BUDGET 2018 MUST DELIVER!

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Union Budget 2018 will be very crucial, especially for real estate sector, as it would be the last full budget before the Modi government faces re-election in May 2019.

The Modi government introduced a series of reforms, with Real Estate Regulation Act (establishing a regulator, RERA, in each state and UT) and Goods and Services Tax (GST) focused on reviving the real estate sector in particular and the economy in general.

These two measures have brought in transparency and opened up the sector as a secure investment asset class for institutions and individuals alike.

At the same time, the government defined the affordable housing segment clearly to give benefit to the sector. Subsidy under Prime Minister Awas Yojana (PMAY) and tax benefit to developers in construction of affordable housing under Section 80IBA have revived the affordable segment of the sector.

But the sector is still languishing and requires a push at the policy level, a number of consultants like JLL India, ICRA, Grant Thornton, RICS, Naredco (National Real Estate Development Council), and developers have said.

All these reforms in last couple of years have given a solid platform for the real estate sector to perform and contribute to the GDP in a significant manner, but further tweaks in existing laws and additional incentives can give the necessary fillip to the sector to grow faster, NeerajSharma, director of Grant Thornton, said.

The expectation from the forthcoming Union Budget is multifold: Increase the demand and supply, so that the country can realize PM Modi’s dream programme of “Housing for all by 2022”.

Provide additional money in the hands of tax payers, the customers, and make the processes in real estate more seamless and quicker.

Make the real estate attractive for both kinds of customers – those who aspire to buy their first house and those who view it as an attractive investment class.

BUDGET 2018 MUST DELIVER!

As shown in the chart on page1, consultants say that the government should use the sector not only to revive the economy, but also to incentivize individual investments in creating wealth.

ICRA said that expansion of the income tax deductions available to homebuyers can be used to incentivize them, especially the first-time buyers.

MrinalKumar, partner in Shardul Amarchand Mangaldas, said they expect the government to enhance the deduction against the interest paid on home loan taken to buy a house, from the existing cap of Rs 2,00,000 per annum, in Budget 2018.

They also say that the deduction against the interest paid on the home loan taken to invest in the housing sector should be allowed on the actual basis; especially in a market where return on capital from rentals of a residential property is around 2%, tax incentive must be given to promote investment in the sector.

With the floating, young working population on the rise, the requirement for rental housing would increase in the times to come.

WHY A HOME LOAN IS NOT A BURDEN

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claim-tax

Home is where the heart is. It is everyone’s dream to own a home, but the burden of EMIs also plays on the mind. Read more to know how the tax benefit on Home Loan can ease your outflow.

Home Loan Interest Deduction permits taxpayers who own their homes to reduce their taxable income by the quantity of interest paid on the loanwhich is secured by their principal residence. In other words, the outflow of EMIs itself gives you a tax benefit. In fact, from financial year 2014-15, the limit on the amount that you can claim as interest on your home loan deduction has been increased to INR 2 lakh.

Let’s understand the steps you need to take to claim this deduction.

Step 1: GET HOLD OF IMPORTANT DOCUMENTS

  1. Ownership details of the property – You need to be an owner or a co-owner of the property to claim this deduction. The amount of deduction you can claim is based on your share in the property.
  2. Completion of construction or date of purchase of the property – The deduction for interest can be claimed to start the year in which the construction of the property is completed. You can also claim pre-construction interest, which is allowed in 5 equal installments starting from the year in which the house is purchased or the construction is completed.
  3. Borrower Details – You should be the primary or a co-borrower of the Home Loan.
  4. certificate from the bank which displays your interest and principal details.
  5. Municipal taxes paid during the year

Step 2: SUBMIT THESE DOCUMENTS TO YOUR EMPLOYER

  • If you claim interest on Home Loan Deduction, your employer will adjust your TDS deductions accordingly. Do make it a point to inform your employer.
  • You are not required to submit these documents to the Income Tax Department.

Step 3: CALCULATION OF INCOME FROM HOUSE PROPERTY

In a case of a self-occupied house property, the amount of deduction is limited to INR 2 lakh. However, for a let out house property, there is no limit on the amount of interest you can claim as a deduction. But from FY 2017-18 onwards, the deduction for home loan interest on let out property is also limited to the extent to which loss of such house property does not exceed INR 2 lakh.

Here are the steps to calculate your income from House Property

Gross Value of the property (nil in case of Self Occupied Property and Rental Value if rented)

  • Municipal Taxes actually paid
  • Standard Deduction (30% of Net Annual Value)
  • Deduction for interest on home loan

= Income from House Property

You can also use the Income Tax Calculator

Step 4: CLAIM INTEREST ON HOME LOAN DEDUCTION AND PRINCIPAL REPAYMENT

In case there is Principal Repayment by you during the year (check your loan installment details), principal repayments are allowed to claim interest on home loan deduction under Section 80(C). However, the total amount allowed to be claimed under section 80(C) is capped at INR 1.5 lakh.

Property Registration transactions in Indian Law

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Property Registration transactions in Indian Law

The law of registration of documents is contained in the Indian Registration Act. This legislation provides for the registration of various documents, to ensure conservation of evidence, prevention of fraud and assurance of title.

