LeapZipBlog: transcontriumph

transcontriumph's blog

9 blogs

How To Buy A Home In Your 20s…

June 15, 2019 by transcontriumph  

Owning a home is a dream for many and being able to buy a home early in one’s career, can give you lots of joy. Experts point out that very few youngsters take the plunge into this big purchase, as the entire process is often challenging and complex. Although it may seem like a challenging task, if the process is managed smartly, the benefits are worth it.

“A house is one of the most expensive investments, as compared to other purchases. Hence, buying such an appreciating asset early, helps in correctly setting one’s financial goals. Earlier the investment, higher the opportunity to reinvest and multiply your returns,” says Samson Arthur, branch director – Hyderabad, Knight Frank (India) Pvt Ltd.

Benefits of buying a home in the 20s

For a millennial, buying a home is an investment in the financial future, says Rajat Johar, head of residential services, India, CBRE, who explains some of the advantages of buying a home in the 20s:

Future investment: It allows youngsters to invest in their future, as it provides them with an asset that can be sold, when they are ready to move on.

Youngsters tend to learn better spending habits: It changes the young buyer’s decision-making process, as they learn how to save and spend money in the most effective and efficient manner.

Tax benefits: As home buyers get tax credits, youngsters can use it for lowering their tax liability.

“Also, owning a house is a huge responsibility, which can make youngsters more responsible” he says.

Planning aspects that a buyer in his/her 20s should keep in mind

Planning the budget for a home, is more important than evaluating the maximum loan eligibility. For a first home purchase, set aside a budget that is affordable and in-line with your career growth and pay scale. Ensure that you have savings of up to 20-25 per cent of the value of the house, prior to purchase, while the rest could be from a home loan. Maintain sufficient balance in your savings, for emergencies and other investments like marriage, family, vacations, further education, vehicle, etc.

While most banks provide loans of up to 85 per cent of the property value, youngsters need to first check the EMI that they would be comfortable paying each month.

Sunil Sharma, VP – marketing and CRM, Mahindra Lifespace Developers Ltd, offers some suggestions for property buyers in their 20s:

Loan planning: Consult at least two to three reputed banking institutions, to understand the nuances of the home loan process, including documentation, interest, repayment terms, tenure implications, EMIs, etc.

Project location and connectivity: Work hours tend to be longer at an early career stage and thus, connectivity to core the business districts is important.

Social infrastructure: Nearby retail, dining and entertainment options must be considered, given the fact that youngsters give significant importance to recreation avenues.

Clear titles and other documentation: A younger buyer may need extra guidance on the various legal aspects of a property, such as land titles, statutory approvals, RERA compliance, etc. A consultant or expert can help evaluate the feasibility of a project in this context.

Inculcate financial discipline, by prioritising savings and asset building and you can end up becoming a smart real estate owner. If you get it right the first time, there is a good chance you will know the pitfalls during future investments.

Inculcate financial discipline, by prioritising savings and asset building and you can end up becoming a smart real estate owner. If you get it right the first time, there is a good chance you will know the pitfalls during future investments.

Why buying a home in the 20s is a wise decision

Longer loan-tenure eligibility.
More tax saving, due to income tax deduction benefit available against home loan interest and principal repayment.
Risk appetite is higher, for which the rewards can be better.
A youngster has more time, to balance other financial objectives.

An Architectural Marvel of G + 35 Storeys. where luxuries are stirred with Indulgences, the contemporary blends in with Classy and Privacy teams with Connectivity.We Present – ‘Transcon Triumph’ – A Lifestyle for the connoisseurs of art and Apartments in Andheri West that are winners of 4 Asia Pacific Awards that let you feel the finesse and live the Luxury.

Source: https://housing.com/news/buy-home-20s/

Will A Home Loan Overdraft Work For You?

June 12, 2019 by transcontriumph  

When it comes to taking a home loan, borrowers have to consider numerous options – different interest rates offered by various banks (which may be fixed rate, floating rate, or semi-fixed rate), in addition to eligibility and tenure. Now, several banks are also allowing the flexibility of using the home loan as an overdraft account.

How does a home loan overdraft work?

