assessment year in which the interest is paid in full, which-ever is earlier. Education loan can be taken for self, spouse, children or student for whom you are the legal guardian.

(The writer is director, Nangia Andersen India. Send your queries to fepersonalfinance@expressindia.com)