Highlights of Union Budget 2019 Presented by FM Piyush Goyal FY 2019-20

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Budget Highlight

100 Key Highlights of Union Budget 2017 presented by FM Piyush Goyal FY 2018-19

  1. Individual tax payers earning income up to Rs 5 Lac will get full tax rebate, ensuring if you invest in 80C like PPF etc you wont be taxed up to Rs 6.5 Lacs. Around 3 crore middle class taxpayers will get tax exemption due to this measure
  2. Standard Deduction for salaried class increase from Rs 40,000/- to Rs 50,000/-
  3. TDS threshold on interest on bank and post office deposits raised from 10,000 to 40,000 rupees
  4. No TDS on House Rent up to Rs 2.4 Lakhs
  5. Benefit of rollover of capital tax gains to be increased from investment in one residential house to that in two residential houses, for a taxpayer having capital gains up to 2 crore rupees; can be exercised once in a lifetime
  6. Gratuity limit increased from 10 lakh to 30 lakh rupees for all
  7. MSME registered under GST will get of 2 per cent interest subvention on the incremental loan of 1 Crore
  8. NPS has been more liberalised. The government has increased its share to 14 per cent from the existing 10 per cent,
  9. GST has been continuously reduced, resulting in relief of 80,000 crore rupees to consumers; most items of daily use for poor and middle class are now in the 0%-5% tax bracket
  10. Computerised system to be in place in next 2 years eliminating direct interference of officers and clients in Scrutiny of Income Tax Cases
  11. Businesses with less than Rs. 5 crore annual turnover, comprising over 90% of GST payers, will be allowed to return quarterly returns
  12. India will become a $5 trillion economy in 5 years
  13. Govt announces assured structural income support for farmers, naming it PM Kisaan Samman Nidhi.
  14. The Kisan yojana will be effective December 1, 2018, and the money will be directly transferred into their account. Expect spend of Rs 75,000 crore on this scheme. To provide assured income support for small and marginal farmers, Pradhan Mantri Kisan Samman Nidhi scheme has been approved
  15. Under Pradhan Mantri Kisan Samman Nidhi, 6000 rupees per year for each farmer, in three installments, to be transferred directly to farmers’ bank accounts, for farmers with less than 2 hectares land holding. This initiative will benefit 12 crore small and marginal farmers, at an estimated cost of Rs. 75,000 crore, this will enable farmers to earn a respectable living
  16. 2018-19 Revised Fiscal deficit at 3.4% Current account deficit to be contained to 2.5%:
  17. Rs 3 lakh crore recovered by banks through IBC, says Goyal. Now bigger businessmen also concerned about repaying debt
  18. India is the fastest growing major economy in the world today. From being 11th largest economy, we are today the 6th largest economy
  19. we had not controlled inflation, our families would have been spending 35-40% more on basic amenities
  20. We brought down average inflation to 4.6% lower than inflation during tenure of any other govt. Inflation in December 2018 was 2.1%.
  21. Government said to the RBI to take a hard look into stressed assets and NPAs. Measures have been taken towards clean banking. IBC has institutionalised a resolution mechanism while preserving the underlying business and jobs
  22. We have noticed that Bank of India, Bank of Maharashtra and Oriental Bank have come out of the PCA framework and our efforts to clean up the banking system will help others too very soon. Expect other banks to soon exit Prompt Corrective Action (PCA)
  23. – Rs 3 lakh crores loan defaults have already been recovered – We brought transparency to auction and tender process – Steps to crack whip on Economic Offenders – India has achieved 98% rural sanitation
  24. We have walked the talk, ushered in a new era, initiated the world’s largest behavioural change movement through Swachh Bharat Mission, I thank the nation for the success of this national mission
  25. More than 98% rural sanitation coverage has been achieved; more than 5.45 lakh villages declared ODF
  26. Government has ended the practice of ‘phone’ banking at state-owned banks, and ushered more transparency.
  27. We have bridged the urban-rural divide in the country. Several times in the past, only empty promises had been made to ppl living in villages. Construction of rural roads has been trebled in the last few years:
  28. During 2014-18, 1.53 lakh houses have been constructed under PM Awas Yojana: FM Shri Piyush Goyal
  29. 1,70,000 crore spent for bringing food at affordable rates to poor people
  30. Close to 3 lakh crore already recovered in favour of banks and creditors, big defaulters are not spared by our government. Recapitalization of banks amounting to 2.6 lakh crore has been done
  31. budget allocation of Rs 60,000 crore for National Rural Employment Guarantee Act in 2019-’20.
  32. FY19 Food Subsidy Spend Was Rs 1.7 Lakh Crore:
  33. Rs 60,000 cr set aside for MGNREGA this year
  34. The world’s largest healthcare programme, launched to provide medical care to nearly 50 crore people, resulting in 3,000 crore savings by families of poor sections:
