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Whitefield

Friday 29 May 2015

COMPUTATION OF INCOME FROM LET-OUT PROPERTIES

COMPUTATIONOF INCOME FROM LET-OUT PROPERTIES

Computation of income from house property is to be made as per the provisions of Section 23 and 24 of Income tax Act, 1961 for every assessment year, commencing from assessment year 2002-2003 onwards.

There are two significant changes from the earlier method, and they are:

1. The method of allowing deductions towards vacancies and unrealized rent after computing the net annual value is discontinued. Instead, these deductions will be considered at the beginning itself to arrive at annual gross value.

2. Various deductions are merged and 30% of net annual value is allowed. However deduction of interest allowed on borrowed capital continues.

The following procedure navigate the steps in computing the income from house property.

(a) Arriving of gross annual value.

(b) Determining net annual value.

(d)Additions towards specified terms.

Plz check the percentage for latest period.

Illustration:

Details of the property for the financial year 2002-2003
1	Municipal valuation	Rs.30,000-00
2	Reasonable rent.	Rs.40,000-00
3	Standard rent	Rs.32,000-00
4	Actual rent receivable at Rs.2,500/- p.m.	Rs.30,000-00
5	Municipal Taxes paid	Rs. 3,000-00
6	Interest on Loan borrowed to construct the house	Rs.10,000-00
7	Rent collection charges.	Rs. 2,000-00
8	Property remained vacant for two months during the period Nov and Dec. 2002
Income from the house property is computed as follows:
	Gross annual value (See Note No.1. herein below)	Rs.25,000-00
	Deduct Municipal taxes paid	Rs. 3,000-00
	Net Annual value (A)	Rs.22,000-00
	Deductions
	Deduct 30% of the net annual value (See Note No.2. herein below)	Rs. 6,600-00
	Deduct Rs.10,000/- (being the interest on borrowed capital)	Rs. 10,000-00
	Total Deduction (B)	Rs.16,600-00
	Total Income from House Property (A less B)	Rs. 5,400-00
	Note 1: Gross Annual value – The Actual rent receivable at Rs.2,500/- per month is adopted, since it is less than Standard rent. Actual rent received is only Rs.25,000/- since the property was vacant during Nov. and Dec. 2002.
	Note 2: An over all deduction of 30%of the net annual value is allowed. No separate deduction is allowed towards collection charges.

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Whitefield

Thursday 28 May 2015

OPPORTUNE TIME TO TRANSFER HOME LOAN

OpportuneTime to Transfer Home Loan

Construction/Purchase of Houserequires substantial funds and repaying in given time; and it attract normalequated monthly instalments. While some other loans are required to repay in less than five years period and such loans attract heavy equated monthly instalments; and this sort of facility is more suitable to avail finance for repairs and renovations.

Due to the reduction of rates by the RBI, the normal lending institutions/Banks are bound to reduce the interest rates on home loans, as such, this is the most opportune time to transfer the loans to exploit the benefit of low interest rates.

Low interest rates are based on tenure of the loan. Some financial institutions link it to the amount of loan. Borrowers who have availed loans at higher interest rates, may examine the following parameters:

(a) balance outstanding;

(b) balance repayment period;

If the balance repayment period is less than five years, they may transfer the loan to an institution which charges less than 9%. They may choose to pay the same EMI, which they were paying earlier, so that loan gets closed earlier resulting in considerable savings in interest. If not affordable, they may also agree to repay the loan in 5 years with reduced EMI.

In case, the balance repayment is more than five years, examine the balance outstanding and the EMI affordable; and in such case, if the balance repayment period is more than 10 years, transfer the loans, where less interest is charged.

While transferring the loans, consider the method of interest calculations. There are various methods like:

- Annual reducing;

- Half-yearly reducing;

- Quarterly reducing;

- Monthly reducing; and

- Daily reducing methods.

Shifting from annual reducing to daily reducing in the present low interest period is prudent to derive maximum benefits.

Timing of transfer:

Benefits may not be maximum, unless the transfer of loan is properly timed. The borrower should ascertain the type and date on which interest is charged. In case of annual reducing method, the interest is charged on 31^st March every year. In case of monthly reducing, generally interest is charged to loan on 5^th of every month. As such, transferring the loan on the day on which the interest is charged or slightly earlier is advisable.

For closure penalty and admission charges:

Penalty of generally 1% on the outstanding balances is charged on loans transferred. Similarly processing fee/admission charges are levied on incoming loans. Compare the charges with the interest saved before requesting for transferring the loans.

Finally one has to decide whether to prefer floating rate or fixed rate on transfer. As the interest rates have been reduced, fixed rate seems to be a better option, so that one may shift to floating, in case of further reduction.

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TRAFFIC AND TRANSPORTATION IN BANGALORE CITY

Traffic andTransportation in Bangalore City

Bangalore is a Radial Pattern city with major roads leading to the centre, which results in concentration of non-residential activities and traffic in the central area. The non-residential activities generate traffic and congestion takes place. As the city grows in to a large city traffic problem in the central area becomes un-manageable.

Traffic problems:

(a) Accidents:

The number of two wheeler accidents in our State is said to be the highest in the country. The reason for this is congestion in the central area, inadequate width of roads compared to traffic volume, many truck entering into the city, too many rash driven auto-rickshaws and maxi-cabs etc. The encroachments by shop keepers in the commercial areas force the pedestrians to walk on the road pavements and involve in accidents.

(b) Vehicular Pollution:

Bangalore is one of the most polluted cities in India. The serious vehicle pollution is due to very large number of vehicles, acute traffic congestion due to inadequate road widths, use of adulterated fuel, bad maintenance of vehicles, etc.

(c)Parking problem:

There is acute parking problem in the City central area between KG Road and City market, as the commercial activities generate lot of parking demand, but it is not possible to park the vehicles due to congested narrow roads. Gandhinagar area with number of commercial activities and hub of tourist activities also has serious parking problems. Very serious parking problems are observed in the whole sale market area at Kalasipalyam located in the most congested centralarea of the city.

Fashionable shopping areas like Commercial street and Brigade road – MG road area also have parking problems. Popular and most reputed schools/colleges also create parking problems attracting large number of vehicles.

One-way system:

One way system introduced on several roads requires review and change for some roads, as there may be inconveniences on some roads due to congestion while other roads may be wide enough to take traffic.

In line with this, during yester years, a committee under the Chairmanship of former Chief Secretary to Government Mr. J.C. Lynn was constituted which suggested traffic engineering proposals, grade separations, pedestrian sub-ways, improvement of bus depots and workshops etc.

Pedestrian subways:

There are pedestrian subways at City Market, City Railway station and Shivajinagar Bus station. The City Market subway built long back is not useful as people seldom use it. The sub way is dark, dirty and even more risky. Even the Shivajinagar Subway is also not being used, as it is narrow, not attractive and not maintained properly. Besides these two, the pedestrian over bridge built on KG Road by a private entrepreneur long back is also not useful as it is very high and difficult to climb.

In fact, Pedestrian subways are required on all busy roads / intersections. Subways are required on MG Road and Residency Road near Opera theatre. Wherever fast traffic is more in one-way roads, subways are required and may be proposed. Private investments may be invited by offering advertisement rights for an agreeable period.

Widening of important roads:

During the past, several important roads were widened by improving traffic movements. In a similar manner, widening of several other roads are also need to be done, strictly as per the rules and regulations and in the interest of the city, without succumbing to the pressure from any corner. Further, widening of important roads should be taken up to improve traffic movement. For easy acquisition additional FAR in the remaining portion of the sites, Floating FAR etc., may be tried as it would be found successful.

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