Tips For Starting a Small Business From Home

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Tips For Starting a Small Business From Home

For many start-ups and small businesses, other than the operational cost, the real estate cost proves to be a major impediment in the intended growth. Thus, a number of small businesses are often run from residential areas. Consultants, advocates, doctors, etc., run their work from their homes. While converting a house premise into an office can help one to save on real estate cost, there are other permissions and expenses that one incurs while doing so.

What does ‘commercial’ mean?

Legally, consultants, advocates and doctors can run their business from their house.

In a case filed under the Karnataka Shops and Commercial Establishments Act, 1961, the court had clarified that home offices run by chartered accountants, lawyers and doctors, will not be considered as a commercial activity as the work involves intellectual exercise and not physical labour. Running yoga classes or tuition classes from home, will also not be counted as a commercial activity, because the services rendered by the said professionals will not be categorised under sale and purchase of goods.

However, there is a difference between running an office from your residential premise and running a commercial business from your home. “The said practice of running an office from a residential apartment is widely accepted in different parts of the country. In Mumbai, an area of 220 sq ft in a residential apartment can be used for commercial activities. This set-up has also become popular in Delhi, owing to the increase in practice of ‘intellectual’ professions – for example, doctors, lawyers, tuition centres, etc.,” explains Ekank Mehra, a New Delhi-based lawyer practicing in the Supreme Court.

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If you are in any profession, other than the ones mentioned above, you can still run your office, adds Mehra. “However, when there is a movement of goods from the residential premise, or if the premise is being used as a godown, the activity turns into a commercial one. This would require approvals/ licences from local municipal offices and other related authorities, such as the fire department and the local police station,” he elaborates.

How can you convert your home into an office?

You need to first inform your residents’ welfare association (RWA). This is a must if the business involves movement of goods and storage. In case you are put up in a rented accommodation, you will need to seek permission from your landlord in addition to the RWA.

While working from your own office is more cost-effective, the work may happen at a relaxed pace. On the flipside, a house address may not be very convenient for a client meeting. Other disadvantages of having an office in a residential premises, may include the absence of outlets that serve food, sitting area, and other basic infrastructure. “Issues with vehicular movement and parking may also pose hurdles,” points out Manisha Singh, an independent Delhi-based company secretary, who started a small consulting business around three years ago. Singh took written permissions from the RWA, to open her office at home and for an extra designated parking.

Any change of address at a later stage, may also involve documentary and regulatory procedures.

Moreover, in case the activity is deemed commercial, your house will incur a property tax applicable on commercial properties. Even the water and electricity charges will be levied on the basis of a commercial property.

There may also be associated renovation costs that you will incur, to give your house an office environment.

Can Adopted Child Claim Right In Biological Father’s Property?

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Can Adopted Child Claim Right In Biological Father’s Property?

Mumbai-resident Nandgopal Radhakrishnan had three sons, Nikhil, Anay and Vivek and a daughter, Manjula. Since his best friend Ashok Kumar was childless, he decided to give his eldest son Nikhil in adoption. In the course of time, Radhakrishnan’s two sons passed away and he married off his daughter.

When it was time for Radhakrishnan to give his moveable and immoveable assets to his only daughter, Nikhil threw spanner in the works to claim his share. He filed a partition suit but lost the case. MakaaniQ tells you why Nikhil’s contention didn’t hold much water.

According to Hindu Adoptions and Maintenance Act, 1956, after adoption, the adopted son/daughter lose all the rights of a son/daughter in their biological family, including the right to claim any share in the estate of the biological father or relations, or any stake in the coparcenary property. The only exception where an adopted child is not entitled to the full rights of a biological child in the adoptive family were if he/she was adopted by a disqualified heir.

The child is entitled to inherit from his adoptive father and other lineal descendants, like a biological heir. At the same time, the adoptive father and his relations too are entitled to inherit from the adopted boy. A child can only be adopted if he/she is Hindu, not previously adopted, unmarried and has not turned fifteen yet.

The property rights of an adopted son/daughter are limited only to inherit the property of his/her adoptive parents. But, at the same time, if the natural parents want to give their property to their natural child, they may do it by way of gift or will.
Thus, it can be inferred that for all intents and purposes, the adopted child is treated like a biological child into the family into which he/she has been adopted and is considered the descendant of the family.

Investing in Land Prospects and Consequences

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Investing in land: The pros and cons

Land as an investment option has always been popular in India. Its popularity has not receded, despite the availability of various financial products such as mutual funds and equity shares. However, you should be aware of all the pros and cons of investing in land.

