RENTAL INCOME ON PROPERTY INVESTMENT


THE RENTAL INCOME FROM THE INVESTMENT IN PROPERTIES (BUILDINGS-CONSTRUCTED) IN BANGALORE IS AS UNDER:

RESIDENTIAL: 2% TO 6% ANNUAL RETURNS.

COMMERCIAL:1% TO 10% ANNUAL RETURNS.

INDUSTRIAL: 1% TO 4% ANNUAL RETURNS.

THE RETURNS ARE ON AN FIVE YEAR AVERAGE, DOES NOT INCLUDE MUNICIPAL TAXES, EXPENSES TOWARDS REPAIRS AND MAINTENANCE, SERVICE TAX AND INCOME TAX.

BUT, THE APPRECIATION IN THE ASSET VALUE ON THE PRESENT MARKET TREND (AVERAGE FOR THE LAST 5 YEARS) IS 1% TO 10% IN RESIDENTIAL, 1% TO 10% IN COMMERCIAL AND 1% TO 4% IN INDUSTRIAL PLOTS, RESPECTIVELY.

REAL ESTATE REGULATION – A REALITY


THE CABINET ON TUESDAY CLEARED THE MOST SOUGHT AFTER REAL ESTATE(REGULATION AND DEVELOPMENT) BILL 2013, SEEK TO SET UP THE REGULATOR IN EVERY STATE TO PROTECT THE INTERESTS OF THE BUYERS AND TO ENSURE FAIR PRACTICES IN THIS SECTOR.

REGISTRATION EXPENSES MAY GO UP SOON FOR PROPERTIES IN KARNATAKA


THE STATE GOVERNMENT MAY REVISE THE GUIDELINE VALUES OF THE PROPERTIES AND MIGHT INCREASE THE STAMP DUTY ON THE REGISTRATION OF PROPERTIES IN KARNATAKA, VERY SOON.

The all new – The land Acquisition, Rehabilitation and Resettlement Bill 2011


The Land Acquisition, Rehabilitation and Resettlement Bill 2011, seeks to strengthen the rights of landowners during acquisition of land for development and ensure proper rehabilitation and compensation for those being displaced. It also seeks to address problems of industry when land is acquired for setting up projects.

The Land Acquisition Bill will finally be tabled in Parliament in the second half of the Budget Session beginning on Monday. In an all party meeting, there was a consensus among them and have agreed to keep the land mafia out and have agreed to veto the bill in the forthcoming session with modifications.

1). The bill allows the states to enact/amend their own law to suit the state`s needs.

2). 50% of the compensation must be paid to the original land owner.

3). Land can be leased to the industrialists/developers on long term basis, thus retaining the ownership with the original land owners or farmers, so that they will get the regular income.

4). The compensation must be based on the market price and is payable to the farmer.

5). 80% of the people, whose lands are proposed to be acquired for a project must accept and give up their land.

The bill has had a roller-coaster journey already and looks very different now from what had been sent by Parliament to a standing committee last year. Ministries insisted on changes to provisions which were perceived as hurdles to investment and industry, which has said that the terms of compensation and rehabilitation that the bill provides for are very steep.

WHY SCRUTINY AND EXAMINATION OF PROPERTY DOCUMENTS AND VERIFICATION OF THE TITLES REQURIED?


It is advised to conduct a thorough scrutiny/examination of the property documents, licenses, approvals, katha and related clearances from an expert advocate, before entering into an agreement of sale.

The Sale Agreement and The Sale Deed are very important documents, which must be drafted with utmost care and all relevant details regarding the acquisition of the property, flow of titles, approvals, consideration, conditions and clauses must be incorporated as per the prevailing and enforceable laws.

The entire exercise of this examination is to ensure that the titles are in order and also to avoid the futuristic litigation.  But, this process, if diligently conducted, will provide a picture of the property titles, whereupon the purchaser can decide either to buy or to withdraw from the purchase, based on the report or opinion.

The Advocate cannot/might not promise or assure that there will not be any future issues or litigation. 

The Advocate  can study, scrutinise and examine the documents submitted and explanations given/provided by the seller and REPORT HIS VIEWS OR FINDINGS to the purchaser.  Based on such a report/view/opinion, the purchaser can decide, whether to buy it or not.

This study and examination is intended to avoid buying properties with defective titles or properties with discrepancies.

BUDGET – INTEREST BENEFIT FOR LOWER CATEGORY – TDS FOR HIGHER VALUE HOMES – SERVICE TAX ABATEMENT AT 70% FOR HIGH END APARTMENTS


First Home Buyer will get an additional benefit on Interest limit:

There is an additional deduction available on interest repaid on a loan for a first time house purchase. The benefit has been increased by an additional Rs 1 lakh and this will be over and above the Rs 1.5 lakh limit already available,provided, if the house property price is less than Rs 40 lakh and the loan(availed) is Rs 25 lakh or less. This benefit can be claimed or availed in the next year, if not availed in the first year.