  35. Electricity for all households will be a reality by March 2019 & achieved 98% rural sanitation coverage
  36. 21 AIIMS operating in India now, 14 of which were announced from 2014, The 22nd AIIMS will be created at Haryana.
  37. The Fugitive Economic Offenders Bill (2018) will help confiscate and dispose-off the assets of economic offenders who escaped the jurisdiction of the laws in India,
  38. 10 lakh people have been treated under Ayushman Bharat scheme and have seen massive scale-up in healthcare over last 5 years
  39. Mahatma Gandhi National Rural Employment Guarantee program’s allocation increased by Rs 5000 crore to Rs 60,000 crore,
  40. The government is committed to providing electricity to every house. LED will help save Rs 50,000 crore in electricity bills in the next few years.
  41. One crore 53 lakh houses have been made which is 5 times the earlier run rate
  42. Pradhan Mantra Gram Sadak Yojana allocation is set at Rs 19,000 crore, he said, adding, kids will no longer have to walk from home to school. They will now have a bus service there.
  43. Increased allocation for Rashtriya Gokul Mission to 750 crore in current year
  44. PM Gram Sadak Yojana spend seen at Rs 19,000 crore.
  45. 2% interest subvention to farmers pursuing animal husbandry and fisheries
  46. In place of rescheduling of crop loans, all farmers severely affected by severe natural calamities will get 2% interest subvention and additional 3% interest subvention upon timely repayment:
  47. Without disturbing the existing reservation system, a 10% reservation for Economically weaker sections in educational institutions and government jobs has been ensured
  48. High growth and formalization of economy has resulted in increased EPFO membership by 2 crore in last two years:
  49. High growth of India has led to increase in jobs as represented in EPFO. EPFO membership has increased by 2crore New Pension Scheme has been further liberalized as Government’s contribution has increased to 14%.
  50. 50% of the GDP comes from sweat and toil of 42 crore workers in unorganized sector:
  51. Mega Pension Yojana, namely Pradhan Mantri Shram Yogi Mandhan, to provide assured monthly pension of 3000 rupees per month, with contribution of 100 rupees per month, for workers in unorganized sector after 60 years of age
  52. Will benefit 10 crore workers in unorganized sector, may become the world’s biggest pension scheme for unorganized sector in five years:
  53. Rs 143 crore LED bulbs distributed which will save 50,000 crores of rupees
  54. Committee under @NITIAayog to be set up to identify and denotify nomadic and semi-nomadic communities;
  55. Welfare Development Board to be set up under @MSJEGOI for welfare of these hard-to-reach communities and for tailored strategic interventions
  56. For workers who receive grievous injuries, they will now get Rs 6 lakh from Rs 2.5 lakh through EPFO
  57. Rashtriya Kamdhenu Ayog to look after effective implementation of policies and schemes for welfare of cows
  58. Nearly 8 crore free LPG connections were planned to be provided to relieve women from use of woodfire for cooking. So far 6 crore connections have already been provided.
  59. For workers and labourers, a new pension scheme will come up to ensure an increase in Centre’s contribution by four percent. The pension has been increased from Rs 3,500 to Rs 7,000:
  60. Welfare department board to be set up under the Ministry of Social Justice and Empowerment.
  61. 75% of woman beneficiaries under PM MudraYojana, 26 weeks of maternity leave and Pradhan Mantri Matritva Yojana, are all empowering women:
  62. A national programme on Artificial Intelligence has been envisioned by the government. Nine priority areas have been identified:
  63. Committee under NITI Aayog to be set up to for denotifed nomadic & semi nomadic community
  64. 1 crore loan can now be obtained under 59 minutes:
  65. Transactions of more than 17,500 crore rupees on Govt of India, resulting in savings of 25%-28%
  66. Our soldiers are our pride and honour; #OROP, pending for last 40 years, has been implemented by us:
  67. Our defence budget this year is over 3 lakh crore, Already disbursed 35,000 crore rupees for our soldiers under #OROP, substantial hike in military service pay has been announced:
  68. Construction of rural roads has been tripled; 15.8 lakh out of a total 17.84 lakh habitations have been connected with pucca roads under #PMGSY. #PMGSY allocated 19,000 crore rupees in 2019-20(BE)
  69. India is the fastest highway developer in the whole world, 27 kms of highways built each day, projects stuck for decades completed;
  70. Vande Bharat Express will provide speed, service and safety to citizens and will give a boost to #Make in India:
  71. Indian Railways experienced the safest year, Vande Bharat to give passengers a world class travel experience
  72. Our commitment to promote renewable energy is reflected in our initiative to set up International Solar Alliance; installed solar generation capacity has increased 10 times in last five years; l
