New Delhi : Ruling out rollback of the proposal to restrict tax incentive for a second home to Rs 2 lakh per annum, Revenue Secretary Hasmukh Adhia on Saturday said there is no point in subsidising purchase of second property by those who have surplus funds.
Moreover, he added that the tax incentive for second home loan borrower is being “virtually misused.” Citing limited resources, he said it is prudent to subsidise first-time buyer and not the second property owner who is not staying in that but earning income from the second unit. The Finance Bill 2017 has restricted set-off of loss towards second home against other heads of income up to Rs 2 lakh under Section 71 of the Income Tax Act.
Under the present dispensation, there is no such limit for set-off of loss from house property, which is mainly the difference between the rental income and interest on home loan. In other words, a buyer could deduct the entire net interest paid on the home loan.
“Government resources are very very limited. The question is should the government be subsidising first-time home owners who are occupying own house or should the government be subsidising the second acquisition of the property by people who have got surplus money to invest in real estate,” Adhia said while addressing industry representatives here.
He cited an example: “If I have already my own house, I buy a new property by taking a bank loan of Rs 1 crore, the interest on it is Rs 10 lakh per annum and I rent it out to somebody who gives out Rs 3 lakh as rent, the remaining Rs 7 lakh you could offset against your salary income or business income.”
The loss to the government for the second house were almost one third of that, he said, adding that it came to about Rs 3 lakh in addition to Rs 2 lakh advantage. “So, why should the government bear the cost of second house acquisition, that was the question. We have a lot of people to be given affordable housing, we need to help them out… so the revenue loss was huge and people were virtually misusing it,” he said.
GDP growth to be 7% plus this year: Govt
New Delhi: The impact of demonetisation on the Indian economy is transient and it will attain a growth rate of over 7 per cent in 2017-18, Economic Affairs Secretary Shaktikanta Das said on Saturday. “The impact of demonetisation on growth would be transient and it would not spill over to the next year which would see a growth of 7 per cent plus and the economy would continue to do well thereafter,” Das said here at the national executive committee meeting of the Federation of Indian Chambers of Commerce and Industry (FICCI). “In spite of the stronger global headwinds, India remained buoyant,” the Economic Affairs secretary added.
