Union Budget 2015: Dear FM, Please consider these Suggestions
Our Prime Minister Shri Narendra Modi wants that by the year 2022 every person must have a house of his own. Thus, I would like to suggest that through the Income-tax Law it is possible, at least, to meet the housing demand to some extent by amending small little provisions in the income-tax law.
Consider the following.
• At present, to save Capital Gain on property particularly Long-term Capital Gain if a person, let’s say, has received capital gain of Rs 1 crore, then he/she is permitted to make an investment in one residential house or pay tax at 20 per cent.
However, there may be a situation when the tax payer may have more than one child and he would like to invest the entire amount of Rs 1 crore for only buying the residential property. However, not one property, but two or three properties so that all children can have small houses or flats of their own.
But the current law does not permit this. Hence, it is suggested that the provisions of Section 54 may be amended to provide investment in the house property without any restriction for the number of houses to be purchased.
• In respect of Long-term Capital Gain, other than residential house property the law provides for investment of not merely the gain amount but the full sale proceeds in one residential; property only. The law now should be amended so as to permit investment of the Capital Gain Amount only in tune with Section 54 and that also not in just one house but as many houses as possible. This simple formula will help the Government to solve the housing problem.
• The exemption in respect of investment in the house for tax purpose is if the flat is ready within two years. In majority of the cases, the investor having derived Long-term Capital Gain finds that the house is not ready within the stipulated time by the builder although majority of the payments have been made. The Government should amend the law that in case the house is not ready within the stipulated time period, then also tax benefit will be available for the payments made within two years.
• Rules relating to Capital Gains Account Scheme should be made more liberal and simple. The upper cap on the limit of investment should be simplified.
Subhash Lakhotia
Subash Lakhotia is a Tax and Investment Consultant and Tax Guru in CNBC Awaaz.
The views expressed in this article are author´s own.