  73. akhs of new jobs being created by the sector Already disbursed 35,000 crore rupees for our soldiers under #OROP, substantial hike in military service pay has been announced
  74. Domestic air traffic doubled in the last 5 years
  75. Digital India: It is leading the world in monthly consumption of mobile data – increased by 50 time. Cost of voice calls and mobile data is possibly the lowest in the world.
  76. Mobile and mobile part manufacturing companies have increased from 2 to 268
  77. 34 crore #JanDhanYojana accounts opened in last five years; Aadhaar almost universally implemented; ensuring poor and middle class receive government benefits directly
  78. Single window clearance for filmmaking to be made available to Indian filmmakers, anit-camcording provision to be introduced to Cinematography Act to combat film privacy
  79. Our commitment to promote renewable energy is reflected in setting up International Solar Alliance; installed solar generation capacity has increased 10 times in last five years
  80. Allocation for the north eastern region has been proposed to be increased to Rs 58,166 crore in this year, it will be a 21% rise over the previous year
  81. Simplification of direct tax system will benefit taxpayers; direct tax reduced and tax interface made simpler and faceless to make life easier; resulting in increase in tax collections and return filings:
  82. Direct tax collections from 6.38 lakh crore rupees in 2013-14 to almost 12 lakh crore rupees; tax base up from 3.79 crore to 6.85 crore:
  83. 54% returns have been accepted without any scrutiny:
  84. Within almost two years, almost all assessment and verification of IT returns will be done electronically by an anonymized tax system without any intervention by tax officials, Refunds to be processed within 24 hours:
  85. Railway operating ratio seen 96.2% in FY19 Vs 95% FY20
  86. Monthly mobile data consumption has increased 50x in last 5 years; cost of data & voice calls in India is possible the lowest in the world
  87. All unmanned level crossings on broad gauge network of railways have been completely eliminated
  88. Unmanned system to be created for scrutiny of income tax returns.
  89. The Group of Ministers is examining how prospective house buyers can benefit under Goods & Services Tax (GST)
  90. Indian Customs is implementing full digitization of exim transactions and leveraging RFID for logistics
  91. Average GST collection at Rs 97,100 cr in FY19
  92. 18% increase in direct tax collections in 2017-18, 1.06 crore people included in tax base; more than 1 crore citizens filed IT returns for the first time, after demonetization
  93. Committed to eliminating the ills of black money; anti black money measures taken have brought undisclosed income of about 1.30 lakh crore rupees to the surface; 3.38 lakh shell companies deregistered
  94. If we hadn’t controlled inflation, families would have spending 35-40% more on basic necessities
  95. We are poised to become a 5 trillion dollar economy in the next five years, we aspire to become a 10 trillion dollar economy in the next eight years
  96. Exemption for GST for small business has been doubled to 40 lakhs – business having turnover upto 1.50 crores have been given an option under composition scheme to pay 1 per cent flat rate and to file one annual return
  97. FM underlines 10 most important dimensions that will guide the Government in Vision 2030
  98. To build next-gen infrastructure – physical as well as social – for a 10 trillion dollar economy and to provide #Ease of Living
  99. To build a #Digital India that reaches every citizen, our youth will lead us in this, by creating innumerable startups and jobs
  100. Clean and Green India – an India that drives electric vehicles, with renewables becoming major source of energy, bringing down import dependence and increasing energy security for our people
  101. Expanding rural industrialization using modern industrial technologies, based on #MakeInIndia approach, using grassroot MSMEs and startups across the country
  102. Expanding rural industrialization using modern industrial technologies, based on #MakeInIndia approach, using grassroot MSMEs and startups across the country:
  103. India becoming launchpad of the world, placing an Indian astronaut in space by 2022
  104. Self-sufficiency in food and improving agricultural productivity with emphasis on organic food
  105. Healthy India, with distress-free and comprehensive wellness system for all is the ninth dimension of our vision for 2030
  106. MinimumGovernmentMaximumGovernance, with proactive, responsible and friendly bureaucracy, electronic governance is the 10th dimension of our vision for India for 2030:
  107. Expenditure to rise by 13% from RE 2018-19 to BE 2019-20:
  108. Centrally Sponsored Schemes To Get 3,27,679 Crore In FY20
  109. Amendments proposed to ensure streamlined system for levy of stamp duties, to be imposed and collected at one place, seamlessly Along with completion of fiscal deficit consolidation programme, we will now focus on debt-to-GDP ratio consolidation
  110. 56,619 crore made in BE 2018-19 for welfare of SCs and STs, increased to 62,474 crore in RE 2018-19 has been further increased to 76,800 crore in BE 2019-20:

