The Direct Tax Code will change the whole tax structure of the country, and every corporate and individual will require in-depth study before its implication. Moreover, it is probable to withstand many emendations before it is conclusively performed. In this article, I will analyze some concept of House Property that will impact the house property income. There will be major changes in the income of house property.
Other sources income will come under house property income
The income from other sources now would be taxable under the head Income from house property as direct tax code adds extra words to the definition of income from house property i.e Machinery, Plant, furniture or any other facility, if letting of both is inseparable.
Fixed base of Deduction
Deduction would be available on the fixed basis rather then actually basis of expenses such as the collection of rent, property tax paid.
New concept of presumptive rent
Now, as per current tax laws, taxable income is determined by annual value of the property fixed by the Municipal authorities / fair market value / rent actually realized. However, as direct tax code tells that contract rent, presumptive rent would be taxable income of house property except for a hotel, convention centre or cold storage and further the DTC proposes 6% of
- Rateable value and Cost of construction or acquisition.
Thus, whether or not a tenant is available for the premises, it forces the owner to pay tax on income that he may never get as when he is unable to find tenants.
Business income will be House Property Income
All income from letting of house property will be fully taxable under the head of house property income except for hotel and convention centre. So, actual expenses, as one can claim as business expenditure will be an end.
Deduction
The deduction proposed to be 20% in the direct tax code bill. It is 30% in current tax provisions. Taxable income of the assessee will increase with this proposed provision.
Interest Deduction
Main and charming provision of current laws, allowing the deduction of payment of interest up to Rs. 1,50,000 for self occupied property and let out property would be ended. Only self occupied property’s interest payment will be an end. However, payment of interest on let-out property will be allowed without any limit under direct tax code bill. So tax planning through home loan would be ceased.
Conclusion
It is clear now, as per above conversation, If you want to invest in a second house, you have to pay more tax in comparison to current tax laws. I think this will leave the very bad impact on realty sector.
Related posts:
- Changes in Taxation of Income from House Property
- Tax Implications on Second House Property
- Direct Taxes Code Important Provisions – Everyone Should Know
- Tax on Rental Income After DTC
- House Near Metro, Pay More Property Tax Now!
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{ 7 comments… read them below or add one }
what is the difference in income tax obligations of an individual w.r.t. the income in India?
Subscription is very high for small Pv. Ltd. companies like ours where the
share capital is only Rs. 5 Lacs.
When the New Direct Tax code will be applicable. In my opinion lots of changes in Income Tax are awaited on large scale if New code been passed.
Please Clarify whether any Investment option are there in New Direct Tax Code.
Can any one clarify on the taxability of income from house property in the following case:
Father and son are two different income tax assessees. Father is working after retirement and he is receiving pension and also salary from current employer. He resides in the flat of his son which is away from the place of son’s work. If he pays rent, whether the income will be treated as rented income. Please mail to my email id also which is kpmramani@gmail.com. I will be thankful for the experts. This is essentially important due to the onset of new direct tax code.
all tds source details and send me income tax ruls
Hi
If I have joint home loan (my wife co-applicant and co-owner),
is that required to have IT benefit only 50:50 or any other proportion is fine (say 75:25)?
Thanks,
Vijay
Vijay,
Typically, the tax benefits are available in proportion to the joint ownership and the loan taken by the co-owners.
Here, the following points merit consideration: First, the house should be bought in the joint name and proof of co-ownership should be maintained. Second, the housing loan should also be taken in joint names.
http://www.theorangepaper.com/loan/home-loans-joint-ownership.html