The home loan overdraft scheme, is similar to a current account with an overdraft limit, explains Adhil Shetty, CEO of BankBazaar.com. “You can deposit any surplus funds that you have, into your home loan account and this surplus will be considered as prepayment against the principal.

“The amount on which the loan interest is calculated, is the outstanding principal, minus the savings deposited in the home loan account over and above the EMI. If you have been making regular deposits to the account, your outstanding principal would proportionally reduce.

“This brings down the overall loan liability,” Shetty elaborates.

In an overdraft loan, the interest is calculated based on the outstanding principal of the loan amount, just like a regular home loan. However, it is calculated on a daily basis and is debited at the end of the month. So, it varies, based on the outstanding principal. Prepaying the loan brings down the interest you end up paying, as well as the tenure of the loan.The EMI remains unchanged.

When to opt for the home loan overdraft?

“The home loan overdraft facility is a good option, if you are sure that you will be able to save some extra money every month, after paying the regular EMI. It is also good for self-employed people, who have access to short-term liquidity,” says Rishi Mehra, CEO, Deal4Loans.com.

See also: Which payment plan suits your pocket?

Experts explain that the biggest advantage of the home loan overdraft scheme, is the liquidity that it offers. If you make part payments against your regular home loan, it reduces your outstanding principal but this money will not be available to you again. However, with the overdraft scheme, the surplus amount in the home loan overdraft account is available for withdrawal any time.

“The home loan overdraft is an appealing scheme for double-income families. It is also especially useful for businessmen, who are in a moderately secure financial position with access to regular surplus funds, as they can withdraw the surplus when needed, without opting for a personal loan,” says Ajay Jain, executive director and head – real estate, Centrum Capital. “The facility offers flexibility in repayment as well. On the other hand, it is not suitable for people who just manage to meet their regular EMIs and are unable to earn surplus income. In this case, it is better to stick to a normal home loan, as one with an overdraft facility is slightly more expensive, by about 50 basis points,” Jain points out.

Factors to consider, while taking a home loan overdraft

The extra amount repaid against the home loan, is not eligible for the rebate under Section 80 (C), as it is not considered as a prepayment. Consequently, experts recommend that applicants should first conduct a cost-benefit analysis, to determine whether a prepayment is cheaper or if the savings on interest substantiate the added premium that you have to pay for this feature.

Financing institutions that offer home loans with overdraft facility

Several banks in India provide the home loan overdraft scheme. These include SBI, Punjab National Bank, Bank of India, Citibank, Standard Chartered Bank, HSBC and IDBI Bank, among others.

Home loan overdraft benefits

Offers greater liquidity on the deposited amount.
Good option for home buyers who have surplus fund inflows.
Reduces the interest liability, when extra funds are deposited.
Facility to withdraw the surplus money any time.
No penalty for prepayment of loan amount.

An Architectural Marvel of G + 35 Storeys. where luxuries are stirred with Indulgences, the contemporary blends in with Classy and Privacy teams with Connectivity.We Present – ‘Transcon Triumph’ – A Lifestyle for the connoisseurs of art and Apartments in Andheri West that are winners of 4 Asia Pacific Awards that let you feel the finesse and live the Luxury.

Source: https://housing.com/news/will-home-loan-overdraft-work/

How Is Profit From The Sale Of A House Property Calculated?

June 6, 2019 by transcontriumph  

beautiful waterfront suite with ocean views

‘Capital gains’ is one of the income heads, under the Indian tax laws. Any profit from the sale of a capital asset, is taxed under the head ‘capital gains’.

Holding period as the basis of taxation

For the purpose of levying tax on capital gains, all capital assets are divided into two categories, based on their holding period. In case the asset is held beyond a certain specified period, profits earned on such sale are treated as long-term capital gains, else it becomes taxable as short-term capital gains. For land and buildings, the holding period requirement is 24 months, for any asset to qualify as long term. However, any rights other than the ownership right, with respect to land and buildings, becomes long-term only if it sold after holding the same for more than 36 months. For example, if you sell an under-construction house, which can neither be categorised as land or building, the same becomes long-term, if it is held for more than 36 months on the date of sale. Any short-term capital gain is clubbed with your other income and taxed at the slab rates applicable.