Tax Deducted at Source:

The Finance Minister has proposed 1% TDS for all immovable properties valued over Rs50,00,000/-. The seller of the house property worth Rs 50 lakh or more, will have to ensure a 1% tax deduction at source on the amount of the sale and will have to deposit this with the government. The TDS amount has to be deposited as per the guidelines and obtain a certificate and must be attached or furnished or submitted to the sub-registrar at the time of registration.

Service Tax:

As per the new proposal, The Service Tax for the new apartments(high end) either 2000 Square feet of CARPET AREA or the VALUE IS ABOVE Rs1,00,00,000/-, the abatement is 70%, which was uniform at 75% in the preceding year.

It means that the high end apartments will have to pay additional service tax on 5%.

Details:

 

Tax Deduction at Source (TDS) on transfer of certain immovable properties (other than agricultural land)

This amendment will take effect from 1st June, 2013.

There is a statutory requirement under section 1 39A of the Income-tax Act read with rule 11 4B of the Income-tax Rules, 1962 to quote Permanent Account Number (PAN) in documents pertaining to purchase or sale of immovable property for value of Rs.5 lakh or more. However, the information furnished to the department in Annual Information Returns by the Registrar or Sub-Registrar indicate that a majority of the purchasers or sellers of immovable properties, valued at Rs.30 lakh or more, during the financial year 2011-12 did not quote or quoted invalid PAN in the documents relating to transfer of the property.

Under the existing provisions of the Income-tax Act, tax is required to be deducted at source on certain specified payments made to residents by way of salary, interest, commission, brokerage, professional services, etc. On transfer of immovable property by a non-resident, tax is required to be deducted at source by the transferee. However, there is no such requirement on transfer of immovable property by a resident except in the case of compulsory acquisition of certain immovable properties. In order to have a reporting mechanism of transactions in the real estate sector and also to collect tax at the earliest point of time, it is proposed to insert a new section 194-IA to provide that every transferee, at the time of making payment or crediting of any sum as consideration for transfer of immovable property (other than agricultural land) to a resident transferor, shall deduct tax, at the rate of 1% of such sum.

In order to reduce the compliance burden on the small taxpayers, it is further proposed that no deduction of tax under this provision shall be made where the total amount of consideration for the transfer of an immovable property is less than fifty lakh rupees.

Changes in Service Tax – High end apartments

This will come into effect from March 1, 2013.

Subject: Union Budget 2013: Changes in Service Tax-reg.

The service tax changes in Budget 2013 are largely guided by the objectives to provide a stable tax regime and improve voluntary compliance. The important changes are as follows:

A. Legislative changes

Following changes are being made in the Finance Act, 1994:

C. Abatement

5. The abatement available under S. No 12 of notification 26/2012-ST dated June 20, 2012 for construction of a complex, building, civil structures etc. is being reduced from the existing 75% to 70% for construction other than residential properties having a carpet area up to 2000 sq ft or where the amount charged is less than Rs. 1 crore.

 

TAX BENEFITS OF INVESTMENT IN RESIDENTIAL UNIT

This amendment will take effect from 1st April, 2014

Income tax benefit

A new section 80EE, has been proposed in the Direct Tax, which provides an additional exemption of Up to Rs. 1 lakh against the interest payable.

The proposed new section 80EE seeks to provide that in computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section,

  • interest payable on loan taken by him from any financial institution for the purpose of acquisition of a residential house property.
  • It is further provided that the deduction under the proposed section shall not exceed one lakh rupees
  • and shall be allowed in computing the total income of the individual for the assessment year beginning on 1st April, 2014
  • and in a case where the interest payable for the previous year relevant to the said assessment year is less than one lakh rupees, the balance amount shall be allowed in the assessment year beginning on 1st April, 2015.

It is also provided that the deduction shall be subject to the following conditions:-

(i)  the loan is sanctioned by the financial institution during the period beginning on 1st April, 2013 and ending on 31st March, 2014;

(ii) the amount of loan sanctioned for acquisition of the residential house property does not exceed twenty-five lakh rupees;

(iii)  the value of the residential house property does not exceed forty lakh rupees;

(iv)  the assesse  does not own any residential house property on the date of sanction of the loan.

It is also provided that where a deduction under this section is allowed for any assessment year, in respect of interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provisions of the Income-tax Act for the same or any other assessment year.

It is also proposed to define the term “financial institution”.

This amendment will take effect from 1st April, 2014 and accordingly apply in relation to the assessment year 2014-15 and subsequent assessment year.

 

URBAN PROPERTY OWNERSHIP RECORD – PROPERTY ID IN BANGALORE


THE NOVEL SCHEME INITIATED BY THE REVENUE DEPARTMENT TO PROVIDE IDENTIFICATION RECORDS HAS SOME NOVEL PROCEDURES.

1). THE DEPARTMENT WILL ISSUE NOTICE TO THE PROPERTY OWNER TO PRODUCE ALL THE RELEVANT DOCUMENTS TO THE PROPERTY.

(50% does not have proper records and 75% of the buildings have abnormal violaion or deviation or not constructed as per sanctioned building plan. 75% of the commercial buildings does not have OCCUPANCY CERTIFICATE)

2). THE RECORDS WILL BE VERIFIED.

