Archive for House Loan

1% interest subvention on housing loans upto Rs.10 lakh

1% interest subvention on housing loans upto Rs.10 lakh

The Cabinet today approved the Scheme of 1% interest subvention on housing loans up to Rs.10 lakh and the allocation of a sum of Rs.1000 crore for the Scheme.
Point-wide Details
• Interest subvention of 1 percent will be made available on individual housing loans upto Rs.10 lakh for construction / purchase of a new house or extension of an existing house provided the cost of the construction/price of the new house/extension does not exceed Rs. 20 lakh.
• The Scheme will be implemented through Scheduled Commercial Banks (SCBs) and Housing Finance Companies (HFCs) registered with the National Housing Bank (NHB).
• The first twelve instalments of all such loans sanctioned and disbursed during the period of twelve months from the date of publication of the scheme will be eligible for interest subvention.
• Subsidy of one percent will be computed for 12 months on disbursed amount and adjusted upfront in the principal outstanding irrespective of whether the loan is on fixed or floating rate basis.
• Reserve Bank of India (RBI) will be designated the nodal agency for SCBs and National Housing Bank (NHB) will be designated the nodal agency for HFCs.
There has been a notable deceleration in the sectoral flow of credit to the housing sector which is attributable to increase in the price of houses, slackening of income growth and a rise in interest rates for housing loans.
The Finance Minister in his reply to the debate on the Finance Bill in the Lok Sabha on 27th July, 2009 made the announcement that housing, particularly lower and middle income housing, deserved to be supported. In order to stimulate this segment of house owners, he proposed to provide support to borrowers by way of interest subvention of 1% on all housing loans up to Rs.10 lakh to individuals, provided the cost of the house does not exceed Rs.20 lakh.
Implementation Strategy and targets
All Scheduled Commercial Banks (SCBs) and Housing Finance Companies (HFCs) will submit a monthly consolidated return to the Reserve Bank of India (RBI) and National Housing Bank (NHB) respectively, specifying interest subvention given.
The nodal agencies will put up a demand to the Government of India for release of subsidy amount and the Government of India in turn will sanction and release the subsidy amount based on demand received.
The number of beneficiaries covered under the scheme will depend, interalia, upon the size of the loan amount and the number of beneficiaries approaching the nodal agency for interest subvention. Being a demand driven scheme no specific targets for coverage of beneficiaries have been fixed.
Major Impact:
It is expected that cut in interest rates should reduce Equated Monthly Instalments (EMIs) of borrowers and create additional demand for housing. This in turn should stimulate demand in construction industry as well as industries such as steel & cement having employment potential and income multiplier effect.
Expenditure involved:
An amount of Rs.1000 crore will be allocated in the Budget for the year 2009-10 for implementation of the Scheme.
No. of beneficiaries:
On a housing loan of Rs.10 lakh, the 1% interest relief available will amount to Rs.10,000/- per account. As such, the Scheme of a size of Rs.1000 crore is expected to cover 10 lakh beneficiaries in one year period.
States/Districts covered:
The scheme will cover all States & Union Territories of the country, including rural & urban areas.


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All most 25 % queries online are regarding housing loan benefits under income tax act and second after Queries Relating to Pan Allotment. In this post we will discuss only points relating to benefit of house loan under section 80C.we have tried to cover all the important issues but if any left or you have different thoughts than ours please record in comments section.
  1. Deduction for house loan /installment available up to Rs.100000 /-
  2. The limit of one lac as above is total limit u/s 80C for all type of savings ,plus section 80CCC(pension policy) plus u/s 80CCD(Contributory Pension Plan).Means the aggregate amount of deduction under above referred sections can not exceed Rs. 1,00,000.
  3. The payment of loan should be made towards cost of purchase/construction of new residential house property.
  4. The house property income should be assessable in the hand of assessee in simple term assessee should be the owner of the house property.
  5. The payment should not be for addition or alteration to,or renovation or repair of house property done after completion of house.
  6. Completion of house means
    1. completion certificate in respect of the house property by the authority competent to issue such certificate or
    2. house property or part has been occupied by the assessee or any other person on behalf of assessee or
    3. has been let out;
  7. Housing loan for more than one house can also be claimed.
  8. All the benefit of tax u/s 80 c will reversed if house property is sold with 5 year from purchase of house property
  9. The tax benefit under section 80C is available on residential house property only and not available on commercial house property.
  10. Loan should be taken from Specified institutions/deptt only given below
    1. Central or State Government
    2. any Bank including co-operative bank
    3. LIC or National Housing Bank
    4. public company formed and registered in India or co-operative society with main object to provide long term finance for construction purchase of houses in India.
    5. Assessee Employer if public company or public sector company or university established by law or a college affiliated to such university or local authority or co-operative society.
  11. The benefit is available only to Individual assessee and to HUF assessee.
  12. The above benefit is available even assessee already has another house property.
  13. The benefit is available on payment basis ,no matter to which year payment is relates to or payment overdue or not.
  14. From total amount of installment paid of house loan reduce amount availed under deduction section 24.(INTEREST)
  15. The Benefit under this section is available whether residential house property is rented or self occupied,but it should be completed as define above by end of the previous year in which loan is repaid.
  16. Pre EMI are also eligible for deduction if house property is completed by the end of previous year.
  17. Stamp duty, registration fee and other expenses for the purpose of transfer of such house property to the assessee is also eligible for deduction under this section even assessee has not taken any loan .
  18. There is no requirement that for loan ,house property should be mortgaged to the institution from which the loan has been taken ,but it should be used for the purpose of purchase /construction of house property.

please comment
cont……I will complete it u can give comment on above any way

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