loan

SBI Drops Prepayment Charges on Home Loans: Other Banks May Follow Soon

by Paul Joseph May 2, 2011

Banking leader State Bank of India dropped ‘prepayment charges’ on all its loans over the past fortnight. The announcement coincided with the hiking of the bank’s base rate and withdrawal of the controversial teaser home loan schemes. With the SBI taking the lead, other banks are now expected to follow suit and withdraw the controversial penalty in the days to come. Most banks and home finance institutions charge a prepayment penalty in the range of 1 per cent to 2 per cent in the event of a customer opting to close the home loan prematurely. Public sector banks generally charge about 1 per cent or less of the loan outstanding as prepayment penalty, while it can be anywhere between 1-3 per cent in private banks. In many cases, banks do not charge any prepayment penalty if you prepay using your own sources. The penalty is calculated on principal. Hence, if you have Rs 20 lakhs of loan outstanding, the penalty could range from nothing to Rs 60,000 depending on the bank. Last year the issue had come under the purview of the Competition Commission of India. After a long hearing, the banks managed to make a strong case for retaining the charge, saying they charge it with a view to covering the interest loss due to the foreclosure of the loan. They said prepayment penalty helps them mitigate the costs of deposits taken at higher rate which they do not have a right to prepay. It also covers for the cost incurred in legal and technical services and origination fees. Banks work out agreements assuming such costs can be recovered over the full tenure of the loan, which prepayment jeopardises. The Competition Commission later ruled that the levy of prepayment penalty by banks on home loans is not against competition laws. A majority decision given by the four-member Commission on December 2, 2010 said banks and housing finance companies have not violated Section 3 and 4 relating to anti-competitive practices and abuse of dominant position. However, two of the members issued dissenting orders suggesting that banks should discontinue with the practice of charging such a penalty. Earlier, the Reserve Bank of India had gone on record expressing its dissent over the practice of slapping penalty charges on premature repayment of loans. The apex bank had said it did not approve of such charges. “RBI does not approve of charging penalty or foreclosure charges. We have advised banks to lay out appropriate internal principles and procedures so that usurious interest including processing and other charges are not levied by them on loans and advances,” RBI had said in response to a query filed under the Right to Information Act.

Tagged as: banks, close-the-home, competition, india, loan, practice, real estate developers, real estate india, real estate trends, taken-at-higher, taking-the-lead, under-the-right

0 comments Read the full article →

SBI to End its Teaser Home Loan Scheme on April 30th 2011

by Paul Joseph April 26, 2011 Uncategorized

State Bank of India (SBI) will discontinue its teaser home loan schemes from the end of this month. The interest rates offered on its home loans will now be replaced by floating interest rate schemes, which are comparable with those offered by other commercial banks and housing finance companies. All loans from May 1 will attract an interest rate of 9.5-10.25 per cent, depending on the loan amount. Loans up to Rs 30 lakh will be available at 9.5 per cent (one percentage point above their base rate). Loans in the Rs 30-75 lakh bracket will be charged 9.75 per cent (125 basis points above the base rate). And, those above Rs 75 lakh will be charged 10.25 per cent (175 basis points above the base rate). However, these rates would move in line with the changes in the bank’s base rate that is reviewed every quarter. Earlier, the Reserve Bank of India had asked banks to stop giving teaser loan rates, since it believed such loans impacted the asset quality of the bank’s home loan portfolio. Teaser loans offered advances at a comparatively lower rate of interest for the first few years, after which rates were re-set at higher rates. SBI was the last one to discontinue such special loans. Under its SBI Easy Home Loan and SBI Advantage Home Loan products, one could get loans for 8-8.75 per cent in the first three years. After the third year, the rates would get reset at the then current floating rate structure. At 8.75 per cent, a 20-year-old loan on Rs 30 lakh would come to Rs 884 a lakh. At 9.5 per cent, you would now be paying Rs 932 a lakh. The good news is that for those who have already availed SBI’s teaser home loans and are still in the initial three years, the old rates remain applicable. The new rates will only apply to new applicants. Among the housing finance companies, LIC Housing Finance still offers a fixed interest rate of 9.9-10 per cent for the first five years and, thereafter, the then prevailing rates are applicable. But a quick calculation on apnaloan.com showed that the average rate for a 20-year period still works out in SBI’s favour. The average rate for SBI was 9.5 per cent, while that for LIC Housing was 10.5 per cent for the same period. SBI has also said there would be no prepayment penalty on home loans. The bank used to charge customers a two per cent penalty on prepaying the home loan. It will also introduce a graded processing fee, which it will increase according to the loan amount.