Computation of holding period in case of inheritance or gift

Computing the holding period is simple, if the property is acquired by you. However, if the property is received as gift or as inheritance, it is not from the date on which you became the owner that the holding period is calculated, but the same is calculated from the date on which it was acquired by any of the previous owners who had paid for it. So, if you inherit a property from your father and your father inherited the same from your grandfather, who had purchased it, then, the holding period shall begin from the date on which your grandfather had become the owner of the property.

Computation of holding period for an under-construction property

There are no clear provisions, for calculating the holding period of an under-construction property that you had booked with a builder and which is sold after taking possession. Judicial opinion is also divided on this matter. If the rights in an under-construction house property are transferred before taking possession, the holding period shall be counted from the date of booking. However, if the property is transferred after taking possession, the holding period should be counted from the date on which you took possession, to avoid any litigation. This is because the law does not provide for combining the holding period of an under-construction property with that of a ready house. Before taking possession of the house what you owned was not a house but a right to acquire a house, which is different from the asset – i.e., a house which comes into your possession after completion of construction. However, if such a property is acquired or inherited by you before April 1, 2001, you have the option to substitute the fair market value of the asset, as on that date, for your cost of acquisition.

Computing the cost

All costs like brokerage, stamp duty, registration charges, transfer fees, etc., paid by you with respect to the property being sold, shall be treated as part of the cost. Moreover, any expenditure incurred subsequently, for improvement of the property, is also eligible for deduction as ‘cost of improvement’.

Benefit of indexation

In case the holding period is more than 24 months, you can enhance your cost of acquisition for computing the taxable long-term capital gains, with the help of indexation. Your original cost of acquisition and cost of improvement is indexed with reference to the ‘cost inflation index’, notified by the government for that year. This is based on the 2001 base value of 100 and is notified every year since 2001. So, for assets either acquired during 2001-2002 or for which the fair market value as on April 1, 2001, is taken as the cost of acquisition, the base is 100 and it goes up year after year. For the financial year 2018-2019, it was 280. So, for computing the long-term capital gains, the indexed cost of acquisition of the property is reduced from the net sale consideration. In case the property was acquired after April 1, 2001, the indexed cost of such property is computed by multiplying the original cost of acquisition by the cost inflation index of the year of sale and dividing the same by the cost inflation index of the year of acquisition of the asset.

So, if the house property was purchased in 2001-2002 for Rs 1 lakh and was sold for Rs 5 lakhs on March 15, 2019, the indexed cost for long-term capital gains purpose shall be Rs 2.80 lakhs and the taxable long-term gains shall be Rs 2.20 lakhs. Like your original cost, you are entitled to index your cost of improvement, as well, from the year in which the expenditure for improvement was incurred by you.

An Architectural Marvel of G + 35 Storeys. where luxuries are stirred with Indulgences, the contemporary blends in with Classy and Privacy teams with Connectivity.We Present – ‘Transcon Triumph’ – A Lifestyle for the connoisseurs of art and Apartments in Andheri West that are winners of 4 Asia Pacific Awards that let you feel the finesse and live the Luxury.

Source: https://housing.com/news/how-is-profit-from-the-sale-of-a-house-property-calculated/

Important Rules For NRIs Investing in Indian Real Estate

June 4, 2019 by transcontriumph  

Non-resident Indians (NRIs) have been a significant segment of investors, in the Indian real estate market. NRIs generally buy properties in India for investment purposes or out of their emotional connect with their country and for settling back, once they retire. According to Amit Wadhwani, director of Sai Estate Consultants, India has emerged as a lucrative spot for international capital. “Overseas investments have surged 137 per cent, from USD 3.2 billion during 2011-13 to USD 7.6 billion during 2014-16. According to a survey, almost 30 per cent of the total global real estate transactions in India, will be cross-border,” he adds.

Important FEMA rules that NRIs must keep in mind

In order to attract more foreign investment, the Reserve Bank of India has made the rules simple for NRI investments. Real estate transactions fall under the purview of the Foreign Exchange Management Act (FEMA).

