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Thursday, July 17, 2014

Original sale deed lost! Now what?

Have you accidentally lost the original sale deed document? Are you worried as to what you should do now?
A copy of the deed can be obtained. However, it requires us to follow a systematic set of procedures. There are some steps that need to be undertaken sequentially to acquire the copy.
* File a regular police complain at the local police station about the loss of the deed.
* Issue a notice in a newspaper wherein the content talks about – The loss of the deed and asking for information from anyone in case anyone finds it.
* You need to then get in touch with the sub-registrar’s office in the relevant jurisdiction to obtain a certified copy of the original sale deed.
* A letter written requesting the copy needs to be submitted, along with the relevant Application Form 22.
* The application Form 22 needs to be filled in with all the relevant details. The form itself can be downloaded from the department website or alternately can be got from the sub-registrar’s office.
* The documents that need to be attached to the application include your identity proof, police complain and other old documents proving that the land is owned by you. This could include documents like ration card, Adhaar card, passport, electricity bill or water bill, or any official document that proves you resided and paid for the property.
* The sub-registrar’s department charges a nominal fee for the first 10 pages of the copy. Each subsequent page is charged separately on a per page basis.
* It is absolutely essential to keep all the papers: the police complain, the newspaper notice and the copy of the deal together.
* In case, you have lost documents like the Khata Certificate (relevant in Bangalore), etc then you need to apply to the revenue officer; again with proof of identity and of owning and paying for the property.
* In case, it is an apartment you could ask the builder to provide you the copy of allotment, receipts and letters and other legal document copies.
* There is a waiting period before legal documents or their copies are given. This is primarily to ensure greater security to both the government agency and the owner when it comes to important documents like these.
It is a long and tedious process to get these documents. There are private companies that provide this as a service for a fee, which could be leveraged in case you so desire.
Kanchana Dwarakanath

Mumbai's posh homes worth Rs 45 cr & more

South Mumbai’s exclusive addresses are worth crores! While Bangalore, the largest consumer of luxury in India measures exclusivity in terms of high-end amenities, Mumbai’s choice is an ideal location and space.
In a city, where having a spacious accommodation is a blessing you yearn for, these spacious addresses in South Mumbai can cost you up as much as Rs 45 crores! Here’s a quick look -
In just two years, this art centre of Mumbai has graduated in terms of prices with Rs 5000 per sq ft increase in prices! The average price in this area stands at Rs 45,000 per sq ft today! Like any other established locality, Colaba also boasts of resale properties. Hitendra Shetty, Spacehub Properties says, “A majority of residents here are end users and the investors in the area happen to earn through rich rental yields.” As per data with Magicbricks, rental values can go up to Rs 5 lakh per month for a furnished spacious accommodation.
Dadar (W)
Situated in the heart of Mumbai, this locality draws the diaspora that converges in Mumbai. Famous as a cultural centre, Dadar is also a prominent interchange station for most passengers in Mumbai who heavily depend on the rail network. Consequently, prices have gone up by over Rs 3000 per sq ft within two years and the current value can be estimated to be about Rs 30,000 per sq ft. However, prices here go up to Rs 27 crore for a plush 6500 sq ft house.
The western and central railway within a distance of 1 km makes the locality easily accessible from Mumbai, Thane and Navi Mumbai.
Primarily commercial in its outlook, this address of the rich and famous is known for its scenic beauty and has often featured in Bollywood movies. Some of the renowned names reside in the Worli Seaface. The exquisiteness of this locality has of late pushed property prices up and the current average price is Rs 35,000 per sq ft. Property prices can shoot up to Rs 45 crore for a 3BHK unit spread over 4500 sq ft.
Ayussh Kalia, Colliers International-Mumbai says, “Luxury in Mumbai is all about location followed by space. South Mumbai’s benchmark for resale properties would be valued at Rs 7-8 crore minimum. These might not have high end amenities but buyers are willing to pay for the location.”
“It is the richest urban precinct and one of the most expensive addresses. It is home to industrialists, sportspersons and many from the entertainment industry. India largest business houses, MNC financial institutions and top stock exchanges are based in here and it has been a preferred residential destination for the well-heeled of South Mumbai,” says Vanita, a user of Magicbricks.
Of late there has been a surge of realty projects that have come up in South Mumbai in areas like Mahalakshmi, Prabhadevi, Lalbag, Curry Road, Parel, Matunga etc. All these have consolidated South Mumbai as an elite living space.
Sneha Sharon Mammen, Bureau

Sunday, July 13, 2014

Re-invest home sale funds in only 1 house to save tax

Re-invest home sale funds in only 1 house to save tax
12 Jul, 2014, 1223 hrs IST, TNN

Section 54 provides for capital gains tax exemption when a taxpayer sells his residential house, held for more than three years.
As families grow, a growing trend — especially in metros such as Mumbai — has been to sell a residential house to buy two adjoining flats, most likely in a distant suburb. For such re-investments, taxpayers claim capital gains exemption under Sec 54 of the Income Tax Act (ITA). Now, the Finance Bill has said such re-investment can be made in only one residential house in India.

