In this budget, the tax aspects of reverse mortgage have been clarified. The reverse mortgage scheme was notified by the National Housing Bank in the last budget. In this budget, the Finance Minister has proposed to amend the Income Tax Act to provide that reverse mortgage would not amount to ‘transfer’, and the income received by senior citizens would not be taxed as ‘income’ in their hands.

This step has been welcomed by housing finance companies. The government has made it clear that a loan under a reverse mortgage scheme would not be considered as transfer of capital, thus putting it beyond the purview of income tax.