Budget 2019: No Tax On Income Up To ₹5 Lakh, Standard Deduction Raised

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The rebate under section 87A of Income tax Act 1961, which is available since assessment year 2014-15 is raised to ₹12,500 from existing ₹2,500. The amount of rebate is 100% of income tax payable on the total taxable income of up to ₹5 lakh.

A rebate is the amount of tax the tax payer is not liable to pay. Total taxable income or net taxable income is the income after taking into account deductions.

So in next fiscal, if an assessee has an income of up to ₹5 lakh in the financial year, she is allowed to claim the entire tax payable as tax rebate. For instance, if an assessee is having a gross income of ₹6.5 lakh for the financial year 2019-20, and makes an investment of ₹1.5 lakh under section 80C her net taxable income comes down to ₹5 lakh, on which her tax liability would be ₹12,500 (5% of ₹2.5 lakh) excluding cess (income upto ₹2.5 lakh is exempt from tax).

However, as her income is up to Rs5 lakh in the particular financial year, she is liable to claim a rebate of ₹12,500 and thus her net tax payable would be zero. This means while the tax payer is still liable to file her returns, the tax payable is zero. 

Around 3 Cr Middle Class Taxpayers Will Get Tax Exemption

“So people earning up to Rs 6.5 lakh may not have to pay tax if they make investments in specified savings. This will provide tax benefit of Rs 18,500 crore to 3 crore people,” he added. Around 3 crore middle class taxpayers will get tax exemption due to this measure, the finance minster said.

TDS Threshold On Rental Income Raised From 1.8 Lakh To 2.4 Lakh Rupees

TDS threshold on interest on bank and post office deposits raised from 10,000 to 40,000 rupees. TDS threshold on rental income raised from 1.8 lakh to 2.4 lakh rupees, said Piyush Goyal at interim budget 2019.

How To Save On Taxes While Buying A Property

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How To Save On Taxes While Buying A Property

The taxation on property purchase, has become much simpler than it was before. With the roll-out of the Goods and Services Tax (GST), several taxes previously applicable on real estate purchase (VAT, service tax, etc.) have been subsumed under this single unified tax system.

The overall costs involved in buying a property are broadly divided into two components – the first being the one paid to the builder/seller and other, the statutory and legal costs, to the government. While the former roughly comprises 80-85 per cent of the overall property cost, the remaining 15-20 per cent goes as taxes to the government coffers. The taxes are not the same for under-construction and ready-to-move-in properties.

axes on under-construction properties

Statutory and legal costs for under-construction properties vary between 15-20 per cent, depending on the state in question and broadly include stamp duty, registration and GST.

  • Stamp duty: Stamp duty is paid on the sale agreement, to render a property transaction legal and it varies from state to state.

For example, in Maharashtra, the stamp duty is five per cent (now proposed to be six per cent), while in Karnataka it is currently 5.6 per cent. As such, stamp duty accounts for between five to seven per cent to the total property acquisition cost. Interestingly, most states offer a rebate of one to two per cent to women, if a property is registered in their name.

  • Registration charges: To register a sale agreement with a government-approved registration officer, buyers have to pay a registration fee of one per cent on the total cost of the property, at the district sub-registrar’s office.
  • GST: Under the new tax-regime implemented in 2017, under-construction properties are currently taxed at 12 per cent on the base cost of a property. However, the GST Council is mulling reducing this rate, with many anticipating it to be reduced to either eight per cent or five per cent.
  • TDS (tax deducted at source): TDS is charged at one per cent, for properties priced below Rs 50 lakhs. It is deducted by the buyer, at the time of payment to the seller. Thereafter, the builder needs to pay this amount to the central government online or via any authorised bank, within seven days from the end of the month in which such TDS was deducted.