Section 54 provides for capital gains tax exemption when a taxpayer sells his residential house, held for more than three years, and purchases or constructs 'a residential house' within the specified period. Such exemption is available to the extent of reinvestment in the new house.

There was ambiguity on whether the term 'a residential house' meant a single unit or could include more than one new house. Tax authorities often disputed the practice of reinvesting in two flats. Courts took varying views, including those favouring taxpayers.

The Andhra Pradesh HC, in the 2012 case of Syed Ali, held that reinvestment in 'a residential house' didn't indicate a single house. Benefits were available under Sec 54 for taxpayers who had invested in two adjacent flats bought from different sellers under separate sale deeds. Karnataka, Delhi and Bombay HC too passed similar judgments. On June 10, Bombay HC — in the case of Devdas Naik — again ruled in favour of taxpayers.

Here, capital gains were reinvested in two flats bought from different parties. One was bought in Devdas Naik's name, the other jointly with his wife. The HC held that the flats were converted into a single unit, thus capital gains exemption couldn't be denied.

The Finance Bill closes the debate. It clarifies that capital gains tax exemption is for reinvestments in one residential house in India. The ITA has been amended accordingly.

"While courts interpreted the law in favour of taxpayers, the Finance Bill ignored the taxpayers' need to invest in multiple properties disposing of their existing property to take care of their growing families. There seems to be no rationale for lawmakers to restrict the investment to one property," says Sonu Iyer, partner and leader human capital tax services at EY.

"Despite the amendment, tax authorities should consider favourable court decisions where flats purchased can be construed as a single unit," says Punit Shah, co-head (tax) at KPMG."The amendment is likely to increase litigation for taxpayers re-investing in more than one flat, if these are adjoining and joint use by families can be proven through a common kitchen or a passage connecting the two flats," says a Mumbai CA.

Tribunals have held that Sec 54 benefits can't be denied if reinvestment is in a new residential unit overseas. RBI doesn't permit overseas remittance for purchase of property, so the condition of the new house being in India may not have much impact. An amendment in conditions of reinvestment in a single house in India has also been made in ITA's Sec 54-F. Here, capital gains exemption on sale of long-term capital assets (other than a residential house) is allowed when reinvestment is in a residential house.


Union Budget 2014: House property -- Buying, letting out and selling

Union Budget 2014: House property — Buying, letting out and selling
Tired of your landlord's constant cribbing and threats to raise rent? Why not buy your own apartment? Banks give housing loans against the collateral of your prospective own apartment. But before you sign on the dotted line, it is vital to do your homework, including finding out over what period of time you would be most comfortable paying off this loan.

Buying your own house

Typically, the longer the loan tenure, the lower is the monthly EMI but higher is the interest outgo. The Reserve Bank of India has prohibited banks from levying any foreclosure charges if you pay off the loan prior to its tenure. Once you have the loan in hand, you will be paying a periodical interest and also repaying the principal — in tranches. I-T law provides for benefits in both instances.

Interest payable on housing loan

Interest payable on 'self-occupied' property is subject to a maximum deduction of Rs 2 lakh under the head 'Income from House Property'. Even a loan taken from an employer is eligible for such a deduction though you will need to obtain a certificate from your employer specifying the interest payable. Booking an apartment which is under construction is sometimes cheaper. I-T law permits you to claim the total interest paid during the pre-delivery period as a deduction in five equal instalments starting from the financial year in which the construction was completed or you acquired your apartment (generally this denotes the date of possession). Of course, the maximum you can claim as a deduction per year continues to be Rs 2 lakh. In both the above instances, it is essential that the acquisition or construction is completed within 3 years from the end of the financial year in which the loan was taken, else the deduction allowed will be limited to Rs 30,000.