(tooooooooooooo mmmmmmmmmany defects and discrepancy will be found)

3). THE DETAILS WILL BE PLACED FOR VERIFICATION/INSPECTION(PUBLIC) AND INVITE OBJECTIONS OR COMMENTS OR AMENDMENT OR OMISSION REGARDING THE PROPERTY DETAILS.

4). A NOMINAL VERIFICATION OR THE PROCESS FEE WILL BE CHARGED.

5). UPOR IS ISSUED.

URBAN OWNERSHIP PROPERTY RECORDS- A NOVEL SCHEME BY REVENUE DEPARTMENT


THE GOVERNMENT OF KARNATAKA WILL BE SOON LAUNCHING A SCHEME THROUGH A  SINGLE WINDOW FORMAT AND UPGRADE THE PROPERTY RECORDS IN URBAN AREAS, WHICH WILL FACILITIATE  THE BUYERS, BANKERS AND OTHERS TO VERIFY AND TO KNOW ALL THE DETAILS ABOUT THE PROPERTY OWNERSHIP, SIZE, TAXES, ARREARS LITIGATION AND OTHER RELATED DETAILS ABOUT THE URBAN PROPERTIES.

IT IS CALLED THE URBAN PROPERTY OWNERSHIP RECORDS OR IN SHORT UPOR, WHICH MAY ERADICATE ALL THE CONFUSION ABOUT THE OWNERSHIP AND TITLES OF THE PROPERTY.

UNTOLD HORRORS OF XXX & XXXXXXXX (XXXXXX CONSTRUCTIONS) -THE BOMBER COMMAND !!!


THE GREATEST DEVELOPERS AND BUILDERS WILL NOT PROVIDE THE DOCUMENTS FOR BUYERS AS THEY CONTAIN ATOM BOMBS !!!!!!!!!!!!!!

YES.

IT IS TRUE.

THEY HAVE BOMBED THE HOPES OF MANY DECENT AND HONEST BUYERS!!!!!!!!!

THEY HIDE, CONCEAL AND IN A BID TO DECEIVE, DOCUMENTS ARE NOT SUBMITTED FOR LEGAL EXAMINATION AND VERIFICATION AND THE BUYERS MUST BUY IT BY INSPECTING THE XEROX COPIES. THEY DO NOT HAVE THE ORIGINALS.

THE MARKETING `L` BOARD GUYS ARE NOT AWARE OF ANY OF THE REPORTED DISCREPANCIES AND CRIMINAL CASES ON THE PROPERTIES WHICH THEY MARKET WITH GREAT FUN AND FARE. IT IS FUN FOR THEM AND FARE FOR THE BUYERS. BUYERS ARE SCARED ABOUT THESE DEVELOPERS CONTACT WITH XXXXXXXXXXXX.

HOW DID THE BANKS APPROVE THESE PROJECTS?

DID THE BUYERS QUESTION THESE BANKS?  NO

SANCTION OR APPROVAL OF BANK LOAN DOES NOT CONFER ANY RIGHT, TITLE AND INTEREST. 

IN CASE OF LITIGATION, THE BANK WILL NOT WAIVE THE LOAN. IF THE BORROWER DISPOSSESS THE PROPERTY OR IF THERE IS A LONG DRAWN LEGAL BATTLE ON THE TITLES, THE BANK WILL STILL RECOVER THE LOAN FROM THE BORROWER WITHOUT ANY MERCY, UNLESS THE BORROWER DECLARES INSOLVENCY

 

 

WATCH OUT- BEFORE PAYING THE ADVANCE TOWARDS THE PURCHASE OF PROPERTIES


WATCH OUT!!!

BUYING A PROPERTY?

THE PROPERTY HAS BEEN SELECTED/CHOSEN!!!!

NOW THE NEGOTIATION REGARDING THE PRICE BEGINS!!!!!!!

BOTH BUYER AND SELLER MUTUALLY AGREE FOR THE SALE PRICE & DURATION TO COMPLETE THE SALE TRANSACTION !!!!!!!!!!!!!!!!!!!!!!

THE NEXT STAGE IS SET!!!!!!!!!!!!!!

THE SELLERS NORMALLY DEMANDS EARNEST MONEY DEPOSIT/ADVANCE/SECURITY DEPOSIT, TO HAND OVER THE COPIES OF THE PROPERTY DOCUMENTS.

EXERCISE UTMOST CAUTION:

1). DEAL AND TRANSACT WITH THE ORIGINAL/DIRECT OWNER 

2). ALL THE PAYMENTS MUST BE MADE ONLY THROUGH AN ACCOUNT PAYEE/NON TRANSFERABLE CHEQUE TO THE ORIGINAL OWNER

3). UNDERSTAND THE CONDITIONS and THE APPLICABLE LAWS OF THE SALE AGREEMENT

4). CONDUCT THE ENTIRE TRANSACTION WITH A REPUTED OR A CONCERN WHICH HAS A GOOD REPUTATION

5). DO NOT DEPEND ON BANK LOANS OR BANK APPROVALS. BANK APPROVAL DOES NOT MEAN, CLEAR TITLES.