Tagged as: advantage-home, after-the-third, bank, commercial, home-loans, housing, india, loan, offered-on-its, real estate, sbi

0 comments Read the full article →

Fixed or floating is good

by Paul Joseph January 18, 2011 Uncategorized

Fixed loans are neither completely fixed nor completely floating floating loan. So before taking a home loan requires that all the conditions the bank may well have known. Home loan interest rates in respect of two of you have heard about. First, the floating rate and second, the fixed rate. Fixed rate means that the loan period you pay the same interest, while floating rate interest rate of interest per Amaceert curves – moves. The only advantage the new Kastemrs Amaceert the interest rate on low rates for Kastemrs not have taken floating rate decreased darted, but the company’s lack of danka interest loans to entice new customers only are beaten. So get all the benefit only to new Kastemrs. For older Kastemrs Taking bank loans on floating rate home loan interest rates for construction Kastemrs does not reduce, the old client re – choose option pricing. Under the interest rate on their loans reduced will be equal to the new Kastemrs. Yes, for sure they will pay the bank fees. Aadjstemento around the Case of floating rate Aadjstemento it also depends on the time. Suppose that a bank has been floating rate every six months Aadjste Kavugtleeerr or later it began to be adjusted on monthly basis. Kastemrs So every quarter or month to take advantage of floating rate conversion fee will have that the rest of the loan amount may be half or one per cent. Fixed also not Fix Like the floating rate are not actually floating, the more fixes are not the same as fixed rate, as many seem. Bank loan rate ever increase in agreement reserved the right to take her. Most bank loans by not paying for the entire period fixed for three years, fixed rate loans on offer. For three-year interest rate is stipulated. Then the interest rate per interest rate Amaceert Rivhaij is. What would be the right Suppose a person took a loan three years ago fixed rate. Six per cent fixed interest rate for three years he had make. After that happened, and now eight per cent Rivijan have had to pay interest. So feel bad that the Bank Fixed loans also have Rivhaij but also the fact that he then four per cent lower rates than floating rates, giving the Kastemrs be. Meanwhile, those who had taken loans on floating rate with the person, of any of them did not reduce interest rates in three years, while the Bank expressed its hope. He got a loan at seven per cent and today he is forced to pay 12 per cent interest. So whether it should assume that the fixed rate is right to take a loan? Experts say that the fixes are not Fixed loan but if you market ups – and downs absolutely no idea if the right Fixed loan will be less interest in the long run if you estimate that if floating select. Middle ground Fluctuations in market interest rates that people – can not imagine downs, they should avoid floating loan. If they want to avoid than fixed loans, the third way is for them. Part of the loan amount they can carry on fixed rate and floating interest rates will be applied to the remaining amount. Hybrid loans it says. Switch Over If you got a loan at fixed rate and floating rate is significantly lower than if you shifted from fixed floating rate options can also choose to be. For this you will have half a per cent to two per cent fee. Suppose you passed a year in total duration of the loan after it Aswichowara If the remaining amount to your loan principal Amaunt EMI decided to assume the remaining time will be. The prospect of rising interest rates in the near future are, you will not be prudent to be shifted from fixed to floating rate