Set off your interest payment

The main advantage of this deduction (which in technical parlance is a loss under the head 'Income from House Property') is that you can set it off against your income, which includes salary income, in the same year. This reduces your total tax liability. Any loss not set off within the same year can be carried forward and set off in the next 8 years. However, in the subsequent years, such set-off is possible only against 'Income from House Property'. You also need to be aware of what constitutes 'self-occupied' property. Even if you are suddenly transferred to another city (where you live in a rented apartment) your own property will be considered as 'self-occupied'. Or, if you have opted to purchase a new apartment in a tier 2 town where property is cheaper, and continue to deal with your landlord, this new apartment will be regarded as 'self-occupied' entitling you to deduction of housing loan interest.

Hot tip: If you have purchased the new apartment jointly — say with your spouse, then each of you is entitled to a deduction of Rs 2 lakh, as explained above. In case you have a working son/daughter and the bank is willing to split the loan three ways, all three can avail of deduction up to Rs 2 lakh each.

Repayment of housing loan

The principal repayment of the housing loan made by you is allowed as a deduction from your gross total income (subject to an overall cap with other eligible investments of Rs 1.5 lakh). Please refer to the section on savings.

First-time buyers

An additional benefit was provided for first-time home buyers during FY 2013-14. The additional one-time deduction allowable from gross total income was for Rs 1 lakh, which if not exhausted in FY 2013-14, is allowed during FY 2014-15. This deduction is allowed only when the loan amount is up to Rs 25 lakh and the value of the house is up to Rs 40 lakh with the loan being sanctioned in FY 2013-14. This is not available for loans sanctioned in FY 2014-15.

Caution point: Unlike deduction of interest, deduction of principal repayment will be allowed only if the loan is taken from

Letting out your house

It makes sense to rent out your house because a locked house still attracts tax on 'deemed value'. The tax on the locked house is calculated at expected market rent. Interestingly, if you let out the second house, you can deduct the entire interest you are paying on it, without any cap, from the rent received. If there is a loss, you can deduct the loss from your taxable income. For eg, if your interest outgo is Rs 8 lakh and the rent is Rs 2 lakh, you can get a tax benefit on Rs 6.6 lakh (after standard deduction of 30% of rent). This is applicable for any number of houses and there is no cap on the amount of deduction you can claim.

Selling your apartment

If you sell your house, whether it is your self-occupied house or a second apartment, you will incur capital gains (given that there has been appreciation in property prices, it is unlikely that you will be making a loss). Capital gains are the difference between the sale proceeds and the cost of acquisition of the apartment you are selling. Further, capital gains can be either short-term or long term and each has a different tax impact. If the house is held for not more than 36 months, on sale, you will incur a short term capital gain, which is subject to I-T based on your applicable slab rates. If you fall in the lower tax bracket with a tax rate of 10.3%, short term capital gains will not pinch you. Else you could end up with a tax rate of as high as 33.99%. If the property is held for a longer period, long term capital gains (LTCG) arise. The cost of acquisition used for computing LTCG is the indexed cost of acquisition (in other words an adjustment is made for inflation). Tax is levied on LTCGs at 20% (plus surcharge and cess). The buyer has to deduct 1% tax of the sale consideration if it is above Rs 50 lakh. The seller can then claim credit of 1% that was deducted when he files his returns.

Save on LTCGs

Reinvestment of capital gains could get you tax breaks.

Reinvesting in residential property or securities

Make sure you invest the entire LTCG from sale of the house in another residential property in India. (Such investment can either be one year before or two years after the date of sale). Mind you, it should not be reinvestment in a commercial property. You could construct another residential house within three years of the date of sale. Also, you may put the sale proceeds in a capital gains account scheme with a bank where investment in new property is not made before filing of I-T return (not later than the due date of filing your I-T return). Exemption is also available for investments in certain bonds within six months of sale, such as of Rural Electrification Corporation and National Highways Authority of India. The maximum amount that can be so invested is Rs 50 lakh. If the entire amount is not reinvested or not deposited in capital gains account scheme, the remaining portion of the gain will be taxable.

Caution point: If the apartment is held for not more than 36 months, on sale, you will incur a short-term capital gain, which is subject to I-T based on your applicable slab rate


Sunita Padhy

Friday, July 11, 2014

How to save taxes through Property Investments?

How to save taxes through Property Investments?