Documents of property requiring mandatory registration

As per Section 17 of the Registration Act, 1908, all transactions that involve the sale of an immovable property for a value exceeding Rs 100, should be registered. This effectively means that all the transactions of sale of immovable property have to be registered, as no immovable property can be purchased for merely Rs 100. Additionally, all transactions of gift of an immovable property, as well as lease for a period exceeding 12 months, are also mandatorily required to be registered.

In special cases, when a party to the transaction cannot come to the sub-registrar’s office, the sub-registrar may depute any of its officers to accept the documents for registration, at the residence of such person. The term ‘immovable property’ includes land, buildings and any rights attached to these properties.

See also: Stamp Duty and Registration Charges Income Tax Exemption

Procedure and documents required

The property documents that need to be registered, should be submitted to the office of the Sub-Registrar of Assurances within whose jurisdiction the property, which is the subject matter of transfer, is situated. The authorised signatories for the seller and the purchaser, have to be present along with two witnesses, for registration of the documents.

The signatories should carry their proof of identity. The documents that are accepted for this purpose, include Aadhaar Card, PAN Card, or any other proof of identity issued by a government authority. The signatories also have to furnish the power of authority, if they are representing someone else.  In case a company is party to the agreement, the person representing the company has to carry adequate documents, like power of attorney/letter of authority, along with a copy of the resolution of the company’s board, authorising him to carry out the registration.

You need to present the property card to the sub-registrar, along with the original documents and proof of payment of stamp duty. Before registering the documents, the sub-registrar will verify whether adequate stamp duty has been paid for the property, as per the stamp duty ready reckoner. In case there is any deficit in the stamp duty, the registrar will refuse to register the documents.

Time limit and fee payable

Documents that have to be mandatorily registered, should be presented within four months from the date of their execution, along with the requisite fee. In case the time limit has expired, you can make an application to the sub-registrar for condonation of the delay, within the next four months and the registrar may agree to register such documents, on payment of a fine that may be up to ten times the original registration fee. The registration fee for property documents is 1% of the value of the property, subject to a maximum of Rs 30,000.

Earlier, the documents that were presented for registration, would be returned to you after a period of six months. However, with computerisation of the offices of the sub-registrar, the documents (bearing the registration number and proof that the documents have been registered by the registrar) are scanned and returned to you on the same day.

Impact of non-registration

Failure to register the purchase agreement of a property, could put you at a huge risk. Any document that is mandatorily required to be registered but is not registered, cannot be admitted as evidence in any court of law.

Examining A Muslim Woman’s Right To Property

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Article 14 of the Indian Constitution mandates equality among all its citizens. With the interesting interplay of socio-legal forces, Hindus, Muslims and Christians in India are governed by their respective personal laws – which includes property rights as well. As Muslims in the country do not have codified property rights, broadly speaking, there are governed by either of the two schools under the Muslim law – the Hanafi and the Shia. In India, a large number of Muslims are Hanafis or Sunnis. While the Hanafi school recognises only those relatives as heirs whose relation to the deceased is through a male. This includes son’s daughter, son’s son and father’s mother. The Shia school, on the other hand, favours no such discrimination. This means that heirs, who are related to the deceased through a female are also accepted.

A few general rules of inheritance for women are:

The daughter

Under the Muslim law, the laws of inheritance are rather strict. In keeping with its ideology that a woman is half the worth of a man, a son takes double the share of a daughter. But the daughter is the absolute owner of whatever property she inherits. If there is no brother, she gets half a share. It is legally hers to manage, control, and to dispose off according to her wishes.

She is eligible to receive gifts from even from those she would inherit from. This is contradictory because she can inherit only one-third of the man’s share but can get gifts without any hassle.

Till a daughter is not married, she enjoys the right to stay in her parents’ house and seek maintenance. In case of a divorce, charge for maintenance reverts to her parental family after the iddat period (approximately three months) is over. But, if her children are in a position to support her, the responsibility falls on them.

The wife

In the famous Shah Bano case, the Supreme Court had held that in case of a divorce, it is the responsibility of the husband to make reasonable and fair provision to maintain his former wife even after separation under Section 3 (1Ha) of the Muslim Women (Protection of Rights on Divorce) Act, 1986. This period extends beyond iddat as the woman retains control over her goods and properties.

In the event of the death of her husband, a widow gets the one-eighth share (when there are children) but will get one-fourth share (if there are no children). If there is more than one wife, the share may diminish to one-sixteenth.

The mother

A Muslim mother is entitled to inheritance from her children, if they are independent. She is eligible to inherit one-sixth of her dead child’s property if her son is a father as well. In the absence of grandchildren, she would get the one-third share.

What more?

There are other provisions, too, in the law which ensure financial security of a Muslim woman.

 The maher (entitlement)

This is the total money or property that a wife is entitled to get from her husband at the time of marriage. There are two types of maher: prompt and deferred. In the former case, the amount is given to the wife immediately after marriage; in the later, the amount is given to the wife when her marriage has ended, either upon the death of her husband or by divorce.

The wasiyat (will)

A Muslim cannot give away more than one third of his/her total property through a will. In circumstances where there are no heirs in the estate as prescribed by law, the wife may inherit a greater amount by will.

The hiba (gift)

Under the Muslim law, any type of property may be given as a gift. For a gift to be valid, a declaration of the wish to make the gift must be made which should be accepted by the receiver.

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