Direct Tax Code - Implications for real estate

Direct Tax Code - Implications for real estate

by Guest Columnist on Jun 17, 2010

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The move will have a positive impact on the real estate sector

It basically boils down to the restoration of deduction of interest upto Rs1,50,000 per annum on loans for purchase or construction of a residential property. The previous draft paper on the tax code envisaged the removal of this exemption, and this proposal caused a not insignificant drop in buyer sentiments when it was made public.

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The restoration of this exemption facility spells relief to ordinary home buyers, and will encourage them to buy residential properties. 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. We should see renewed interest in availing of home loans for the purchase of properties in the mid-income segment.
Shobhit Agarwal, Jt Managing Director - Capital Markets, JLLM

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