6). DISCUSS ABOUT THE CONDITIONS OF THE SALE AGREEMENT, DURATION, ADDITIONAL/MISC EXPENSES WITH THE SELLER AND THE FORFEITURE CLAUSE, IN CASE OF DEFAULT

7). DO NOT MAKE ANY PAYMENT OR TAKE DECISION IN A HURRY

8). FINALLY, IF YOU ARE TOTALLY SATISFIED WITH THE PROPERTY, PRICE, DURATION AND THE REPUTATION OF THE SELLER, MAKE THE PAYMENT, AFTER CONSULTING YOUR ADVOCATE/SOLICITOR

 

Service tax on construction services-A clarification from the department


Circular No. 151/2/2012-ST F.No.332/13 /2011-TRU New Delhi, 10th February, 2012 Subject: Service tax on construction services — regarding. Many issues have been referred by the field formations, in the recent past, seeking clarification regarding the levy and collection of service tax on construction services [clauses (zzq),(zzzh) of section 65(105) of the Finance Act, 1994], in the light of varying business models. Across the country, divergent business models and practices are being followed in the construction sector. Some of these business models and practices could be region specific. 2. From the issues referred by the field formations, important ones have been identified model wise, examined and clarified as follows: 2.1. Tripartite Business Model (Parties in the model: (i) landowner; (ii) builder or developer; and (iii) contractor who undertakes construction): Issue involved is regarding the liability to pay service tax on flats/houses agreed to be given by builder/developer to the land owner towards the land /development rights and to other buyers. Clarification: Here two important transactions are identifiable: (a) sale of land by the landowner which is not a taxable service; and (b) construction service provided by the builder/developer. The builder/developer receives consideration for the construction service provided by him, from two categories of service receivers: (a) from landowner: in the form of land/development rights; and (b) from other buyers: normally in cash. (A) Taxability of the construction service: (i) For the period prior to 01/07/2010: construction service provided by the builder/developer will not be taxable, in terms of Board’s Circular No.108/02/2009-ST dated 29.01.2009. (ii) For the period after 01/07/2010, construction service provided by the builder/developer is taxable in case any part of the payment/development rights of the land was received by the builder/ developer before the issuance of completion certificate and the service tax would be required to be paid by builder/developers even for the flats given to the land owner. (B) Valuation: (i) Value, in the case of flats given to first category of service receiver, is determinable in terms of section 67(1)(iii) read with rule 3(a) of Service Tax (Determination of Value) Rules, 2006, as the consideration for these flats i.e., value of land / development rights in the land may not be ascertainable ordinarily. Accordingly, the value of these flats would be equal to the value of similar flats charged by the builder/developer from the second category of service receivers. In case the prices of flats/houses undergo a change over the period of sale (from the first sale of flat/house in the residential complex to the last sale of the flat/house), the value of similar flats as are sold nearer to the date on which land is being made available for construction should be used for arriving at the value for the purpose of tax. Service tax is liable to be paid by the builder/developer on the ‘construction service’ involved in the flats to be given to the land owner, at the time when the possession or right in the property of the said flats are transferred to the land owner by entering into a conveyance deed or similar instrument(eg. allotment letter). (ii) Value, in the case of flats given to the second category of service receivers, shall be determined in terms of section 67 of the Finance Act, 1994. 2.2 Redevelopment including slum rehabilitation projects: Generally in this model, land is owned by a society, comprising members of the society with each member entitled to his share by way of an apartment. When it becomes necessary after the lapse of a certain period, society or its flat owners may engage a builder/developer for undertaking re-construction. Society /individual flat owners give ‘No Objection Certificate’ (NOC) or permission to the builder/developer, for re-construction. The builder/developer makes new flats with same or different carpet area for original owners of flats and additionally may also be involved in one or more of the following: (i) construct some additional flats for sale to others; (ii) arrange for rental accommodation or rent payments for society members/original owners for stay during the period of re-construction; (iii) pay an additional amount to the original owners of flats in the society. Clarification: Under this model, the builder/developer receives consideration for the construction service provided by him, from two categories of service receivers. First category is the society/members of the society, who transfer development rights over the land (including the permission for additional number of flats), to the builder/developer. The second category of service receivers consist of buyers of flats other than the society/members. Generally, they pay by cash. (A) Taxability: (i) Re-construction undertaken by a building society by directly engaging a builder/developer will not be chargeable to service tax as it is meant for the personal use of the society/its members. Construction of additional flats undertaken as part of the reconstruction, for sale to the second category of service receivers, will also not be a taxable service, during the period prior to 01/07/2010; (ii) For the period after 01/07/2010, construction service provided by the builder/developer to second category of service receivers is taxable in case any payment is made to the builder/ developer before the issuance of completion certificate. (B) Valuation: Value, in the case of flats given to second category of service receivers, shall be determined in terms of section 67(1)(i) of the Finance Act, 1994. 2.3 Investment model: In this model, before the commencement of the project, the same is on offer to investors. Either a specified area of construction is earmarked or a flat of a specified area is allotted to the investors and as it happens in some places, additionally the investor may also be promised a fixed rate of interest. After a certain specified period an investor has the option either to exit from the project on receipt of the amount invested alongwith interest or he can re-sell the said allotment to another buyer or retain the flat for his own use. Clarification: In this model, after 01/07/2010, investment amount shall be treated as consideration paid in advance for the construction service to be provided by the builder/developer to the investor and the said amount would be subject to service tax. If the investor decides to exit from the project at a later date, either before or after the issuance of completion certificate, the builder/developer would be entitled to take credit under rule 6(3) of the Service Tax Rules, 1994( to the extent he has refunded the original amount). If the builder/developer resells the flat before the issuance of completion certificate, again tax liability would arise. 