Subhash Lakhotia, Tax & Investment Consultant, RN Lakhotia & Associates and Vaibhav Sankla, Director, H&R Block India Private Limited address common issues faced by consumers, related to tax benefits on under-construction and leased properties on GuruTalk, the live chat session by
Tax benefit on under construction property
As per Lakhotia, the interest paid on home loan for an under-construction property cannot claim deduction as per the income tax rule. Deduction on interest payment of home loan can be claimed only once the property is completed or at possession stage. However, repayment of the principal amount can be claimed as deduction upto Rs 1 lakh per annum within the limit of Section 80C.
Sankla adds, tax laws provide deferred deduction on interest payable during the
pre-construction period (on the loan taken for purchase of house). Interest on pre-construction period can be claimed as deduction equally distributed over five financial years starting from the year in which possession of the property was obtained.
If the buyer intends to occupy the property and possession is received after three years from the end of the financial year in which the loan was taken, then the total deduction on total interest payment (current interest paid plus one fifth of pre-construction period) is restricted to only Rs 30,000 as against Rs 1.5 lakh per annum.
However, if the buyer intends to lease the property, then the possession date does not matter. In this case, the buyer can claim the entire interest payment (current interest paid plus one fifth of pre-construction period interest in a financial year). This is irrespective of the possession date .
Tax on rental income
To compute the taxes on rental income, the lessor (owner of an asset that is leased under an agreement to the lessee) needs to make separate calculation for each property. Lessor needs to follow simple steps for computation:
First Step: Deduct the amount of property tax paid in respect of the owned house from the annual rental income to arrive at the net annual rental income.
Second Step: Deduct 30 per cent of the net annual rental income towards repairs and maintenance charges of the property. This 30 per cent deduction is adhoc and irrespective of the actual amount incurred for repairs and maintenance of the house. In case the lessor has taken any loan for the purchase/repair of the property then the interest from the same is available for deduction.
Third Step: Balance amount is the taxable income from the property and is added to your total annual income. Tax on the same can be computed as per the applicable slab rates says Sankla.
Lakhotia adds, the property needs to be registered in the name of the buyer to claim deduction and save taxes. He advices, individuals who have invested in multiple properties can save taxes by applying simple strategy. Buy properties through loan and give it on rent. This will entitle you to save taxes through deduction on your gross income.
He further adds, there are no restrictions on claiming tax deduction for HRA payment in the same city in which the individual owns property.
Source: Times Property, Chennai/ Bureau

Highlights of Union Budget 2014

Highlights of Union Budget 2014

NEW DELHI: Here are the highlights of Union Budget 2014 tabled by finance minister Arun Jaitley on Thursday: 

Policy of One Rank One Pension to be adopted. 

* RBI will create framework for licenses of small banks. 

* Government aims to provide all households with banking facilities to empower the weaker sections; there should be atleast 2 bank a/cs in each household.

* Urgent need to converge current Indian standard with international accounting standards: Jaitley

* Rs 37, 800 crore allotted for National Highways.

* Revision of rate of royalty on minerals to be taken up on request from the states. 

In order to complete gas grid, 15000 km of additional pipeline to be developed through PPP mode.

* ​New and renewable energy deserves high priority; ultra modern power projects to be taken up in Rajasthan, Tamil Nadu, Ladakh with Rs 500 crore.

Rs 4200 crore set aside for Jal Marg Vikas project on river Ganga connecting Allahabad to Haldia , over 1620 km. 
* Scheme for development of new airports at tier II and III cities through PPP mode.
Rs 200 crore set aside for 6 more textile clusters in Rae Bareily, Lucknow, Surat, Bhagalpur. Rs 50 crore set aside for Pashmina Production program in J&K. 
* MSMEs are the backbone of the economy; to be revived through a Committee to examine and report in three months. 

* 6 more textile clusters to be set up. 

* Industrial Smart Cities to come up at 7 cities.

* All govt departments and ministries to be integrated through E-platform by 31 December this year.

Rs 100 crore set aside for Kisan Television to provide real time information on various farming and agriculture issues.

* National Industrial Corridor to be set up. Rs 1000 crore set aside for this.

* Rs 5000 crore short time rural credit refinance fund for 2014-15.

* Rs 50 core set aside for indigenous cattle breed and blue revolution for inland fisheries.

* Propose to provide finance to 5 lakh landless farmers through NABARD.

* Govt will initiate scheme to provide a soil health card; Rs 100 crore set aside. Rs 56 crore for soil testing labs across the country.

* Agriculture University in Andhra Pradesh and Rajasthan, and Horticulture University in Haryana, Telangana; Rs. 200 cr set aside by the government.

* Slum development to be included in Corporate Social Responsibility activities.

Govt announces Rs 100 crore for modernization of madrassas.

* Govt announces development of Metro rails in PPP mode; Rs 100 crore set aside for metro scheme in Ahmedabad and Lucknow.

Rs 100 crore set aside for Community Radio Centres; 600 new and existing ones will be supported.

* National Rural Internet and Technology Mission; Rs 500 crore set aside.

