Overall, Budget 08-09 offers the aam taxpayer many benefits. No doubt, Finance Minister P Chidambaram has done his bit in preparing a favourable pitch for the upcoming general elections. Be that as it may, it's some relief in a year when the invisible tax called inflation is threatening to unhinge household budgets.
The following are the important proposals which impact the aam taxpayer. All these proposed amendments apply to FY 08-09 and subsequent years, unless otherwise specified.
Reverse Mortgage Scheme -- Looking after the baghbaan
The popular film of 2005, Baghbaan (meaning gardener, the one who raises flowers), depicted the story of the sufferings of a retired couple who spent all their savings on raising their children. Once well settled, the self-centred children had little inclination to help their senior citizen parents, or look after them with love and understanding. As it happens in films, the protagonist played by Amitabh Bachchan is able to write a bestselling book that solves all his financial problems.
Realizing perhaps that life may not always emulate the dream world of films, the government last year launched the reverse mortgage scheme, which can provide both financial security and an independent life to the Baghbaans.
This scheme was launched with the intention to secure a stream of cash flow for the senior citizens against the mortgage of a residential house and not to alienate the property. However, the scheme did not take off because of lack of clarity in some aspects. Now, Sec. 10(43) has been inserted to provide that such loan amounts will be exempt from income tax. Sec. 47(xa) has also been inserted to provide that any transfer of a capital asset in a transaction of reverse mortgage shall not be regarded as a transfer and therefore shall not attract capital gains tax. The borrower (or his legatees) will be liable to tax on capital gains only when the mortgaged property is transferred by the mortgagee for recovering the loan.
Unfortunately, the authorities have neglected to deal with the treatment of tax on accrued interest in the hands of the lender.
The amendment shall apply retrospectively from FY 07-08.
Two more tax saving investments -- Enlargement of the scope of Section 80C
Read in detail: http://inhome.rediff.com/money/2008/apr/30spec1.htm
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