The Direct Tax Code (DTC) proposed by finance minister Pranab Mukherjee last year was silent on the point whether home loan interest would continue to be eligible for exemption from income of a tax payer.Satish Magar, president of he Confederation of Real Estate Developers of India (Credai) Pune, told TOI that the announcement was a positive signal for the real estate sector which was looking back after a longish spell of recession.
“The proposal will send a positive signal to realty market as it will push up the affordability index and more people will feel inclined to buy homes,” Magar said.
In terms of residential properties given out on rent, the income is proposed to be taxed on actual rent received or receivable, and not on an assumed figure in lieu of actual rental income. This, too, is a step forward, he said, adding that we should see renewed interest in availing of home loans for the purchase of properties in the mid-income segment. Read More
Related Stories:1) Government to go slow on personal tax reforms:
Thereis something to cheer about though. Currently, interest paid on a home loan is available as a deduction subject to a maximum of Rs1.5 lakh per year. The earlier version of DTC had proposed to take this deduction away.The revised discussion paper proposes to keep this deduction.
“The deduction for interest on capital borrowed for acquisition or construction of a self-occupied house property, up to a ceiling of Rs1.5 lakh, as available in the existing provisions of the Income-Tax Act, 1961, should be retained,” the paper says. Read More
2) Govt drops plan to tax PF, pension funds withdrawals:
Revenue secretary Sunil Mitra said the government would entertain suggestions on the revised DTC draft till June 30. A Bill will be brought before Parliament in the monsoon session. Once passed by Parliament, the new tax code will replace the 1961 Income Tax Act and be implemented from April 1, 2011. Read More
3) Revised direct tax code proposal to lead to lower tax regime:
The revised discussion paper on DTC, which would help replace the decades old Income-Tax Act, has retained the tax exemption for up to Rs1.5 lakh paid as interest on housing loans. However, both the first and revised drafts are silent on the exemption given on principal amount paid on housing loans. At present, borrowers can enjoy exemption on payment of principal amount. However, it is part of exemption to savings capped at Rs1 lakh per annum. Interestingly, the first draft had proposed to revise this limit to Rs3 lakh a year. Read More
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