Tagged as: bank, interest-rates, loan, loans, person, remaining, time

0 comments Read the full article →

Consider taking a home loan now

by Paul Joseph September 9, 2010 Uncategorized

Makes sense to opt for fixed-cum-floating one, as rates are on an upward trend. If you have been hesitant about a home loan, now is the time to consider one. Those attractive interest rates on home loans that teaser or dual rate schemes offer are here to stay for some more time. This means lower equated monthly instalments (EMIs) outgoings. Improved customer response has resulted in banks extending their teaser rates. On Tuesday, HDFC extended its scheme to match State Bank of India’s (SBI) and ICICI Bank’s offer that ends on September 30. Other housing finance companies offering such rates are LIC Housing Finance and Indiabulls. Among banks, Punjab National Bank (PNB) is also offering such a scheme to its borrowers. Opting for teaser rates Experts say customers should opt for the current fixed-cum-floating rate loans, since interest rates will only go up from here. “Teaser rate schemes come with a comfort that the interest rate cycle will not disturb the monthly outgo for a minimum period of a year and a half. The interest rates are on an upward trend and there is no clarity when the cycle will change,” said Harsh Roongta, CEO, Apnapaise. Suresh Sadagopan, a certified financial planner, says teaser loans make sense for borrowers with the capacity to prepay every year and who want to finish their loan earlier than the specified tenure. This means if you get an annual bonus or commission that you can pay towards your home loan, you can look at these hybrid products. But, they also add, the borrower should first understand the implication on finances once the lender switches the loan to a floating rate. “The change can impact your pocket, as rates can go from 9-9.5 per cent to, say, 11-11.5 per cent,” said Arnav Pandya, certified financial planner. This is why the Reserve Bank of India has regularly expressed concern over these schemes. The banking regulator feels these products can take a toll on borrowers’ finances once the fixed rate period gets over and customers need to pay higher prevailing floating rates. Current Offers According to the revised rates, HDFC will charge an interest rate of 8.5 per cent for the next six months, up to March 31, 2011. For another year (March 31, 2012), the customer will pay a fixed rate of 9.5 per cent. Thereafter, the rates will be 4.75 per cent lower than the prime lending rate, currently at 14.25 per cent. These rates are applicable irrespective of the loan amount. For loans up to Rs 50 lakh, SBI charges eight per cent in the first year after disbursement. In the second and third year, the interest rate will be nine per cent. Thereafter, the borrower has a choice to either opt for a floating or fixed rate. The floating rate will be 1.75 per cent above the base rate, currently at 7.5 per cent. And, a fixed rate will be 3.5 per cent above the base rate. The interest rate structure for loans above Rs 50 lakh is the same. The only difference is that once the fixed rate tenure is over, the spreads are higher. For a floating rate, the customer will need to pay 2.25 per cent over the base rate and if he or she opts for a fixed rate, the spread will be 3.5 per cent above the base rate. ICICI Bank offers a fixed rate of 8.25 per cent until March 31, 2011 and 9.25 per cent fixed till March 31, 2012. Thereafter, for loans up to Rs 30 lakh, the rates will be 1.5 per cent above the base rate and for loans above Rs 30 lakh, the interest would be 1.75 per cent above the base rate. Currently, ICICI Bank’s base rate is 7.5 per cent. Comparison Among the six schemes, experts said offers from SBI and PNB work out to be cheaper and the tenure for a fixed rate is higher, too. Both banks offer fixed rates for the initial three years of the loan. Schemes from other lenders work out to be fixed only for a year and a half. The longer duration of loan gives more safety to borrowers from a volatile interest rate environment. If you look at the average interest rate to be paid for 20 years for loans below Rs 30 lakh, these work out to be 8.79 per cent for LIC Housing Finance, 8.98 per cent for PNB, 9.03 per cent for SBI, 9.12 per cent for Indiabulls Financial Services and ICICI, and 9.37 per cent for HDFC. The average interest rates for loans above Rs 50 lakh for a 20-year loan work out to be the same for all lenders except PNB, which is 9.30 per cent. “Banks also fare better for now, as they have shifted to the base rate system for benchmarking their loans. This system is more transparent compared to the prime lending rate that housing finance companies follow,” said Roongta. Source: http://www.business-standard.com/india/news/consider-takinghome-loan-now/407460/ Filed under: Home loans Tagged: HDFC , Home loans , Icici Bank , LIC Housing Finance and Indiabulls , PNB , State Bank of India’s (SBI)

