Reverse Mortgage Scheme, 2008

Reverse Mortgage Scheme, 2008

Ministry : Ministry of Finance
Department / Board : CBDT
Notification No : 93/2008
Date : 30.09.2008

In exercise of the powers conferred by clause (xvi) of section 47 of the Income -tax Act, 1961 (43 of 1961), the Central Government hereby makes the following scheme, namely:

1. Short title, commencement and application -

(1) This scheme may be called the Reverse Mortgage Scheme, 2008.
(2) It shall be deemed to have come into force from the 15th day of April, 2008.
(3) Save as otherwise provided in the Scheme, it shall be applicable to all eligible persons.

2. Definitions - In this Scheme, unless the context otherwise requires,-

(a) "Act" means the Income -tax Act, 1961 (43 of 1961);

(b) "approved lending institution" means -
(i) National Housing Bank established under section 3 of the National Housing Bank Act, 1987 (53 of 1987);
(ii) a scheduled bank included in the second schedule to the Reserve Bank of India Act, 1934; or
(iii) a housing finance company registered with the National Housing Bank;

(c) "Board" means the Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963 (54 of 1963);

(d) "Capital asset" means a residential house property which is located in India;

(e) "eligible person" means
(i) any person, being an individual, who is of, or above, the age of sixty years; or
(ii) any married couple, if either of the husband or wife is of, or above, the age of sixty years;

(f) "Reverse Mortgage" means mortgage of a capital asset by an eligible person against a loan obtained by him from an approved lending institution;

(g) "reverse mortgagor" means the eligible person who has mortgaged the capital asset for the purpose of obtaining loan;

(h) "reverse mortgage transaction" means a transaction in which the loan may be disbursed to the reverse mortgagor but does not include transaction of sale, or disposal, of the property for settlement of the loan;

(i) All other words and expressions used herein, but not defined and defined in the Act, shall have the meanings respectively assigned to them in the Act.

3. Application and processing for reverse mortgage transaction -

(1) Any eligible person may enter into a reverse mortgage transaction by applying in writing to the approved lending institution, if the capital asset, being mortgaged, is-
(i) owned by him; and
(ii) free from any encumbrances.

(2) The application under sub-rule, (1) shall be processed by the approved lending institution and for this purpose the institution may charge nominal amount as processing fees.

4. Sanction of reverse mortgage loan -

(1) The approved lending institution, before taking mortgage of capital asset and before disbursing any loan under reverse mortgage, shall-

(a) enter into a loan agreement in writing with the reverse mortgagor; and

(b) obtain and maintain the following particulars from the reverse mortgagor, namely:-
(i) Name and address of the owner of the capital asset;
(ii) Permanent Account Number of the owner of the capital asset;
(iii) Total area, including built up or covered area, of the capital asset;
(iv) Cost of acquisition and the year of acquisition of the capital asset;
(v) Cost of improvement and the year of improvement of the capital asset;
(vi) Name, address and Permanent Account Number of all the legal heirs and estate of the owner of the capital asset;
(vii) A copy of the registered will of the owner of the capital asset including any changes made therein during the currency of the term of the loan.

5. Disbursement of loan -

(1) The approved lending institution may disburse the loan to the
reverse mortgagor by any one or more of the following modes, namely:-
(i) periodic payments to be decided mutually between the approved lending institution and the reverse mortgagor;
(ii) lump-sum payment in one or more trenches, to the extent that the aggregate of the amount disbursed as lump sum payments does not exceed fifty per cent. of the total loan amount sanctioned.
6. Period of reverse mortgage loan -

The loan under reverse mortgage shall not be granted for a period exceeding twenty years from the date of signing the agreement by the reverse mortgagor and the approved lending institution.

7. Repayment of loan -

The reverse mortgagor, or his legal heirs or estate, shall be liable for repayment of the principal amount of loan along with the interest to the approved lending institution at the time of foreclosure of the loan agreement.

F.No.142/06/2008-TPL

Sd/-
(Kamlesh C. Varshney)
Director (TPL)

Directory of firms operating in India

Directory of firms operating in India


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This is not a complete list and there are several firms who have offices at places other than those mentioned above.

Limited Liability Partnership Bill, 2008

The new Limited Liability Partnership Bill, 2008 - Download here

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Upcoming articles

I am planing to write articles on the following subjects and would appreciate inputs (which will be included in the article) from the readers.

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With the Finance Bill 2008 receiving Presidential assent, Seven new taxable services will come under the Service Tax net w.e.f May 16. These new services include Information Technology, Software services, investment management services, ULIP, Internet Telecommunication services, stock exchange services, Commodity Exchanges and Clearing houses.

The revenue department has also extended the scheme of refund of service tax paid by exporters to three additional services, taking the total number of services for which service tax refund is available to exporters to 19.

Exporters can now get service tax refund on purchase or sale of foreign currency by authorised dealers or foreign exchange brokers.

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CAs can audit; Sales Tax Lawyers can't: HC

In a decision that will affect the lawyers specialising in Sales Tax laws as well as former Sales Tax officers' who work as sales tax practitioners, Bombay High Court has held that only Chartered Accountants (CAs) can audit and certify accounts for traders.

Hitherto, traders had to hire only sales tax lawyers or former sales tax officers as advisors in tax matters. But a recent amendment to Maharashtra Value Added Tax Act made it mandatory for traders with sale of over Rs 40 lakhs to get their accounts audited and certified by a professional CA.

The amendment specifies that only a CA can audit the account. It allows lawyers and other sales tax practitioners to represent traders before sales tax commissioner and tribunals, but not to audit accounts.

Various organisations, including Bar Council of Maharashtra and Goa, the Sales Tax Practitioners Association of Maharashtra and Bombay Small Scale Industries Association moved High Court, claiming that this restraint violated right to equality enshrined in the Constitution.

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