Only Resident Taxpayers Can Submit Form 15G To Bank For Nil Tax Deduction On Interest Income

Under Section 197(1A) of the Income-tax Act, 1961, only a resident individual can furnish form No. 15G for nil deduction of tax on interest. So, you cannot furnish form no. 15G to the bank. However, you can make an application under Section 195(3) to your assessing officer for nil deduction of tax at source (TDS) on interest received on your bank deposit in case your tax liability is lower than the tax being deducted.

There is no restriction as to from whom you borrow money for the purpose of buying a house or for repayment of any existing home loan. The loan can be interest bearing or interest-free as well. In case you borrow any money on interest from your relatives to repay your existing home loan, you can still claim the amount of interest paid on such loan under Section 24(b) of Income-tax Act, 1961. It is pertinent to note that you will not be able to claim any tax benefits under Section 80C in respect of loan repayment, for loan taken from a relative. This interest-free loan from your relative will not be taxed in your hand but you will have to establish the credit worthiness of the person lending you the money.

There is no restriction under income tax laws as to whom you pay rent to in order to claim exemption for HRA. What is required is that you should be paying the rent for the accommodation occupied by you and the premises are not owned by you. So even if you pay rent to your father you should be able to claim exemption in respect of HRA received by you within the limits of rule 2A of the income tax rules.

You can continue to claim HRA exemption even after you have taken possession of your house which you have let out for rent. A rent agreement would be preferable for payment of the rent to avoid any problem with the income tax department. However in respect of the let out house, the rent received by you will be taxable under the income tax laws. From the rent received you will get a flat 30 per cent deduction for repairs in addition to the interest on home loan for the year. You can set off loss under house property head up to Rs 2 lakh every year against other income.