Tagged as: base, home-loans, housing-finance, loan, loans, time

0 comments Read the full article →

Most banks grant a home loan of 4 times gross annual income

by Paul Joseph August 25, 2010 Uncategorized

I applied for a home loan (of Rs 20 lakh) twice but didn’t get one. My basic pay is Rs 14,000 and my father is also supporting me for the loan. He is a government employee but will be retiring in next 3 years. I have tried with most private and state-owned banks. Suggest a solution. Anonymous While considering entitlement for a home loan, the first thing banks look at is the gross salary and the repaying capacity. Based on this a limit is worked out. Generally, most banks grant a maximum housing loan of 4 times the gross annual income. In your case you have not indicated this. Another point is about your other loans/liabilities. If you can pay an easy monthly installment (EMI) of Rs15,000, spread over a period of 20 years the maximum amount of loan you can expect from a bank will be Rs15-16 lakh. You need to take these aspects into account and work out a strategy. I had taken personal loans from 11 banks in October 2007. I paid EMIs regularly till October 2009, after which I started paying through cheques. I invested the loan amount in a company called City Realcom in 2007 and was promised regular returns. However, in August2009, the accounts of this company were frozen and its cheques bounced. Now the matter is with the courts. We were promised that we will be paid when the assets of this company and seized funds are sold. However, it has been almost 1 year since this problem started.As I would not like to be termed a defaulter by banks, I wrote to their customer care centres that I will have difficulty in paying my EMIs. But by selling some assets I managed to pay back from August 2009-July 2010. So far, I have reached a settlement with 5 banks. Now I have to pay the 6 remaining banks. Please advise me on how to settle the matter. James D’ Souza To understand the total debts, rate of interest on various dues viz, credit card debts, personal loans, etc you wil need to prepare a chart and then approach a Credit counseling centre. One thing is certain — banks cannot wait indefinitely. You need to give a concrete plan as to how you will pay the amount and in how many months. If you are Mumbai, you can approach any of the three counselling centres, viz. Abhay Credit Counselling, Disha Counselling Centre and the one started by the BCSBI. For address, timings, etc log on to respective websites. Source: http://www.dnaindia.com/money/column_most-banks-grant-a-home-loan-of-4-times-gross-annual-income_1428292 Filed under: Home loans Tagged: Home loans

Tagged as: home-loans, loan, matter

0 comments Read the full article →

No loan can be advanced below the new benchmark rate

by Paul Joseph August 25, 2010 Uncategorized

The Reserve Bank of India has said a bank will have to honour a fixed rate contract, even if interest rates move up in future. The clarification has removed doubts that some banks had over introduction of fixed rate home loans. Customers of some banks feared that if the lender’s base rate rose above the contracted fixed rate, the bank might increase the loan rate citing RBI guidelines even though the loan was termed as ‘fixed rate’ . The central bank has said no loan can be advanced below the new benchmark rate. Banks like Punjab National Bank, State Bank of India and ICICI Bank are offering fixed rate home loans, but customers were worried that they may be charged a higher rate of interest rate if the base rate goes up since no bank is allowed to lend below the base rate. However, RBI has said at the time of contracting a fix rate loan if the lending rate (under the special scheme) is higher than the base rate, banks do not need to charge higher rate even if the lenders raise their base rate in future. Banks like Punjab National Bank, State Bank of India and ICICI Bank are offering fixed rate home loans, but customers were worried that they may be charged a higher rate of interest rate if the base rate goes up since no bank is allowed to lend below the base rate. However, RBI has said at the time of contracting a fix rate loan if the lending rate (under the special scheme) is higher than the base rate, banks do not need to charge higher rate even if the lenders raise their base rate in future. However, RBI has also told banks that if they hike or lower base rate, that increase or cut in rates will have to be passed on to the new customers under the special home loan scheme. Therefore, if PNB raises its base rate, to say 9% in October, those special schemes cannot continue at 8.5%, however, the customer who have already availed loan at a fix rate of 8.5% before October, need not pay more Sources from the industry say PNB had asked for a clarification from RBI on this issue since they recently launched the festive offer and were keen to offer a fix rate scheme. The PNB fix rate offer is on loans up to Rs 50 lakh and from the fourth year onwards, the bank will charge home loan rate that is prevailing at that point of time for all its customers. Source: http://economictimes.indiatimes.com/quickiearticleshow/6425359.cms Filed under: Home loans Tagged: Home loans , National Bank , State Bank of India and ICICI Bank , The Reserve Bank of India