“An NRI or person of Indian origin (PIO), as defined in FEMA, can acquire by way of purchase, any immovable property in India, other than agricultural land/plantation property/farm house. This is under a general permission that has been given by the government of India. However, no person being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan, shall acquire or transfer immovable property in India, other than lease, not exceeding five years, without prior permission of the Reserve Bank,” explains Amarjit Bakshi, managing director, Central Park.

Types of properties where NRIs can invest

An NRI is allowed to invest in both residential and commercial properties in India. However, any agricultural land, farm house and plantation property can be owned, only if it is inherited or gifted to the NRI.

Financial transactions by NRIs

When it comes to property transactions in India, NRIs/ PIO can make payments out of:

Funds remitted to India through normal banking channel.
Funds held in NRE/ FCNR (B) / NRO account maintained in India.
No payment can be made either by traveller’s cheque or by foreign currency notes.
No payment can be made outside India.

Loan eligibility for NRIs

Bakshi elaborates that “Like normal Indian citizens, NRIs/PIOs too can avail of home loans in Indian rupees for their property purchases, up to 80 per cent of the property value, depending upon individual eligibility. Such a loan can be repaid:

By way of inward remittance through normal banking channels.
By debit to his NRE / FCNR (B) / NRO account.
Out of rental income from such property.
By the borrower’s close relatives, as defined in Section 6 of the Companies Act, 1956, through their account in India, by crediting the borrower’s loan account.”

How NRIs are taxed, for profit earned from real estate investments
NRIs can earn returns from their investments in real estate, in the form of rental income and short or long-term gain.

Rental income

The rental income earned from a property asset in India, falls under the income accrued in India and is taxable, irrespective of residential status.

Short-term capital gains

Short-term capital gains apply on the profit earned through the sale of a property, within two years of its purchase. The capital gains for such property are calculated as the difference between the sale proceeds and the cost of acquisition. It is taxed as per the applicable slab rate for the NRI.

Long-term capital gains

Long-term capital gains (applicable when the property is held for more than two years) are taxed at 20 per cent. However, unlike short-term capital gains, exemption can be claimed under sections 54, 54 F and 54 EC.

If an NRI opts for an under-construction property, they may have to give a power of attorney to a trusted associate, for completing the deal. Hiring a lawyer to prepare the document, is also crucial, to ensure that there is no forgery and the investment is secure.

An Architectural Marvel of G + 35 Storeys. where luxuries are stirred with Indulgences, the contemporary blends in with Classy and Privacy teams with Connectivity.We Present – ‘Transcon Triumph’ – A Lifestyle for the connoisseurs of art and Apartments in Andheri West that are winners of 4 Asia Pacific Awards that let you feel the finesse and live the Luxury.

Source: https://housing.com/news/important-rules-nris-investing-indian-real-estate/

Economic Factors To Look At While Buying A Property In Andheri West

June 1, 2019 by transcontriumph  

The satisfaction and feeling of being a proud owner of a Apartments in Andheri west are like any other feeling in the world. Deciding to buy a house is a big commitment. Real estate in Mumbai is soaring and there is more demand than supply as of now. New Projects in Andheri West are coming up, yet finding a property in Mumbai is not so easy. More so, to find a property which suits all your needs is a task. You invest a big chunk of your hard-earned money and hence it is important that you choose a house with care. Flats For sale in Andheri west have increased in number, but it is still a hassle to get that ideal house for oneself. Here we list a few economic factors pertaining to home ownership, which you should consider before you take the final decision to buy a house in Mumbai.