Case study: Buying a home in Karnataka

Let us take these charges as applicable in Karnataka, to illustrate the calculations for an under-construction property with a super built-up area of 1,000 sq ft (carpet area of 780 sq ft) and priced at Rs 6,000 per sq ft. We will divide the overall cost into the total cost paid to the builder and to the state government.

Total cost paid to builder

1. Basic cost = Rs 60,00,000 (SBA* quoted rate, i.e., 1,000×6,000)

2. Cost of UDS/land value (One-third of basic cost, as per notification) = Rs 20,00,000

Thus, the total taxable value (basic cost less cost of USD/land value) = Rs 40,00,000

3. BESCOM, BWSSB and legal charges (calculated on per sq ft rate) = Rs 2,50,000

4. GST on water, electricity and other services (18 per cent on BESCOM, BWSSB and legal charges) = Rs 45,000

5. CGST (six per cent of taxable value) + SGST (six per cent of taxable value) = Rs 4,80,000*

Thus, the total cost paid to the builder = Rs 67,75,000 (basic cost + BESCOM/BWSSB/legal + GST + CGST + SGST)

Total cost paid to state government (during registration)

6. Stamp duty = Rs 3,79,400 (5.6 per cent of total cost to builder)

7. Registration charges = Rs 67,750 (One per cent of total cost to builder)

Grand total (Cost paid to builder + stamp duty and registration) = Rs 72,22,150

(* If the GST rate is brought down to eight per cent in the next Council meeting, the new GST cost paid to the government will be Rs 3,20,000 – a reduction of Rs 1,60,000)

How to save on taxes while buying a property

Tax benefits of ready-to-move-in properties

One of the major attractions of ready-to-move-in properties, is that they are exempt from GST, provided that the project has been issued a completion certificate. Buyers of such properties need to pay only the stamp duty and registration charges as taxes, which comprise seven to eight per cent of the total property cost.

The seller quotes a lump-sum amount and the buyer also pays the government’s statutory charges during registration. Thus, ready-to-move-in properties offer a good value proposition for home buyers, who not only get to see the property they are buying but can also move in immediately and save on rentals.

Understandably, ANAROCK’s recent consumer sentiment survey indicates that buyer preferences are significantly skewed towards ready-to-move properties. More than 49 per cent of today’s property seekers prefer to buy ready properties, not only to save on costs but also to avoid risks such as delayed project delays and assorted unscrupulous builder activities.

Property tax

Another tax that a buyer needs to pay, after moving into his or her new home, is the annual property tax. The tax amount varies, not only from state to state, but also according to micro-markets in a city. In case there is an income generated by a property, that too is liable to be taxed. However, if the property is self-occupied, then, only the annual property tax applies.

Tax relief for affordable housing

In a major push to the affordable housing segment, the government has extended a GST benefit to its Credit-Linked Subsidy Scheme (CLSS) for EWS, LIG, MIG-I and MIG-II home buyers. Besides getting an interest subsidy, such buyers can also avail of a lower concessional GST rate of eight per cent.

In fact, to boost sales in this segment, the government has urged developers to refrain from charging any GST from home buyers in this critical segment, because the effective eight per cent GST rate in affordable housing can be adjusted against their input credit, should they opt for this.

How to save on property taxes

Tax deductions and exemptions which, if availed of appropriately, can go a long way in easing a home buyer’s overall financial burden.

Tax deductions on stamp duty and registration charges

While the government charges five to seven per cent of the property cost as stamp duty and registration taxes, one can claim tax deductions on these, under Section 80C of the Income Tax Act, 1961. Buyers can seek a maximum of Rs 1.5 lakhs as tax deduction, provided they fulfil certain conditions. For example, the taxes paid must be in the same year as that of claim, only fully-constructed properties are considered for this exemption and the property must be purchased for self-use and not as an investment.