2.4 Conversion Model: Conversion of any hitherto untaxed construction /complex or part thereof into a building or civil structure to be used for commerce or industry, after lapse of a period of time. Clarification: Mere change in use of the building does not involve any taxable service, unless conversion falls within the meaning of commercial or industrial construction service. 2.5 Non requirement of completion certificate / where completion certificate is waived or not prescribed: In certain states, completion certificates have been waived or are considered as not required for certain specified types of buildings. Doubts have been raised, regarding levy of service tax on the construction service provided, in such situations. Clarification: Where completion certificate is waived or is not prescribed for a specified type of building, the equivalent of completion certificate by whatever name called should be used as the dividing line between service and sale. In terms of the Service Tax (Removal of Difficulty) Order, 2010, dated 22/06/2010, authority competent to issue completion certificate includes an architect or chartered engineer or licensed surveyor. 2.6 Build- Operate – Transfer (BOT) Projects: Many variants of this model are being followed in different regions of the country, depending on the nature of the project. Build-Own-Operate-Transfer (BOOT) is a popular variant. Generally under BOT model, Government or its agency, concessionaire (who may be a developer/builder himself or may be independent) and the users are the parties. Risk taking and sharing ability of the parties concerned is the essence of a BOT project. Government or its agency by an agreement transfers the ‘right to use’ and/or ‘right to develop’ for a period specified, usually thirty years or near about, to the concessionaire. Clarification: Transactions involving taxable service take place usually at three different levels: firstly, between Government or its agency and the concessionaire; secondly, between concessionaire and the contractor and thirdly, between concessionaire and users, all in terms of specific agreements. At the first level, Government or its agency transfers the right to use and/or develop the land, to the concessionaire, for a specific period, for construction of a building for furtherance of business or commerce (partly or wholly). Consideration for this taxable service may be in the nature of upfront lease amount or annual charges paid by the concessionaire to the Government or its agency. Here the Government or its agency is providing ‘renting of immovable property service’ (renting of vacant land to be used for furtherance of business or commerce) and in such cases the concessionaire becomes the service receiver. In this model, though the concessionaire is undertaking construction of a building to be used wholly or partly for furtherance of business or commerce, on the land provided by the government or its agency for temporary use, he will not be treated as a service provider since such construction has been undertaken by him on his own account and he remains the owner of the building during the concession period. At the second level, transaction can take place between a concessionaire and the contractor. Where the concessionaire himself does not have exposure to construction sector, he may engage a contractor for undertaking construction of a building on the land, in respect of which right to use has been obtained in his favour, from the Government or its agency. If the concessionaire is himself a builder/developer, this level of transaction may not arise. Where an independent contractor is engaged by a concessionaire for undertaking construction for him, then service tax is payable on the construction service provided by the contractor to the concessionaire. At the third level, the concessionaire enters into agreement with several users for commercially exploiting the building developed/constructed by him, during the lease period. For example, the user may be paying a rent or premium on the sub-lease for temporary use of immovable property or part thereof, to the concessionaire. At this third level, concessionaire is the service provider and user of the building is the service receiver. The concessionaire may provide to the users, taxable services such as ‘renting of immovable property service’, ‘business support service’, ‘management, maintenance or repair service’, ‘sale of space for advertisement’, etc. Service tax is leviable on the taxable services provided by the concessionaire to the users. There could be many variants of the BOT model explained above and implications of tax may differ. For example, at times it is possible that the concessionaire may outsource the management or commercial exploitation of the building developed/constructed by him, to another person and may receive a pre-determined amount as commission. Taxable service here will be business auxiliary service and service tax is leviable on the commission. (A) Taxability: (i) the service provided by the Government or its agency to the concessionaire is liable to service tax; (ii) the construction services provided by the contractor to the concessionaire would be examined from the point of taxability as to whether the activity is not otherwise excluded; (iii) the services provided by the concessionaire to the user of the facility are liable to service tax; (B) Persons liable to pay tax: Government or its agency and concessionaire are liable to pay tax on the services being provided by them. There could be several other persons liable to pay service tax, depending on the variant of the BOT model followed. 2.7 Joint Development Agreement Model: Under this model, land owner and builder/developer join hands and may either create a new entity or otherwise operate as an unincorporated association, on partnership /joint / collaboration basis, with mutuality of interest and to share common risk/profit together. The new entity undertakes construction on behalf of landowner and builder/developer. Clarification: Circular 148/17/2011-ST dated 13/12/2011, particularly paragraphs 7, 8, 9 apply mutandis mutandis in this regard.

