Budge 2023 has proposed to take away the double tax deduction profit related to dwelling mortgage curiosity.
Everyone knows that the curiosity element of a house mortgage will be claimed as a deduction as much as a most of Rs. two lakhs underneath part 24. When the property is bought, the complete curiosity element, whether or not claimed as a tax profit underneath part 24 or not, may very well be added as an acquisition value and deducted from the realised capital good points underneath part 48.
Price range 2023 has now plugged this double tax exemption loophole. From 1st April 2023 onwards, the house mortgage curiosity can solely be as soon as. We both declare it underneath part 24 yearly whereas servicing the mortgage, or we will declare it underneath part 48 whereas promoting the property. We are able to now not do each.
Will this have an effect on the true property trade? Since part 24 is undamaged, it’s unlikely to influence correct shopping for.
That is the extract from the funds 2023 memorandum:
“Prevention of double deduction claimed on curiosity on borrowed capital for
buying, renewing or reconstructing a property.”
“1. Beneath the present provisions of the Act, the quantity of any curiosity payable on borrowed capital for buying, renewing or reconstructing a property is allowed as a deduction underneath the top “Revenue from home property” underneath part 24 of the Act.”
“2. Part 48 of the Act, inter alia, supplies that the revenue chargeable underneath the top “Capital good points” shall be computed by deducting the price of acquisition of the asset and the price of any enchancment thereto from the complete worth of the consideration acquired or accruing on account of the switch of the capital asset.”
“3. It has been noticed that some assessees have been claiming double deduction of
curiosity paid on borrowed capital for buying, renewing or reconstructing a property.
Firstly, it’s claimed within the type of a deduction from revenue from home property underneath
part 24, and in some circumstances, the deduction can also be being claimed underneath different provisions of Chapter VIA of the Act. Secondly, whereas computing capital good points on switch of such property, this identical curiosity additionally varieties part of the price of acquisition or value of enchancment underneath part 48 of the Act.”
“4. As a way to stop this double deduction, it’s proposed to insert a proviso after clause (ii) of part 48 in order to offer that the price of acquisition or the price of enchancment shall not embody the quantity of curiosity claimed underneath part 24 or Chapter VIA.”
“5. This modification is proposed to take impact from the first day of April, 2024 and shall
accordingly, apply in relation to the evaluation 12 months 2024-25 and subsequent evaluation years.”
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