  1. Debt to Income Ratio: This is one factor which you should look at when deciding on the budget for Property in Andheri West. A debt to income ratio or DTI is a percentage of your fixed monthly expenses (debts) divided by your gross monthly income. This ratio helps you evaluate how well you can manage your monthly expenses and how much you can afford to spend and explains whether there is any need of loan or not.
  2. Property Tax: When you decide to invest in a real estate property in 2 bhk flat in Andheri West or a 3 bhk flat in Andheri West, you are bound by property taxes levied by the local government. This is a tax which a homeowner has to pay each year. You need to know everything about property taxes before you sign the dotted line. You can use a property tax calculator and calculate the property tax of the house you are planning to buy. If you do this beforehand, then you get a clear picture of the money you have to spend on taxes.
  3. Closing Costs: Whether it is buying Property in Andheri West or any other property, there are many parties involved until you reach the final point of the home sale process. A closing cost is fees charged by mortgage lenders and third-party service providers for documenting, securing and completing the final transaction of a home sale. While closing a deal you should always check all the documents.
  4. Home Insurance: Home insurance is something every lender will advise you to take. This insurance helps you protect your house from theft, damage from natural calamities, etc.The above are some of the top things, which you should consider while Apartments in Andheri West. Real estate developers in Mumbai are coming up with new New Projects in Andheri West. There are many options from which you can choose but the key is to choose the right house which suits your need and also fits in your budget.

What Can Home Buyers Do, Under RERA, If Agreements Don’t Mention Possession Dates

May 29, 2019 by transcontriumph  

There have been cases galore, where home buyers have faced delays in getting the possession of their flats. In many cases, the delays have been for more than five to six years. Some developers have even gone to the extent of not mentioning the date of possession in the agreement, leading to mental and financial trauma for the home buyers.

While taking a serious note of the issue, the Maharashtra Real Estate Regulatory Authority (MahaRERA), in a recent judgement, directed Skyline Construction Company to refund Rs 1.06 crores, along with an interest of 10.55 per cent to actor Vrajesh Hirjee, for failing to hand over possession and keeping the date of possession clause empty in the registered agreement. The Authority also asked the builder to refund tax deducted at source (TDS) and stamp duty paid by Hirjee. In another case, Aparna Singh, who had purchased a flat in a residential project in Thane, was not able to claim interest relief under Section 18 of the Real Estate (Regulation and Development) Act (RERA) rules, due to the absence of the possession date in the sale agreement. In her case, the RERA tribunal ordered the developer to pay interest to her, even though the date was not mentioned in the agreement.

What is possession date?

The possession date, in case of a home purchase agreement, is the date on which the unit’s possession is to be handed over to the buyer. This date should be clearly mentioned in the agreement and is well-defined under the RERA norms and rules. “The possession date, generally known as completion date, is usually a few months or years from the date of entering into or executing the agreement in favour of the flat purchaser. It is the date when the developer completes the construction work of the building and obtains the requisite permissions from the local body/authority, for permitting the flat purchasers to occupy the same. In other words, it is the date from which the buyer has the right to demand the possession of the flat from the developer,” explains Parth Mehta, managing director of Paradigm Realty.

Factors on which the possession date is decided

The possession date is decided, based on the period involved in carrying out construction work of the building, availability of materials and labour at site and the permissions and approvals to be issued from the concerned authorities. Under the new regulatory regime, it is important as it defines the date on which the home buyer should get possession of the unit, adds Niranjan Hiranandani, national president of NAREDCO (National Real Estate Development Council). “No real estate developer wants to delay his project by not handing over possession on the specified date, as the RERA prescribes penalties for delayed possession. Nevertheless, delays are usually caused by bureaucracy and ‘red tape’, over which the real estate developer has no control. In such cases, the developer may be penalised for no fault of his. Hence, developers are likely to add a generous ‘safety margin’, to ensure that they are not penalised for delays that are beyond their control. If there are no delays, the possession may even be handed over prior to the scheduled date,” he elaborates.

Other factors that determine possession date, are market conditions and availability of cash flow for the project. Industry experts point out that in the event of scarcity of cash flows, the period of construction shall be longer and eventually, the date of possession would be delayed. Adverse market conditions also affect the cash inflows from buyers. Timely payments by flat purchasers, as per the agreed schedule, is of immense importance for completion of the project.

What can a buyer do, if the agreement does not mention the possession date?

The issue, where no exact date for possession is mentioned in the agreement or the absence of a date from which one can calculate the date of possession, has been considered by various courts of law. Sulaiman Bhimani, an RTI activist and president of Citizens Justice Forum, who has been fighting many cases related to this issue says: “This a trick adopted by developers, to escape the laws by not mentioning the date. In the case of Hirjee, the issue has been settled by the real estate authority, even though the date of possession was not mentioned in the agreement. Earlier, there was no clarity on the redressal for these kind of issues. Now, home buyers can approach the consumer court or RERA and file a complaint regarding the promise made by the builder or regarding unreasonable delay.” If the buyer is not satisfied with the order, s/he can challenge it in the appellate tribunal, within 60 days. The next appeal against the order of the appellate tribunal can be filed in the high court of the respective states.