3. This Circular may be communicated to the field formations and service tax assessees, through Trade Notice/ Public Notice. Hindi version to follow. (Samar Nanda) Under Secretary, TRU

HOME LOANS AND RBI DIRECTIVES – TAX EVASION BY THE BUYERS IS UNDER SCRUTINY


RBI HAS DIRECTED ALL THE BANKS NOT TO OVER VALUE THE PROPERTIES WHICH INCLUDES STAMP DUTY, REGISTRATION FEE, SERVICE TAX, VAT AND OTHER ADDITIONS, WHILE PROCESSING THE HOME LOANS, AS THE REGULATOR RECEIVED COMPLAINTS OF SUCH DISCREPANCIES BY SOME OF THE BANKS.

THE INCOME TAX DEPARTMENT IS EXAMINING THE HOME LOANS APPLICATIONS AND SANCTIONS AS IT IS NOTICED THAT MANY ASSESSEES HAVE FILED THE TAX RETURNS, WHICH HAVE SOME UNDISCLOSED TRANSACTIONS, TO AVOID THE PAYMENT OF TAXES.  

THE BUYERS ENTER INTO AN AGREEMENT OF SALE WITH THE BUYER FOR XXXXX PRICE AND SUBMIT THE SAME FOR HOME LOAN SANCTION AND REGISTER THE SAME PROPERTY FOR THE LESSER VALUE TO AVOID OR EVADE INCOME TAX, STAMP DUTY AND REGISTRATION FEE.  THE INCOME TAX DEPARTMENT IS COLLECTING INFORMATION OF SUCH TRANSACTIONS AND TAX EVADERS WILL BE PENALISED.  THEHOME LOAN BUYERS ENTER INTO A SALE AGREEMENT FOR THE ACTUAL VALUE OF THE  PROPERTY OR HIGHER VALUE OF THE PROPERTY TO AVAIL LOANS AND AT THE TIME OF REGISTRATION, REGISTER THE SAME FOR LESSER VALUE TO EVADE INCOME TAX, SALES TAX, SERVICE TAX, STAMP DUTY AND REGISTRATION FEE. 

 

PROPERTY BUYERS WHO HAVE AVAILED LOAN HAVE ALSO ENTERED INTO SEVERAL DUBIOUS AGREEMENTS AND THE BUILDERS COLLECT THE PAYMENT UNDER VARIOUS HEADS AND IN DIFFERENT NAMES, BUT ARE CAUGHT, AS THEY HAD ENTERED INTO THE AGREEMENT OF SALE AND THESE ARE OFFICIALS DOCUMENTS, BASED ON THESE DOCUMENTS THE LOAN IS SANCTIONED.

REVENUE RECORDS IN AGRICULTURE LANDS AND REVENUE SITES – RTC AND MUTATION


What is RTC or pahani ?

RTC – Right, Title and Crop details are recorded in the revenue records of the Government and is a very important revenue record and it contains details of land such as owners’ details, area, assessment, water rate, soil type, nature of possession of the Land, Liabilities, Tenancy and Crops grown, etc.
Why is it (RTC)required ? 
It is required for various purposes:
1. To know the genuiness of seller(owner) when land is being purchased.
2. It is required at Sub-Register’s office when sale transaction is being done 
3. To raise the farm credit / loan from the Bank.
4. It is required as evidence (RTC) in case of Civil litigation.

What does RTC contain?

1. Survey Number and Hissa Number of Land.
2. Total Land under the Pahani.
3. Land Revenue details.
4. Land Owner’s name with Extents and Khatha Number.
5. The way land is acquired by the owner.
6. Government/Public rights on the Land. 
7. Liabilities of the Owners on the Land.
8. Classification of the Soil.
9. Number of Trees.
10. Source of irrigation and area irrigated.
11. Cultivators Details.
12. Utilisation of land under various categories.
13. Details of Crops grown season-wise.
14. Details of Mixed Crops.

How is the computerised RTC different from manual RTC ? 

There is absolutely no difference in the contents of computerised RTC and manual RTC. However, the computerised RTC is neat and easily readable and understandable as details are printed in the respective Columns. Further it cannot be tampered easily.”

What is Mutation ?

Mutation is a process through which Owner’s name or his particulars like liabilities get changed because of some type of transactions. The type of transaction may be one of the following:

1. J-Slip-Sale through registered deed.
2. Inheritance – Change of Ownership because of death of the Owner.
3. Division of Land within the Family. 
4. Pledge / Release – Change in liabilities because of loan from bank or 
repayment to bank.
5. Court Decree – Based on the Court Order. 
6. Alienation – Conversion of land from agricultural to other purposes.
7. Acquisition by Government for Public purpose.
8. Grant of Land by Government to Poor People.”

When does the Owner name and his details Change ?

The change in Owner name and his details will take place when one of the following transactions occurs:
a. J-Slip – Sale transaction takes place at SRO.
b. Inheritance – Death of the Owner. 
c. Division of Land within Family Members.
d. Court Decree – Order of the court.
e. Grant by the Government.
f. Alienation for non-agricultural purposes.
g. Acquisition by Government. 
h. Podi – Division of RTC into 2 or more. 
i. Pledge/Release of the Land with / from banks.”

