Price-monitoring Structure Under GST In The Pipeline

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Price-monitoring Structure Under GST In The Pipeline

The government is considering a price-monitoring mechanism under the proposed goods and services tax (GST) to ensure that the multiple benefits of the landmark reform are passed on and head off any unwarranted price shocks. States are also keen to ensure that the effects of GST provide a demand push to the economy.

“A mechanism will be put in place to keep a tab on prices,” said a senior official aware of deliberations before the GST Council meets later this week to decide on key issues, including the tax rate.

The government is keen to put GST in place on April 1, 2017. The incidence of tax on goods is expected to fall sharply under GST, widely seen as India’s biggest reform since independence.

It will replace multiple central and state taxes, creating a national market. GDP growth is expected to get a boost of up to 2 percentage points from the reform with the bulk of benefits going to industry that will see logistics costs and taxes decline.

The government wants to guard against profiteering by companies that will benefit from seamless input credit or tax on tax. This was among the points raised by some members of the empowered committee of state finance ministers at its last meeting.

Tax experts said a price-monitoring system without legislative backing may not be effective but suggested additional compliances that could be imposed.

“The government clearly wants to ensure that GST does not lead to price increase and inflation. However, I am not sure if any price monitoring system would be effective, particularly if it does not have legislative backing,” said Siddharth Mehta, partner, PwC India.

He said this could lead to complicated compliance paperwork and avoidable disputes between government and industry and the former should instead ensure that the GST rate is moderate and credit system smooth.

LOW TAX RATE

The implementation of GST in some countries fuelled inflation and the government is keen to prevent a similar situation by starting with a low tax rate.

ET view: Broaden the Tax Base

A price monitoring mechanism is fine. But the government should desist frequent tinkering of rates to grant sector specific sops. Some experts favour setting GST rates low to start with. The other option is to have multiple rates. This makes eminent sense and will work in India just as in the EU where VAT rates vary across member states. Including large chunks of the economy in the tax base and keeping sops to the minimum will help lower GST. A wider base gives leeway to lower GST that allows credit for input taxes paid across the value chain, makes production efficient and lowers retail prices.

Punjab abolishes 2% Stamp Duty Tax

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CHANDIGARH: With a view to boost the real estate sector, the Punjab Cabinet decided to abolish the stamp duty of two per cent levied on immovable property while awarding the power of attorney.

A decision to this effect was taken by the Cabinet in a meeting held under the chairmanship of chief minister Parkash Singh Badal here.

Speaking on the matter, a spokesperson of the chief minister’s Office said the decision would be a major relief for people aspiring to buy their own houses.

The stamp duty would now be a nominal Rs 1000 on the General Power of Attorney and Rs 500 on Special Power of Attorney, irrespective of the market value.

In another major decision, Cabinet decided in principle to offer the proprietary rights under concessional terms and conditions to the small and marginal agricultural farmers cultivating up to five acres of provincial government agricultural land.

These tillers who have been cultivating government land for at least 20 years would be entitled to allotment at significant discount from the collector rates.

The Cabinet also gave nod for appointing Senior Vice President in the various boards and corporations from among the non-official members.

Following this decision, the Cabinet approved the creation of post of Senior Vice Chairman in Punjab State Board of Technical Education and Industrial Training and Punjab Khadi & Village Industries Board.

It was also decided in the meeting to constitute a Cabinet sub committee comprising Food and Civil Supplies Minister and Finance Minister to negotiate with banks for a lower rate of interest on previous loan accounts.

The Cabinet also approved the proposal mooted by the local government department to make suitable amendment in the Punjab Municipal Act, 1911 and the Punjab Municipal Corporation Act, 1976 for the disposal of Municipal properties under possession of occupiers for a period of twenty years or more.

In the meeting, the Cabinet also decided to make amendments in the rates of property tax of hotels in the urban areas from the year 2015-16 by including this type in the category of commercial property.

Benefits of Registering Property in Wife’s Name

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Benefits of Registering Property in Wifes Name

There are several benefits to buying a property in a woman’s name, either as the sole owner or as a joint owner, with governments and banks offering several sops.

“Aspiring home buyers can seek certain benefits including tax exemptions, if a home is bought in a woman’s name. Such offers can also attract more women buyers to the realty sector,” points out Ashok Mohanani, CMD, Ekta World. Encouraging women to register assets in their name, also boosts women’s empowerment, he adds.

