DELHI: The finance ministry has proposed to allow tax deduction against intrest on loans taken from employer for self-occupied property in addition to home loans from banks, a concession that was not offered in the DTC Bill introduced in Parliament.
The move follows a suggestion by the Parliamentary Standing Committee on Finance but comes with a ceiling of Rs 1.5 lakh for purchase or construction of house property and Rs 50,000 in case of repairs. The move will come as a boon for several employees, who can now hope to get additional benefits from their employers.
In addition, the government has said that income from a house property, which is not used for business or commercial purposes, will be taxed under the head 'income from house property'. It has clarified that income from house property will include the gross rent minus the specified deductions such as property tax and interest on home loan.
The ministry also said the gross rent will be higher of the contractual rent or the presumptive rent, which is the rental value fixed by the local authority for levying property tax. If no value is fixed by the authority, the presumptive rent will be the amount for which the property might reasonably be expected to be let from year to year, it clarified.