Tax deductions on home loans

Buyers who avail of home loans, can claim tax deductions under Section 24, 80C and 80EE of the IT Act for repayment on both, the principal and interest amount, after fulfilling certain preconditions:

  • Tax deductions on interest repayment: Under Section 24, a buyer can avail of deduction of a maximum of Rs two lakhs for the interest portion of the home loan for a self-occupied property. A property that is rented out has no upper limit for tax deduction claim.
  • Tax deductions on principal repayment: Under Section 80C, one can claim a deduction of Rs 1.5 lakhs on repayment of the principal portion of the EMI paid during the year. However, the owner must not sell the property for at least five years after taking possession, or else, the deduction claimed earlier will be added back to owner’s taxable income in the year of sale.
  • Additional benefit for first-time home buyers: Under section 80EE, first-time home buyers can claim an additional Rs 50,000 in deduction, provided the loan amount is Rs 35 lakhs or less and the property value does not exceed Rs 50 lakhs.
  • Tax deductions on joint home loans: In case of a joint loan, each loan holder can claim a deduction of Rs two lakhs for interest paid and up to Rs 1.5 lakhs for the principal amount under Section 80C, provided they are the co-owners of the property purchased via the loan.

Saving tax on rental income

How to save on taxes while buying a property

A property purchased for rental income is also subject to tax, but there are ways to save here, as well.

  • Maintenance charges: An easy way to save tax on rental income, is to outright exclude maintenance charges from the rent received. One only needs to include the maintenance cost in the rental agreement.
  • Municipal taxes: One can also claim municipality taxes like property tax, sewerage tax, etc., from the rental income, provided these charges are paid by the owner and not by the tenant.
  • Additional tax benefit for jointly-owned property: In case of a jointly-owned property (usually, by a husband and wife) one can save on taxes quite effectively. For instance, if the wife is not working, the rental income can be divided in the proportion of ownership of the property and thus, one can save on taxes. This can also be beneficial in a scenario, wherein, both are working but are in different tax slabs.
  • Basic deduction: One of the straightforward ways for owners to save more on a rented-out home, is to deduct an outright 30 per cent of the annual rental income for repair and maintenance of the property, irrespective of the actual expenditure incurred during the year.

(The writer is chairman, ANAROCK Property Consultants)

WHY A HOME LOAN IS NOT A BURDEN

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claim-tax

Home is where the heart is. It is everyone’s dream to own a home, but the burden of EMIs also plays on the mind. Read more to know how the tax benefit on Home Loan can ease your outflow.

Home Loan Interest Deduction permits taxpayers who own their homes to reduce their taxable income by the quantity of interest paid on the loanwhich is secured by their principal residence. In other words, the outflow of EMIs itself gives you a tax benefit. In fact, from financial year 2014-15, the limit on the amount that you can claim as interest on your home loan deduction has been increased to INR 2 lakh.

Let’s understand the steps you need to take to claim this deduction.

Step 1: GET HOLD OF IMPORTANT DOCUMENTS

  1. Ownership details of the property – You need to be an owner or a co-owner of the property to claim this deduction. The amount of deduction you can claim is based on your share in the property.
  2. Completion of construction or date of purchase of the property – The deduction for interest can be claimed to start the year in which the construction of the property is completed. You can also claim pre-construction interest, which is allowed in 5 equal installments starting from the year in which the house is purchased or the construction is completed.
  3. Borrower Details – You should be the primary or a co-borrower of the Home Loan.
  4. certificate from the bank which displays your interest and principal details.
  5. Municipal taxes paid during the year

Step 2: SUBMIT THESE DOCUMENTS TO YOUR EMPLOYER

  • If you claim interest on Home Loan Deduction, your employer will adjust your TDS deductions accordingly. Do make it a point to inform your employer.
  • You are not required to submit these documents to the Income Tax Department.

Step 3: CALCULATION OF INCOME FROM HOUSE PROPERTY

In a case of a self-occupied house property, the amount of deduction is limited to INR 2 lakh. However, for a let out house property, there is no limit on the amount of interest you can claim as a deduction. But from FY 2017-18 onwards, the deduction for home loan interest on let out property is also limited to the extent to which loss of such house property does not exceed INR 2 lakh.

Here are the steps to calculate your income from House Property

Gross Value of the property (nil in case of Self Occupied Property and Rental Value if rented)

  • Municipal Taxes actually paid
  • Standard Deduction (30% of Net Annual Value)
  • Deduction for interest on home loan

= Income from House Property

You can also use the Income Tax Calculator

Step 4: CLAIM INTEREST ON HOME LOAN DEDUCTION AND PRINCIPAL REPAYMENT

In case there is Principal Repayment by you during the year (check your loan installment details), principal repayments are allowed to claim interest on home loan deduction under Section 80(C). However, the total amount allowed to be claimed under section 80(C) is capped at INR 1.5 lakh.

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