Tax benefits

Experts explain that some of the obvious tax benefits of buying a home in the wife’s name, include an extra deduction of interest up to Rs 1.5 lakh every financial year, if the house is self-occupied. If a husband and wife are the joint owners of a property and if the wife has a separate source of income, then they can both claim tax deductions individually. The tax benefit will depend on the ownership share of each co-owner.

Discount on stamp duty charges

Several state governments in north India are now offering a partial waiver on stamp duty, for buyers registering properties in a woman’s name – either as a sole owner or as a joint owner.

“You can save 1%-2% on stamp duty, if the property is in a lady’s name. In Delhi and Haryana, the stamp duty rate is 4% for women, compared to 6% for men. Moreover, if you are undergoing some financial setback and have some debts to repay, the property held in your wife’s name, does not come under the cover for your loss,” points out Sushil Raheja, CEO of Raheja Homes Builders & Developers.

 

Stamp duty charges for Women Vs Men

State/UT For Women For Men
Delhi 4% 6%
Haryana 3% to 6% up to 7%
Rajasthan 4%* 5%

* As 1% rebate over normal rate

Discount on home loan interest rates

Many banks like SBI, ICICI and HDFC Bank, offer discounted rates on home loans for women borrowers. The prevailing interest rates for women borrowers are as mentioned below:

Interest rate for woman borrower Vs others

Bank Interest for Women borrower Interest Rate for others
SBI 9.35% 9.40%
ICICI 9.40% 9.45%
HDFC Bank 9.40% 9.45%-10.45%

Note: For amount < Rs 1 Cr

Things to keep in mind when buying a home in the wife’s name

Experts maintain that it is a good idea to buy a home in the name of one’s wife or in co-ownership. However, the wife can enjoy the tax benefit, only if she has a separate and genuine source of income. Moreover, if there is any legal dispute on the property, then both, the husband and wife, will be involved in the case. Therefore, home buyers should evaluate all possibilities, before making a final decision.

TDS on Purchase of Property From Builder

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TDS on Purchase of Property From Builder

In order to check the rampant use of black money in immovable property transactions, the government of India has introduced a law, wherein, the purchaser of a property has to deduct tax at source, while paying the seller for his property.

Properties that are covered

Section 194I A of Income Tax Act, requires a buyer to deduct tax at the rate of 1% of the sale consideration, if the value of the transaction is Rs 50 lakhs or more. This section covers residential property, commercial property, as well as land. However, transactions pertaining to the purchase of agricultural land, are not covered under this provision.

When to deduct the TDS and how to pay it

The purchaser of the property has to deduct the TDS, either at the time of executing the conveyance deed, or at the time of payment of advance in case any advance is being paid before the execution of the conveyance deed. The buyer has to deposit the TDS amount to the credit of the central government, within 30 days from end of  the next month in which the tax is so deducted. For payment of the TDS and furnishing other particulars, you have to fill in Form-cum-challan No 26QB. If a property has more than one buyer and/or seller, you need to fill in separate Form 26QB for each set of buyer and seller. The details of all buyers and sellers, have to be submitted in each Form 26QB.

See also: 

Details required for payment of the TDS

It is the buyer who has to comply with the requirement of deducting TDS and paying the amount to the central government. Detailed instructions for filling up the form and payment of tax can be found at the following link: http://www.incometaxindia.gov.in/Pages/tds-sale-of-immovable-property.aspx

Generally, every person who is responsible for deducting TDS has to obtain a TAN (tax deduction account number). However, in case of TDS on immovable property, the buyer does not have to obtain the TAN. You need to provide details like name, address, PAN, mobile number and email id of the seller as well as buyer, in Form 26QB. You also need to provide the complete address of the property, along with the date of agreement, total value of consideration, date of payment, etc.

The buyer should ensure that the PAN of the seller is correct. Otherwise, the seller will not be able to get the credit for tax deducted by the buyer, as the credit shall flow on the basis of PAN card details furnished in Form 26QB.

The TDS can be paid online or deposited offline, by tendering the physical challan to an authorised bank. The bank will then update the details on the income tax department’s website. Once the TDS has been deposited, the buyer has to download the TDS certificate in Form No 16B, from the website of the Income Tax Department and furnish it to the seller within 15 days.

Lower deduction or nil deduction of TDS

Some TDS provisions provide for the payee to either approach the income tax officer for issue of a certificate, so that the payer shall deduct tax at a lower rate or nil rate, or in some cases the payee can just furnish a declaration for nil TDS. However, there is no such provision for TDS on immovable property. The buyer has to mandatorily deduct tax at source, where the consideration exceeds Rs 50 lakhs, in respect of each set of buyer and seller.

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