Tagged as: bank, home-loans, industry, lending, loan, punjab-national, reserve-bank

0 comments Read the full article →

Rise in base rate won’t affect your repayments

by Paul Joseph August 24, 2010 Uncategorized

MUMBAI: The Reserve Bank of India, has said a bank will have to honour a fixed rate contract, even if interest rates move up in future. The clarification has removed doubts that some banks had over introduction of fixed rate home loans. Customers of some banks feared that if the lender’s base rate rose above the contracted fixed rate, the bank might increase the loan rate citing RBI guidelines even though the loan was termed as ‘fixed rate’. The RBI has said no loan can be advanced below the new benchmark rate. Banks like Punjab National Bank, State Bank of India and ICICI Bank are offering fixed rate home loans, but customers were worried that they may be charged a higher rate of interest rate if the base rate goes up since no bank is allowed to lend below the base rate. However, RBI has said at the time of contracting a fix rate loan if the lending rate (under the special scheme) is higher than the base rate, banks do not need to charge higher rate even if the lenders raise their base rate in future. For instance, PNB has decided to offer a fixed rate loan of 8.5% on home loan for the first three years. In case PNB decides to raise its base rate, which is now at 8-9% after a year, RBI has said they cannot charge customers (who have opted for 8.5% three-year fixed rate scheme) an interest rate more than 8.5% in the first three years. SBI scheme offers 8% for the first year and 9% for the second and third year. While SBI’s scheme is up to September, PNB’s scheme is till December 10. However, RBI has also told banks that if they hike or lower base rate, that increase or cut in rates will have to be passed on to the new customers under the special home loan scheme. Therefore, if PNB raises its base rate, to say 9% in October, those special schemes cannot continue at 8.5%, however, the customer who have already availed loan at a fix rate of 8.5% before October, need not pay more. Sources from the industry say PNB had asked for a clarification from RBI on this issue since they recently launched the festive offer and were keen to offer a fix rate scheme. The PNB fix rate offer is on loans up to Rs 50 lakh and from the fourth year onwards, the bank will charge home loan rate that is prevailing at that point of time for all its customers. Source:http://economictimes.indiatimes.com/personal-finance/loan-centre/home-loans/home-loans-news/Rise-in-base-rate-wont-affect-your-repayments/articleshow/6423649.cms Filed under: Home loans , Mumbai Tagged: Home loans , Icici Bank , Mumbai , PNB , RBI , SBI

Tagged as: base, india, lending, loan, mumbai, punjab-national, rate, rbi., sbi, time

0 comments Read the full article →

HDFC Follows SBI, Keeps Loan Rates Unchanged

by Paul Joseph July 6, 2010

With SBI keeping its teaser rate unchanged, mortgage major HDFC too left its rates unchanged. The home finance major said it would extend its dual rate offering till the end of March 2011, with the rate till March 2011 fixed at 8.25 per cent. From April 1, the rate will be fixed at 9.25 per cent for the next one year. Thereafter, the home loan customer will move to a floating rate structure at the rate effective for the amount of the loan, called card rate, from April 1, 2012. At present, under the card rate, for loans of up to Rs 30 lakh, HDFC customers are charged at 9 per cent per annum while for loans of above Rs 30 lakh they pay at the rate of 9.25 per cent per annum. “The fixed rates are applicable for all new home loans irrespective of the loan amount,” a release from HDFC said. “This special offer is applicable to all new home loan customers who apply before August 31, 2010 and take at least part disbursement before September 30, 2010,” the release added. Last week, SBI said that it would continue with its 8 per cent home loan product till September. Under this scheme, State Bank of India offers home loans at 8 per cent per annum for the first year and 9 per cent for the second and the third years. After the end of the third year, the home loan customer moves to the prevailing interest rate at the time of such a shift. From the fourth year onwards, the rate will be linked to SBI’s base rate, and the effective rate is 9.25 per cent for loans upto Rs 50 lakh and 9.75 per cent for loans above Rs 50 lakh, a release from the bank said.