Possession date: Important points for home buyers to consider

The home buyer should look for projects registered under RERA and the draft agreement on the website. This agreement should be checked by an advocate, to verify whether it conforms to the RERA. The buyer should also check the date of possession mentioned in the agreement and the ‘grace period’, if any. Ideally, six months should be the maximum grace period, from the date of possession specified in the agreement. As per the Maharashtra Ownership of Flats Act, 1963 (MOFA), the exact date of possession should be disclosed in the agreement of sale. Consequently, in its absence, in many cases, the deal was declared invalid. A specific clause in the agreement, known as the ‘compensation clause’ can also be included, wherein, in case of failure to finish a project within the date mentioned in the agreement, the developer will be bound to pay a stipulated amount to the buyer every month.

Having the possession date in writing, gives the buyers assurance that the developer will ensure timely delivery as per the agreement and that their investment is safe, maintains José Braganza, joint MD, B&F Ventures (P) Ltd.

“As a first step, the buyer has to do a background check on the builder and physically inspects all documents, especially details about the possession date, before buying any property. The possession date, ideally, should be between two-three years from the inception of the project, regardless of its size,” he concludes.

An Architectural Marvel of G + 35 Storeys. where luxuries are stirred with Indulgences, the contemporary blends in with Classy and Privacy teams with Connectivity.We Present – ‘Transcon Triumph’ – A Lifestyle for the connoisseurs of art and Apartments in Andheri West that are winners of 4 Asia Pacific Awards that let you feel the finesse and live the Luxury.

Source: https://housing.com/news/what-can-home-buyers-do-under-rera-if-agreements-dont-mention-possession-dates/

Stamp Duty: Bombay HC Rules Stamp Duty Cannot Be Charged For Past Transactions

May 23, 2019 by transcontriumph  

The government of Maharashtra, on March 1, 2019, announced an amnesty scheme with respect to the penalty that can be levied for insufficient payment of stamp duty made in the past. The scheme proposes to limit the penalty payable on certain transactions to 10% of the deficient stamp duty, instead of the 400% which can be levied in normal course by the government. The scheme applies to all the transactions of sale or transfer of tenancy rights, of residential houses within Maharashtra and is available only for documents that have been executed on or before December 31, 2018. The application, along with the instrument and supporting documents, has to be made within a period of six months from March 1, 2019, i.e., by August 31, 2019, the period up to which the scheme will remain open.

Years ago, when the prices of properties were not so high and stamp duty was not a major source of income for the state government, there were no clear guidelines on the stamp duty payable on the sale of flats in Maharashtra. However, as property prices soared, state governments realised that stamp duty on the sale/transfer of flats, could bring in substantial revenue to the state exchequer. So, the government prescribed the rate of stamp duty payable on transfer of immovable property.

How is stamp duty calculated

Till July 4, 1980, the stamp duty was required to be paid on the basis of the agreement value. However, due to the rampant use of black money in property transactions, the agreement value used toabysmally low, which deprived the state government of its legitimate dues. To overcome this menace, the Maharashtra government introduced the concept of market value for stamp duty, on July 4, 1980, to augment its revenue and plug the leakage of revenue. On March 1, 1990, the government of Maharashtra introduced the ‘ready reckoner’, to help the buyers to find out the cost of stamp duty on the purchase of a property, in case the agreed value was lower than the stamp duty valuation.

For properties that were bought prior to July 4, 1980, where adequate stamp duty was not paid at that time, the stamp duty office has been collecting the differential stamp duty with penalty, with respect to the past transactions of such properties, as and when such properties are transferred and come for registration with the registration authorities of the government of Maharashtra. This action has caused a lot of stress and cost huge money, to the present buyers of such properties.

The Bombay High Court, recently, had an occasion to decide on this issue and has held that the recovery of stamp duty for past transactions at the time of subsequent sale, is not proper. This decision will bring relief to the buyers of old resale properties.