How to bring New Owner’s name or change the owner’s details in the RTC ?

The Owners of the land will change because of purchase transaction, Inheritance, Division, Grant by Government, Court Decree. When one of these takes place, NEW OWNERS should approach the Revenue Department with the required document to incorporate their names. They can request for the same at the THALUK OFFICE OR CHAVADI CENTRE and collect the acknowledgement. Similarly when loan is taken or repayment is done, to change the liabilities details, Owner can submit the request at the PAHANI CENTRE with required documents.”

REGISTRATION OF PROPERTIES MADE EASY AND HASSLE FREE


THE CHIEF MINISTER MR.D.V.SADANANDA GOWDA INAUGURATED A NEW CONCEPT AND HASSLE FREE REGISTRATION PROCESS IN THE STATE OF KARNATAKA FROM 04-11-2011.  PROPERTY BUYERS CAN REGISTER THEIR PROPERTIES IN ANY OF THE SUB-REGISTRARS OFFICE IN THEIR DISTRICT.  THERE IS ALSO A PROPOSAL TO CREATE AND ISSUE A UNIQUE PROPERTY IDENTITY CARD TO THE PROPERTY OWNERS IN KARNATAKA BY MARCH,2012.

The daughter of a coparcener becomes a coparcener BY BIRTH in her own rights and liabilities in the same manner as the son. She will have rights over the ancestral property in the same manner as the son,(subject to the following conditions) if the property had not been partitioned through a registered partition deed or dispossessed due to alienation or by a decree of court or dispossessed through a testament before 20-12-2004.


SC JUDGEMENT ON HSA-12-10-2011

 14. The new Section 6 provides for parity of rights in the

coparcenary property among male and female members of a joint

Hindu family on and from September 9, 2005. The Legislature has

now conferred substantive right in favour of the daughters. According

to the new Section 6, the daughter of a coparcener becomes a

coparcener by birth in her own rights and liabilities in the same manner as the son. The declaration in Section 6 that the daughter of the coparcener shall have same rights and liabilities in the

coparcenary property as she would have been a son is unambiguous

and unequivocal. Thus, on and from September 9, 2005, the daughter

is entitled to a share in the ancestral property and is a coparcener as if

she had been a son.

 

15. The right accrued to a daughter in the property of a joint

Hindu family governed by the Mitakshara Law, by virtue of the 2005

Amendment Act, is absolute, except in the circumstances provided in

the proviso appended to sub-section (1) of Section 6. The excepted

categories to which new Section 6 of the 1956 Act is not applicable

are two, namely, (i) where the disposition or alienation including any

partition has taken place before December 20, 2004; and (ii) where

testamentary disposition of property has been made before

December 20, 2004. Sub- section (5) of Section 6 leaves no room for

doubt as it provides that this Section shall not apply to the partition

which has been effected before December 20, 2004. For the

purposes of new Section 6 it is explained that `partition’ means any

partition made by execution of a deed of partition duly registered

under the Registration Act 1908 or partition effected by a decree of a

court. In light of a clear provision contained in the Explanation

appended to sub-section (5) of Section 6, for determining the nonapplicability of the Section, what is relevant is to find out whether the

partition has been effected before December 20, 2004 by deed of

partition duly registered under the Registration Act, 1908 or by a

decree of a court. In the backdrop of the above legal position with

reference to Section 6 brought in the 1956 Act by the 2005

Amendment Act, the question that we have to answer is as to

whether the preliminary decree passed by the trial court on March 19,

1999 and amended on September 27, 2003 deprives the appellants

of the benefits of 2005 Amendment Act although final decree for

partition has not yet been passed.

GENERAL POWER OF ATTORNEY – PROPERTY DEALING – SUPREME COURT OBSERVATION – TAKE UTMOST CARE!


The Supreme Court observation on the sale of properties on General Power of Attorney:

The SC has clarified that it was only stating the well-settled legal position in this connection and not laying down a new law, the order was necessary because a good proportion of property sales have been affected through the GPA route of late.  The Supreme Court’s ruling on Wednesday that transfer through general power of attorney (GPA) cannot give ownership title to the buyer will address a long-pending anomaly as far as property transactions in this country are concerned.

This has led to evasion of stamp duty and registration charges, causing losses to the public exchequer. It also has a great role to play in the circulation of black money in the real estate sector, which in turn has become a major avenue for investment and creation of unaccounted wealth.

The transfer of property through the GPA route has often seen genuine buyers being cheated since the same property can be sold to several parties, resulting in litigation, and, sometimes, crime.

