Budge 2023 has proposed to take away the double tax deduction profit related to residence mortgage curiosity.
Everyone knows that the curiosity part of a house mortgage might be claimed as a deduction as much as a most of Rs. two lakhs underneath part 24. When the property is offered, all the curiosity part, whether or not claimed as a tax profit underneath part 24 or not, could possibly be added as an acquisition value and deducted from the realised capital positive factors underneath part 48.
Finances 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 are able to declare it underneath part 48 whereas promoting the property. We will now not do each.
Will this have an effect on the actual property trade? Since part 24 is unbroken, 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. Underneath the prevailing 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 pinnacle “Revenue from home property” underneath part 24 of the Act.”
“2. Part 48 of the Act, inter alia, gives that the earnings chargeable underneath the pinnacle “Capital positive factors” shall be computed by deducting the price of acquisition of the asset and the price of any enchancment thereto from the total worth of the consideration acquired or accruing because 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 earnings from home property underneath
part 24, and in some instances, the deduction can also be being claimed underneath different provisions of Chapter VIA of the Act. Secondly, whereas computing capital positive factors 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. With the intention to forestall 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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