Tax Benefit Information

• Deduction of interest on housing loan:

  In the case of self-occupied property acquired or constructed out of borrowed funds, the deduction available for interest on capital borrowed is Rs.2,00,000/-. In case of a rented property, the whole of the interest amount is allowed as deduction. The interest on borrowed fund in pre-construction period is allowed over a 5 year period commencing from the previous year in which the house is acquired or constructed.

• Limit of repayment of housing loan (principal):

  The limit of repayment of housing loan qualifying for deduction u/s 80C is Rs.1,50,000/- (including Stamp Duty, Registration Fee incurred for the purpose of transfer of such residential house property).

• Long term capital gains on sale of property used for residence:

  Section 54 of the Income Tax Act provides relief to an individual or Hindu Undivided Family from capital gains arising from transfer of a residential house held by the assesse at least for a period of 36 months. Such capital gains to the extent utilised for purchase (within 1 year before or 2 years after the date of sale) or construction (within 3 years of date of sale) of a single residential house in India is exempt u/s 54. If the amount of capital gains is proposed to be utilised, but is not so utilised up to the due date for filing of return then, the amount of unutilized capital gain is required to be deposited in the "Capital Gains Account Scheme, 1988".

• Capital gains on transfer of capital assets other than a residential house:

  Section 54F of the Income Tax Act exempts long term capital gains arising from transfer of any long term capital asset other than a residential house. Such capital gains to the extent utilised for purchase (within 1 year before or 2 years after the date of sale) or construction (within 3 years of date of sale) of a residential house is exempt u/s 54F. To be entitled to this exemption the assesse should not own more than one residential house other than the house sold as on the date of transfer. The provisions of depositing the unutilized capital gain in the "Capital Gains Account Scheme, 1988" as explained above is also applicable.

• Capital gains not to be charged on investment in specified assets:

  Section 54EC of the Income Tax Act provides relief from capital gains arising from transfer of any capital asset on or after 1st April 2000 shall be exempt to the extent such capital gain is invested within a period of 6 months after the date of such transfer in the long term specified asset provided such specified asset is not transferred or converted into money within a period of 3 years from the date of its acquisition. However, the investment made on or after 1st April 2007 in the long term specified asset by assesse during any financial year cannot exceed Rs. 50 lakh. For claiming this exemption, the capital gains have to be invested (investment not to exceed Rs. 50 lakh during the FY in which the original asset is transferred or in the subsequent FY) within 6 months of the date of transfer in notified bonds issued by:

  • National Highways Authority of India (NHAI)
  • Rural Electrification Corporation Ltd. (REC)

There are various implications of entering into a lease agreement such as you have to pay the stamp duty, the lease agreement has to be registered etc.

Yes. The RBI may grant permission to a foreign citizen of non-Indian origin/foreign companies if the property is purchased for residential use and the consideration is paid by way of foreign exchange.

• Indian citizens who stay in a foreign country for employment
• Indian citizens carrying on their businesses or vocations
• Indian citizens abroad for any other purpose in the circumstances indicating a definite intention to stay outside India for an indefinite period

• Indian citizens working abroad on assignment with foreign governments or international agencies
• Officials of central and state government and public sector undertakings deputed abroad on temporary assignments or posted to their offices abroad
• Indians who have settled abroad permanently or gone abroad on immigration

Non-resident Indians become residents of India once they come back to India to engage in employment, for carrying on any business or vocation, or for any other purpose indicating a definite intention to stay in India for an indefinite period.

By registering the transaction of an immovable property, it becomes permanent public record. Title or interest can be acquired only if the deed is registered.

If you purchase a new flat within two years of the date of sale of the original flat and invest the entire amount of capital gained into the new flat, you will not have to pay any capital gains tax.

For instance, 70 per cent tenants out of a total of 32 tenants are ready to form a co-operative housing society.

There is no new provision in the new Rent Act regarding the prescribed percentage of tenants willing to form a society.

Approach the Registrar of Co-Operative Societies and file the various relevant documents.

A notice is sent to the tenant, failing which a court case may be filed. It usually takes 10 to 20 years to reach a verdict.

Yes, tenants of an old, repaired building can form a co-operative housing society without the landlord's permission. Assume there is a lease agreement for 6 years for a shop with a built-in escalation clause at the rate of 20 per cent after 3 years. The lease expires on a specified date say, March 31, 2000 and the concerned landlord has sent a written letter. It is always advisable to make a new agreement with the landlord.

There is no prescribed norm for determining the market rent rate though it can be easily found out by approaching individuals such as brokers, registration authority, etc.