SAFEGUARD YOUR PROPERTY FROM ENCROACHES AND FRAUDSTERS


THERE ARE MORE CASES REPORTED REGARDING ILLEGAL OCCUPATION, ENCROACHMENT AND POSSESSION OF ALL AND EVERY TYPE OF PROPERTIES IN AND AROUND BANGALORE.  THE PROPERTY OWNERS ARE ADVISED TO PUT UP COMPOUND WALLS OR FENCING AND MUST KEEP A WATCH ON REGULAR BASIS TO PROTECT THEIR INTERESTS.  DURING OUR INSPECTION TO IDENTIFY AND MEASURE BDA,BMRDA,SOCIETY,PRIVATE LAYOUT SITES AND DC CONVERTED SITES, HAVE NOTICED THAT ONCE THE LAYOUT IS FORMED AND SOLD, IT IS LEFT FOR THE BUYERS TO TAKE CARE AND SAFEGUARD THEIR PROPERTIES, BUT MAJORITY OF THESE PROPERTIES SEEMS LIKE ABANDONED, COULD NOT BE LOCATED AND IDENTIFIED.  IF LEFT AS IT IS, SOME ILLEGAL ELEMENTS WILL OCCUPY AND FABRICATE DOCUMENTS AND THE ORIGINAL OWNER WILL LOSE THE PROPERTY OR APPROACH THE COURTS AND IT WILL TAKE YEARS TO REPOSSESS THE SAME.

 

SALE AGREEMENTS


ONE SIDED AGREEMENTS-UNFAIR AGREEMENTS-BIASED AGREEMENTS, ILLEGAL AGREEMENTS, UNFAIR CLAUSES – BY DEVELOPERS AND BUILDERS

IS YOUR BUILDER/DEVELOPER/MARKETING AGENCY COMPELLING YOU TO SIGN OR ENTER INTO SALE AGREEMENTS ON CERTAIN CLAUSES WHICH ARE AGAINST YOUR INTERESTS OR IN FAVOUR OF THE DEVELOPER OR UNFAIR OR ONE SIDED AGREEMENTS OR THE BUILDER DOES NOT AGREE TO MODIFY THE ILLEGAL CLAUSE AND IT IS IN TOTAL INTEREST OF ONE OF THE PARTIES (BUILDER) ?

YOU HAVE A SAY NOW!!!!

THE CCI HAS COME OUT WITH HEAVY PENALTY AGAINST DLF REALTY AND FINED THEM TO THE TUNE OF RS630 CRORES.

REGULARISATION OF REVENUE SITES IN BBMP LIMITS – AN OPPORTUNITY FOR INVESTORS – MARKET WILL FINETUNE THE PRICES


THE AKRAMA -SAKRMA SCHEME AND THE PROPOSED REGULARISATION OF REVENUE SITES BY THE BBMP  WILL THROW IN LARGE NUMBER OF PROPERTIES FOR SALE AND THE MARKET MIGHT REACT WITH A DEPRESSING NOTE FOR SUCH SUPPLY AND HENCE THE PRICES MIGHT GET SHOCKING JOLT(REDUCTION IN PRICES) IS EXPECTED BY THE INVESTORS. 

MISCONCEPTION ABOUT THE MARKET PRICE AND GUIDANCE VALUE


THE SELLERS ARE IN GREAT MOOD HOPING THAT THE PRICES OF THE PROPERTIES HAVE GONE UP WITH THE REVISION OF GUIDANCE VALUE.  THIS IS A MISCONCEPTION. IN REALITY, THERE WILL NOT BE GOOD DEMAND FOR THE PROPERTIES DUE TO THE REVISION AND INCREASE.

THE REASONS ARE:

THE SELLERS HAVE TO PAY ADDITIONAL STAMP DUTY AND REGISTRATION FEE TO THE EXTENT OF THE INCREASED VALUE.

THE SELLERS MUST ALSO HAVE INCOME TAX (ACCOUNTED MONEY) TO THE TUNE OF THE GUIDANCE VALUE.

NORMALLY ALL THE PROPERTIES ARE UNDERVALUED TO EVADE STAMP DUTY AND REGISTRATION FEE AND THE MOST IMPORTANT ASPECT IS THAT THE INCOME TAX DEPARTMENT TREATS OR ASSESSES THE VALUE OF THE PROPERTY AS PER THE GUIDANCE VALUE OR THE GOVT VALUE OR IF THE VALUE OR CONSIDERATION IS PAID ABOVE THE GOVT/GUIDANCE VALUE AND NOT FOR THE VALUE SHOWN IN THE SALE DEED.

IN CASE, IF THE SALE VALUE OR CONSIDERATION SHOWN IS LESS THAN THE GUIDANCE/GOVT VALUE, THE INCOME TAX DEPARTMENT WILL LEVY PENALTY AND ASSESS IT TO THE TAX PURPOSE AT THE GUIDANCE VALUE.

DUE TO THE AFORESAID FACTORS, THE PRICES WILL NOT INCREASE BUT WILL DEFINITELY HAVE A DISCOURAGING TREND. 

WITH THE REVISION ALL THE REVENUE AND(GOLMA)L PROPERTIES WITH( BOGUS) GPA ARE IN QUANDRY.  EVEN, IF THEY UNDERGO SURGERY UNDER AKRAMA-SAKRAMA, THE PENALTY WILL BE BASED ON THE GUIDANCE VALUE.  IF ANY OF THESE GPA PROPERTIES HAD TO BE REGISTERED NOW, IT WILL BE AT THE NEW REVISED GUIDANCE VALUE.