Reverse Mortgage Scheme
IS mortgage of property for obtaining a loan under the reverse mortgage scheme a transfer within the meaning of the Income-tax Act thereby giving rise to capital gains?
As per clause (XVI) of section 47 of the Income-tax Act (with effect from 1.4.2008), any transfer of a capital asset in a transaction of reverse mortgage under a scheme made and notified by the Central Government shall not be regarded as a transfer and therefore shall not attract capital gains tax.
Accordingly, in pursuance of above, Reverse Mortgage Scheme has been notified vide notification No. 93/2008 dated 30th September 2008.
Government has amended the Reverse Mortgage Scheme to provide for disbursing the loan to the annuity sourcing institution for the purposes of periodic payments by way of annuity to the reverse mortgagor. And some consequential changes are made. “Annuity Sourcing Institution” means Life Insurance Corporation of India or any other insurer registered with the Insurance Regulatory and Development Authority.
CBDT Notification No. 79/2013-., Dated: October 07, 2013