Tagged as: loan, rate, real estate, real estate india, time

0 comments Read the full article →

HDFC Launches home loan product at a fixed rate of 8.25% p.a. up to March 2011

by Paul Joseph July 5, 2010

HDFC Ltd. has launched “Dual Rate Product – 3 “, a special home loan product at a fixed rate of 8.25% p.a. up to 31.3.2011, 9.25 % for the period between 1.4.2011 and 31.3.2012 and the applicable floating rate for the balance term. This is a flexible product with dual rates. The fixed rates are applicable for all new Home loans irrespective of the loan amount. This special offer is applicable to all new home loan customers who apply before 31.8.2010 and take at least part disbursement before 30.9.2010.These customers will get a fixed rate of 8.25% up to 31.3.2011, 9.25% for the period between 1.4.2011 and 31.3.2012 and for the balance period the floating rate will apply. While the fixed rate will remain the same irrespective of the Loan amount the floating rate will vary with the loan Amount. Under this offer the floating rates has two slabs ie; Loans up to Rs 30 lacs where the rate will be 9 % and above Rs 30 lacs where the rate will be 9.25%. The existing floating rate product continues without any change where the rates applicable are 8.75% for Loans up to Rs 30 lacs, 9% for loans between Rs 30 lacs and Rs 50 Lacs and 9.25% for loans of Rs 50 lacs and above. The special interest rate under DRHL-3 is available to the NRI and PIO customer segments too. The self employed customers can also apply under the DRHL-3 and avail the same special interest rate offer. HDFC had recently re-launched its product Loan against property to assist customers take advantage of opportunities or attend to emergencies by making available one of the important ingredients required in both cases, which is funds. If you own a property, it can probably serve as the best possible avenue to generate a decent amount of funds within a short period of time while you continue to comfortably live in the house. Availing a personal loan from a lending institution may also be an option. However the advantage of LAP is that not only is the interest rate lower than a personal loan, but the tenure of the loan is also much longer. This enables a person to take a larger loan as compared to a personal loan where the period is very short which has a huge impact on the cash flow and thus the repaying capacity”. Loan approvals for the year ended March 31, 2010 were Rs. 60,611 crores as compared to Rs. 49,166 crores in the previous year, representing a growth of 23%. Loan disbursements during the year were Rs. 50,413 crores as against Rs. 39,650 crores in the previous year, representing a growth of 27%. Cumulative loan approvals and disbursements as at March 31, 2010 were Rs.2,98,061 crores and Rs. 2,42,219 crores respectively. HDFC’s recovery performance continues to be very good. This is the twenty-first consecutive quarter end at which the non-performing loans have been lower than the corresponding quarter end in the previous year As at March 31, 2010, outstanding deposits stood at Rs. 23,081 crores as against Rs. 19,375 crores on the corresponding date last year, registering a growth of 19%. During the year, deposits accounted for 29% of the incremental borrowing of the Corporation. CRISIL and ICRA have for the fifteenth consecutive year reaffirmed “AAA” rating for HDFC’s deposits. Source : http://frontierindia.net/hdfc-launches-home-loan-product-at-a-fixed-rate-of-8-25-p-a-up-to-march-2011 Filed under: Home loans Tagged: HDFC Ltd. , Home loans

