Prajna Capital - An Investment Guide

Some conditions that enable an assessee to claim tax deductions on the interest and principal components Individuals can claim a tax deduction on the principal and interest components of a home loan as per the Income Tax Act 1961. These deductions are available under Section 24(b) to assessees who have taken a loan to either buy or build a house. In case these conditions are met, interest on borrowed capital is deductible up to Rs 1.5 lakhs: Capital is borrowed on or after April 1, 1999 to acquire or construct a residential property The acquisition/construction should be completed within three years from the end of the financial year in which capital was borrowed. The bank extending the loan certifies that the interest is payable on the amount advanced for acquisition or construction of the house, or as refinance of the principle amount outstanding under an earlier loan. In case the conditions stated are not met, interest on borrowed capital is deductible up to Rs 30,000. However, ...

Home loan borrowers have experienced a roller coaster ride of highs and lows over the past few years. The interest rates hovered around six to seven percent about four years ago. Until a few weeks ago, they had touched 13-14 percent. Today, some banks offer a modest eight percent home loan interest rate. The fluctuations in interest rates have an impact on a borrower's EMI dues and loan tenure. Scenario 1: When rates go up Increase in the interest rates translates into greater burden on the borrower. The borrower has to pay more from his pocket towards his home loan. When rates go up, the borrower has the option to either increase his EMI or tenure. Increase in EMI keeping tenure constant means greater cash outflow every month towards your loan. Increase in tenure keeping EMI constant amounts to increasing the number of years you'll be repaying the loan. Scenario 2: When rates go down A reduction in rates is good news that borrowers yearn to hear. When interest rates go down...

While choosing a home loan option to buy a house, there are a few important aspects. You need to go into these Scheme of loan Whether the loan is a fixed or floating rate one. As is common knowledge, in case of floating rate loans, the interest rate will move up or down with each revision in the benchmark rate of the bank. In case of a fixed rate loan, the interest rate may remain fixed for either a given period of time or entire tenure of the loan. Rate benchmark In case it's a floating rate loan, what the rate is benchmarked against is important. Usually, floating rates are determined with reference to the prime lending rate (PLR), fixed at the time of taking the loan plus a mark-up. If your home loan is at a spread of one percent to the PLR, which is say 10 percent, you will pay an interest rate of 11 percent per annum. How often the bank changes the benchmark rate should be checked. Banks periodically revise the PLR to which the home loan interest rate is pegged. The...

Some deductions you are eligible for to help you arrive at the right taxable income while filing returns. This time you don’t need to attach any documents to the form. The last date for individuals to file returns is July 31 The time to file the income tax returns is here. July 31 is the last date to file the IT returns for individuals. The returns has to be filed for the previous year - April 2008 to March 2009. So, the transactions should have taken place during that period only. Any subsequent transactions will be taken into account during the next year - 2009-10. An assessee also needs to compute taxes properly and pay off any outstanding dues. This can be done before the date of filing of the returns. It is of utmost importance that one uses the correct form, as is applicable to him. In a radical change from the past, no document (including TDS certificate) should be attached to this form. The officials receiving the returns have been instructed to detach all documents enclosed wi...

Here are some channels available to help you file your returns conveniently The financial year 2008-09 has come to an end and it is the time to start filing the income tax returns relevant to the assessment year 2009-10. The income may be from any one or more sources including salary, income from property, business and profession, capital gains, and income from any other source. In case the income from are required to file the tax returns. Tax is payable on the amount of income that exceeds the basic exemption limit. The requirements for filing of annual income tax returns are contained under Section 139 of the Income Tax Act. According to these provisions, every person having income in excess of the amount not chargeable to tax is required to file the returns. The returns need to be filed by July 31. Now it is compulsory to obtain and quote your Permanent all these sources during the financial year exceeds the basic exemption limit, you Account Number (PAN) in the returns. PAN is avai...

The last few quarters have been quite tough for the people dreaming of buying a home. The interest rates on housing loans have gone up from the 2004-05 levels. Many people thought that property prices will come down significantly due to the rise in home loan interest rates. However, contrary to expectations, property prices have never come down significantly, and in fact, have gone up in many areas. So what affects property prices? Some factors that dictate property prices: Rise in input costs With the inflation ruling high globally (especially here), the prices of all basic commodities has increased quite significantly over the last few quarters. For example, the cost of labour, steel and cement has gone up quite significantly in the last few quarters. Due to higher input costs, builders cannot reduce property prices in their newly-launched projects. Investments by foreign investors Many foreign investors believe that there is huge potential in real estate and the returns will be q...

The tax benefits available on 2 components of a home loan Interest Principal There are some tax benefits available on home loans. The tax benefits can be claimed on both the principal and interest components of a home loan as per the Income Tax Act. These deductions are available to assessees who have taken a loan to either buy or build a house, under Section 24(b). A) Tax benefits on interest component If these conditions are met, interest on borrowed capital is deductible up to Rs 1.5 lakhs: Loan is taken on or after April 1, 1999 to buy or build a property. The purchase or construction should be completed within three years from the end of the financial year in which the loan was taken. The bank extending the loan should certify that interest is payable against the loan advanced to buy or construct a house. If these conditions are not met, the interest on the loan is deductible up to Rs 30,000 only. However, these conditions have to be fulfilled then: The loan should have been tak...

Planning to buy your dream house? Take a look at rental rationale as well BUYING a house is “simple”. All you have to do is to ask for an advice. And voila, they come in dime-a-dozen. Besides, if you look around, you’ll find real estate portals, hoardings and various self-styled real estate gurus advising you where and how to buy your dream house. But in this commotion, you may often overlook a simple calculation — the buy v/s rent comparison. Here’s a reality check on what should really influence your decision. ARE YOU READY TO BUY? Personal finance experts believe that emotions, family and personal reasons all come into play in any home-buying decision. Also, there are lots of non-financial factors that affect this decision, including your hobbies, lifestyle, and personal psychology. Even before you plan to buy a house, it’s better to assess if you want to live in that city. If it’s your first house, then you should see it as a long term investment. After all, you want to spend your...

We are at the end of this financial year. Some tips in case your tax planning isn’t complete The financial year 2007-08 is coming to an end in the next couple of weeks. This is the last chance for investors who have not planned their tax savings this year to invest and save taxes. There are certain investments and expenses that are exempt from income tax under the Income Tax Act. Investors can review their tax planning and see if they missed out on something good. This can lead to a 33 percent savings on the amount invested through the reduction in their tax liability. Here are some ways for an individual to reduce tax: Tax rebate under Section 80C Section 80C of the Indian Income Tax Act allows income tax exemptions to individuals on certain investments and expenditures. The maximum exemption allowed under this section is Rs 1 lakh. Investors can invest Rs 1 lakh in one or more of these instruments to avail tax rebates under Section 80C: Provident fund or public provident fund ( PPF ...