Investment Inn

In direct taxes code bill 2009 the tax treatment of reverse mortgage is silent. The author believes that given the nature of trafficking, the prevailing view within the income tax act, 1961 will be conducted under the code similarly. Nonetheless, it is desirable that express provisions be integrated.

1. Under department 47(xvi) of the income-tax act, 1961 (“the act”), any transfer of a capital asset in a dealing of reverse mortgage under a scheme made and notified by the central government is not regarded as a ‘transfer’. Accordingly, the quantity obtained by somebody as a loan, either in lump sum or in instalment, in a dealing of reverse mortgage as above is exempt from tax under department 10(43) of the act.

2. On the tax treatment of reverse mortgages the direct taxes code bill, 2009 (‘the code’) is silent. As the code is silent on reverse mortgage, a question arises what will be its tax implica tions under the code?