Recovery of stamp duty on past transactions: Gist of the case
A lady named Lajwanti Randhawa had inherited a posh 3,300-sq-ft apartment in Tahnee Heights Cooperative Housing Society at Napean Sea Road in Mumbai, from her father along with other legal heirs. This apartment was bought in 1979 and an agreement was executed on a stamp paper of Rs 10 then. Back then, an agreement for sale could be executed on a stamp paper of Rs five. This agreement was also not registered.

This flat was auctioned for Rs 38 crores, in 2018. When the buyer, Vijay Jindal, approached the registration office for registration of the documents, the collector of stamps refused to register the new sale agreement pursuant to the auction and demanded stamp duty on the chain of agreements, contending that it was not adequately stamped. The stamp duty alone was around Rs two crores, on the basis of the present ready reckoner rates. As the property was bought through a court receiver auction, the buyer approached the Bombay High Court, to direct the sellers to bear the liability on past stamp duty, as one of the sellers had refused to bear the cost.

Bombay HC decision on the retrospective applicability of stamp duty on past transactions

While deciding the dispute, justice Gautam Patel, took an out-of-the-box stand and held that the stamp duty authorities had no right to collect the stamp duty, for inadequately stamped past documents of any property, at the time of registration of its subsequent sale. Patel observed that the stamp duty was payable with respect to an instrument and not with respect to a transaction, as per the provisions of the Indian Stamp Act.

He also held that stamp duty cannot be recovered at the present rate, with respect to past instruments which were executed at a time when the instrument was not liable for stamp duty, as these documents could not be treated as ‘unstamped’ or ‘inadequately stamped’ at the relevant time. He also observed that as there were no clear cut provisions in the law, about the recovery of stamp duty retrospectively, the stamp duty authorities have no authority to insist on payment of stamp duty on such past instruments that formed part of the chain of documents.

The court also observed that even if the instrument was subject to stamp duty, the rate to be applied would be the rate at which the relevant document was to be stamped and in no case can the same be required to be stamped at current stamp duty rates.

Present buyer not liable to pay stamp duty on past transactions
This decision has brought clarity and will help the buyers of old flats on which adequate stamp duty was not paid in the past. This will benefit lakhs of flat buyers while buying old properties, as there are many properties on which adequate duty was not paid at the time of their purchase.

If one reads the decision carefully, one will find that even in case the old instrument was executed when stamp duty was payable butwas not paid, the present buyer cannot be burned with the additional cost of stamp duty, for old ‘unstamped’ or ‘not adequately stamped’ deals.

This decision has also clarified that the arrears of stamp duty, even if is required to be paid, has to be paid with respect to the rate applicable at the time of execution of the old document and not at the rates applicable at the time of its subsequent sale. So, effectively, the stamp duty authorities cannot refuse to register the agreement for properties being purchased now under resale, even in cases where the earlier instrument/agreement was unregistered or not properly or insufficiently stamped as per the prevailing rate at the relevant time.

An Architectural Marvel of G + 35 Storeys. where luxuries are stirred with Indulgences, the contemporary blends in with Classy and Privacy teams with Connectivity.We Present – ‘Transcon Triumph’ – A Lifestyle for the connoisseurs of art and Apartments in Andheri West that are winners of 4 Asia Pacific Awards that let you feel the finesse and live the Luxury.

Source – https://housing.com/news/stamp-duty-bombay-hc-rules-stamp-duty-cannot-charged-past-transactions/

GST Council Extends Deadline For Realty Firms To Opt For Old GST Rate Till May 20