Tagged as: balance, home-loans, house, loan, year

0 comments Read the full article →

Only part-rebate on home upgrade loan EMI

by Paul Joseph May 24, 2010

I took a loan for construction of my house in 2004 on which the interest and principal portions are Rs 72,000 and Rs 37,500 respectively, for 2009-10. I took an home improvement loan in 2009 and the interest and principal portions on the second loan are Rs 77,000 and Rs 46,650 respectively. I understand that home improvement loans for expansion and maintenance of the house are treated on a par with housing loans. In such a case can I claim Rs 1,49,000 as deduction u/s 24 in respect of interest paid on the housing loans and the principal repayment of Rs 37,500 as deduction u/s 80-C? – K.V. Aravindakshan Section 24, which allows a deduction on interest on housing loan, provides for the deduction where the loan is taken for purchase, construction, repairs, renewal or reconstruction of house. The interest on both the loans will qualify for deduction u/s 24. The principal repayment on the loan taken for expansion and maintenance will, however, not qualify for deduction u/s 80-C. You may note that if the property is self-occupied, the maximum deduction that can be claimed in respect of such interest on the loan taken for extension, expansion, repairs, renewal or reconstruction cannot exceed Rs 30,000. If the second loan is taken for such a purpose, the deduction in respect of interest will be restricted to Rs 1,02,000 – Rs 72,000 in respect of the original loan and Rs 30,000 in respect of the loan taken subsequently and used for the purposes mentioned above. If the property is let out, the interest will be eligible for deduction u/s 24. In 2009-10 my wife has earned Rs 2,45,050 comprising short-term capital gains of Rs 1,46,453 from trading and investments in shares through stock exchange and interest from bank deposits of Rs 98,593. After exhausting the basic exemption she is left with a taxable income of Rs 55,050. What is the rate of tax applicable on this income? Is she eligible for deduction u/s 80-C against the short-term capital gain and make the taxable income NIL? – Subramanyam It can be seen that the entire income that is chargeable to tax after the basic exemption comprises of only short-term capital gains. If the short-term capital gain arises from dealing in shares through a recognised stock exchange, where securities transaction tax is charged at the time of sale, the gain will be charged to tax u/s 111A at 15 per cent. No deduction u/s 80C can be claimed in respect of such income under the head capital gains arising from the sale of shares through a recognised stock exchange where securities transaction tax is charged at the time of sale as there is a specific prohibition in this regard u/s 111A(2). You may alternatively choose to claim deduction u/s 80-C against income from bank deposits. The amount after such deduction may be reduced from the basic exemption and such balance left out of the basic exemption which is not adjusted against bank deposits may be set off against the short-term capital gains and only the balance if any will be charged to tax at 15 per cent in accordance with section 111A. My company pays me leave travel assistance as an allowance every month. But it is taxable. If I travel to my home town during the block year 2010-11 with my own savings, am I eligible for exemption on the amount spent for my journey? – M. Hussain Under section 10(5), the value of leave travel concession or assistance received by an individual from his employer for himself and his family in connection with his proceeding on leave to any place in India or to any place in India after retirement from service or after the termination of his service will be exempt subject to prescribed conditions and that the same is limited to the amount spent. Family, for the purpose of this provision, means spouse and children; and parents, brothers and sisters of the individual wholly or mainly dependent on that individual. The exemption is available for two journeys in a block of four calendar years commencing from calendar year 1986. Where an individual does not avail such travel concession or assistance once or on both occasions during any block of 4 calendar years, the value of travel concession or assistance first availed during first calendar year immediately succeeding the block of 4 calendar years will be eligible for exemption. This exemption will be in addition to the exemption that will be available in respect of two journeys for the succeeding block. The fact that the leave travel assistance is paid to you every month or that you have spent the amount for the travel out of your savings will not affect your claim for exemption as long as you qualify for deduction and the deduction is within the limits in the provision. Source:http://www.thehindubusinessline.com/iw/2010/05/23/stories/2010052350771300.htm Filed under: Home loans Tagged: home loan

Tagged as: calendar, home-loan, housing, india, loan

0 comments Read the full article →