Car loan is exempted for an author

Hi,

There are two options to offer the income from Royalty- One offer under the head Income from Profession (Section 28)- Other alternative being to offer under the head income from Other Sources (IFOS). The frequency and intensity of the activities leading to generation of the income determine what head to offer.

Since you have been filing the return in form ITR-2 I believe you are treating the income as IFOS. Expenses incurred (other than capital expenses) wholly exclusively for earning the income is allowed for dedcution u/s 57 in case this option is chosen. Accordingly following expenses are allowed to be claimed-

a. Interest on car loan- 57(iii)

b. Depreciation on car -57 (ii)

c. Car maintenance- 57(iii)

But the onus of proving that such expenses are essential and are incurred wholly and exclusively for earning the income is on the assessee.

Additionally, you may refer to Section 80QQB through which your tax burden may come down substantially, however, subject to certain conditions and limitations.

Hope the above was useful.

Regards,

CA Hariprasad Nayak

Dear Nayak sir ,

Thanks a lot for quick  response 

Need to ask a question.. My parents are author in writing digest of text books. How they get advantage of 80QQB? 

Hi,

As stated earlier, Section 80QQB is subject to certain limitations and conditions. Since text book authors are outside the scope of Section 80QQB, you can not claim that benefit.

regards,

CA Hariprasad Nayak

Thanks a lot  sir....

a. Interest on car loan- 57(iii)

b. Depreciation on car -57 (ii)

c. Car maintenance- 57(iii)

How much can b claim?? pls sir can u describe pls 

Actual amount incurred can be claimed without any upper limit. However, you may at your option disallow a reasonable portion of the expenses (say 25% or 30%) as personal expenses. This will avoid additions in the assessment if any as the AO may take a stand car being used for personal purposes is inevitable.

Also, you need to keep proper documents like invoices for car maintenance.

hope the above clarifies.

Thanks a lot for your quick response....

I am clear now. 

Thanks a lot sir