May 15, 2019 by transcontriumph  

The GST Council, headed by Finance Minister Arun Jaitley and comprising state counterparts, had in March allowed real estate players to shift to 5 percent GST rate for residential units and 1 percent for affordable housing without the benefit of input tax credit (ITC) from April 1, 2019.
New Delhi: The GST Council Thursday extended by 10 days till May 20 the deadline for realtors to opt for old GST rates with input tax credit for ongoing projects or shift to new lower tax rates.
The GST Council, headed by Finance Minister Arun Jaitley and comprising state counterparts, had in March allowed real estate players to shift to 5 percent GST rate for residential units and 1 percent for affordable housing without the benefit of input tax credit (ITC) from April 1, 2019.
For the ongoing projects, builders have been given the option to either continue in 12 percent Goods and Services Tax (GST) slab with ITC (8 percent for affordable housing), or opt for 5 percent GST rate (1 percent for affordable housing) without ITC and communicate to their respective jurisdictional officers the same by May 10.
“The date for exercising the option for residential real estate project to either stay at old GST rate (8 percent or 12 percent with ITC) or to avail new GST rate (1 percent or 5 percent without ITC) is being extended to May 20, 2019 from May 10, 2019,” the GST Council said in a tweet.
The Central Board of Indirect Taxes and Customs (CBIC) has given the real estate companies a one-time option to choose either of the tax rates and once a realty developer chooses a particular tax rate for ongoing projects he would not be able to modify it.
In case, realtors do not exercise the option by May 20, they will be covered under the lower tax rate of 5 percent and 1 percent with effect from April 1, 2019, and will not be entitled to avail tax credit on inputs.
AMRG & Associates Partner Rajat Mohan said builders are still under the process of calculating the cost benefit analysis in relation to tax change scenario.
“Builders were facing challenges in finalising the roll over scheme to the new tax regime and in the light of new circular on this matter, government in good faith has increased the date for opting,” he added.

An Architectural Marvel of G + 35 Storeys. where luxuries are stirred with Indulgences, the contemporary blends in with Classy and Privacy teams with Connectivity.We Present – ‘Transcon Triumph’ – A Lifestyle for the connoisseurs of art and Apartments in Andheri West that are winners of 4 Asia Pacific Awards that let you feel the finesse and live the Luxury.

Source - https://zeenews.india.com/real-estate/gst-council-extends-deadline-for-realty-firms-to-opt-for-old-gst-rate-till-may-20-2202319.html

Mumbai Realty Sector Gives Thumbs Down to RBI Repo Rate Hike

May 9, 2019 by transcontriumph  

The city’s real estate sector has expressed disappointment over the repo rate hike announced by the Reserve Bank of India (RBI), saying it will adversely affect already slowing sales in Mumbai.

This 25 basis point hike by RBI comes just after the state government’s announcement of an additional 1% surcharge on stamp duty for realty deals.

Both builders and realty experts said that this move will increase interest rates on home loans as well as on EMIs (equated monthly instalments) for those who have already availed home loans.

”Sales will surely be impacted with the hike in repo rate. Buyers will also push further their decision to purchase low ticket size homes,’’ Samyak Jain, director of Siddha Group. Dhaval Ajmera, director of Ajmera Group, said, “This move will further dampen the already low spirits of the real estate sector, making home loans more expensive for potential seekers.”

Though there has been an increase in the number of launches by 128 % this year in the Mumbai Metropolitan Region (MMR) market, realty sales have remained stagnant. Homebuyers are currently being very cautious while both builders and experts have been critical about authorities not easing the situation and in fact, aggravating it despite the ambitious goal of ‘Housing for all by 2022’ by the Centre.

“The various initiatives implemented to make the housing scheme a success will go through a doomed phase due to raised rates, making the overall real estate market more expensive than ever,” said Amit Wadhwani, managing director of Sai Estate Consultants Chembur Pvt Ltd.

Repo rate is the interest that banks pay when they borrow money from the RBI to meet their short-term fund requirements.

In the last few years, the real estate sector was faced with massive slowdown with a fall in both new launches and sales. The builders priced the apartments at exorbitant prices, forcing many buyers to postpone their plans. In addition, the RBI imposed stringent conditions for availing loans. The high-interest rates on home loans only aggravated the situation further. However, the interest rates have started coming down in recent times.

An Architectural Marvel of G + 35 Storeys. where luxuries are stirred with Indulgences, the contemporary blends in with Classy and Privacy teams with Connectivity.We Present – ‘Transcon Triumph’ – A Lifestyle for the connoisseurs of art and Apartments in Andheri West that are winners of 4 Asia Pacific Awards that let you feel the finesse and live the Luxury.