Limited supply

Other than a few reclamation cases, the supply of land is limited and the possibility of creating more, is quite impossible. Due to its limited supply and the ever-increasing need, the demand for land has only been going up. However, this continuous demand has ensured that the price of land hasn’t experienced volatile changes like with other assets like gold and equity.

See also: Why you Should Thoroughly Read your Builder-Buyer Agreement

Big ticket and illiquid investment

The amount of money required to invest in land is substantial. Those with less savings, cannot afford to invest in land. Instead, they should opt for financial assets such as units of mutual funds, shares, recurring deposits or even gold. Moreover, investment in land is relatively illiquid and you cannot dispose of this investment as and when you want to encash it. In some cases, the time taken for the sale to actually happen, may run into years, thus, defeating the purpose of making the investment in the first place.

Risk of acquisition and encroachment

We have all come across stories of encroachment of land causing investments to sink. In some scenarios, your legal right over the land gets jeopardised, resulting in litigation and unnecessary legal costs. These auxiliary expenses can sometimes outweigh the appreciation in the value of your land. There’s also the risk of the land being taken over by the government by way of compulsory acquisition. The compensation received, may not always be satisfactory. A prime example of such a scenario is the acquisition of land in the Noida Extension case.

Non-availability of finance

In order to buy or construct a house, loan seekers can only get up to 80% of the value of the property. In case you want to construct a property on a plot of land, you can get a composite loan covering the cost of the plot and cost of construction. However, no bank will generally lend money to buy a plot of land, unless the same is purchased from an endorsed and reputed government development authority like DDA or MHADA.

Tax benefits

In the event of a home loan, you can claim tax benefits with respect to interest payment as well as principal repayment, under Section 24 and 80C of the Income Tax Act. No such provision exists for the interest paid on money borrowed for investing in land.

Noida Oks Exit Policy To Rescue Realty Projects

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NOIDA: The three development authorities in Gautam Budh Nagar cleared the long-awaited exit policy for realtors struggling to complete projects in Noida and Greater Noida and approved a series of measures to protect the interests of homebuyers. Primary among those is an escrow account that will monitored by the Noida and Greater Noida Authorities that will be used to finish housing projects running behind schedule.

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The Project Settlement Policy, which all these new measures are a part of, has been sent to the state government for approval and will come into force once it gets the green signal, which is only a matter of time.

Noida Authority chairperson Rama Raman said once the state government’s approval comes, developers will have to open the escrow account”. “The account will be for each project of each builder and will be applicable to all the three authorities in Gautam Budh Nagar (Noida, Greater Noida and YEIDA). It will be operated by the builder and the representative of buyers in that project jointly,” he explained.

The exit policy has been chiefly designed for four scenarios that most affect homebuyers and real estate companies in the twin cities.

Scenario 1: If a realtor has been allotted land but hasn’t started construction or created third-party rights, which means the right to sell to buyers. “The project will be cancelled and the realtor can surrender the land to the Authority. But the realtor will have to forfeit 30% of the amount paid to the Authority,” Raman said. If third party rights have been created, the remaining 70% will be returned to buyers, explained Deepak

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Agarwal, CEO of the Greater Noida Industrial Development Authority. “The amount returned to the buyer

will be the initial amount paid without interest. If there is an agreement between the builder and buyer on the interest amount, it will have to be borne by the builder,” he added.

Scenario 2: If a builder has completed a project but is unable to procure a completion certificate. The realtor will be provided with a rescheduled payment policy for dues against the land cost. The time-limit for this policy will be decided by the UP government within a month. “In cases where buyers are unable to register their properties, builders have to deposit 10% of the amount due (instead of the current 25%).

Buyers can then register their properties and execute lease deeds,” Agarwal said.

Scenario 3: If a builder has launched a project on a part of the land allotted and the rest is lying unused. The realtor will have to forfeit 15% of the amount deposited with the Authority and will be allotted land proportionate to the remaining amount. This will mean a builder can retain only that portion of the land where a project has been launched. The Authority will take back the rest.

Scenario 4: If a realtor needs a partner to finish a project. “Builders can take on board a co-developer to rescue sick realty,” Agarwal explained. “If builders have leftover floor area ratio (FAR) in their projects, they will be allowed to sell it to co-developers, who will complete the project. Proceeds from the sale will be deposited in an escrow account and used to pay off home buyers.”

Agarwal said the purpose of the policy was not to bail out builders but redress home buyers’ problems. “The idea is to break the deadlock which has been created between the builders and buyers so that buyers can take possession of their long due houses or get their hard-earned money back,” he said.

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Amit Modi, vice-president (western UP) of realty body Credai, said, “The exit policy is a positive step in resolving the stalemate in the group housing sector.”

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