* Govt proposes to set up Center of Excellence in MP named after Lok Nayak Jai Prakash Narayan.

5 more IITs and 5 IIMs to be set up .

* Propose to set up four more AIIMS; Rs. 500 crore set aside for this. Six new AIIMS started recently have become functional. Four new AIIMS will be set up in Andhra Pradesh, West Bengal, Vidarbha and Purvanchal.

* Govt proposes National Housing Banking programme; sets aside Rs 8000 crore for this program.

Union Budget 2014 through infographics

* Pradhan Mantri Gram Sadak Yojana has a massive impact on rural development; Govt sets aside Rs 14,389 crore for this scheme.

* Crisis Management Center for women at Delhi; money to be provided from Nirbhaya fund.

* Govt announces Beti Padhao, Beti Badhao Yojana; sets aside Rs 100 crore for this. (Read story here)

* Safety of women of prime importance.

* EPFO will launch a unified account scheme for portability of Provident Fund accounts.

* Schemes for disabled persons in the country. 15 new Brail presses to be established and revival of 10 existing.

* Rs 50,548 crore proposed for Schedule Caste development.

​* Govt committed to providing 24/7 power supply to all homes. Deen Dayal Upadhyay Gram Jyoti Yojna for electricity supply to rural areas.

* Rs 200 crore for 'Statue of Unity' of Sardar Vallabh Patel.

Pradhan Mantri Krishi Sichayin Yojana to be started for irrigation.

* We will examine proposal to give additional autonomy to banks and make them more responsible: Jaitley

E-visas to be introduced at nine airports in India in phased manner. (Read storyhere)

FDI in insurance to be increased to 49%

* FM announces FDI in defence up from 26 to 49 % with Indian management and control

* Transfer pricing is major area for litigation; proposes changes in transfer pricing regulation: Jaitley

* I propose to strengthen authority for advance ruling in tax: Jaitley

* Aim to achieve 7-8 per cent economic growth rate in next 3-4 years.

* We wish to provide an investment friendly taxation system: Jaitley

* This govt will not ordinarily change policies retrospectively which creates a fresh liability.

* GST will streamline tax administration and result in higher tax collection for center and states.

* A new urea policy would be formulated.

* Considering that we had two years of low GDP growth, a large subsidy burden, target of 4.1% fiscal burden is daunting: Jaitley

* We must address the problem of black money: Jaitley

* Iraq crisis leading behind an impact. Inflation has remained at elevated level: Jaitley

* We have taken up the challenge in the right ernest; will create a vibrant and strong India: Jaitley.

* The task before me is very challenging. We need to introduce fiscal prudence. there is an urgent need for more reforms.

* The steps I will announce are only the beginning of the journey we wish to take for macro economic stabilization: Jaitley

*People below poverty line anxious to free themselves: Jaitley

* Green shoots of recovery seen in world economy.

*​ We look forward to lower inflation: Jaitley

Thane to see over 30 new residential projects

Thane to see over 30 new residential projects

If Mumbai is too expensive for you, then Thane can be the region where you can plan your dream home. As per data, the region is witnessing over 30 new projects in localities such as Ghodbunder Road, Badlapur and Thane west. Out of these, 93 per cent are offering multi-storeyed apartments in varied budget ranges.
“Thane is preferred by people working in areas along the central line. They are relocating from Mumbai city to Thane in search of affordable properties. The area witnesses high demand from local Mumbaikars,“ says Ashok Chajjer, CMD of Arihant Infrastructures Ltd.
As per the data, Ghodbunder Road boasts maximum number of new projects, followed by Thane west and Badlapur in the farther suburbs. Majority of the units are 2-BHK flats followed by 1-BHK units. However, the price difference can be noted between ready-to-move-in and the under-construction units. A ready-tomove-in, 2-BHK flat of 1,000 sq ft is available for Rs 28 lakhs in Badlapur while the same flat in an under-construction stage is offered at Rs 21 lakhs in the same locality.
Of all the localities, Majiwada is the most expensive and offers numerous properties in the budget of Rs 1 crore and above. Manpada and Waghbil are other localities which have some premium projects in the said budget.
What makes it livable?
As far as transport is concerned, Mira Bhayander Municipal Transport (MBMT), Brihanmumbai Electric Supply and Transport (BEST), Navi Mumbai Municipal Transport (NMMT), Thane Municipal Transport (TMT), State Transport (ST) corporations, provide public bus services to the city.
Apart from this, Thane is also connect ed to Mumbai via the Eastern Express Highway and to Pune via the Mumbai Pune Expressway. In fact, local trains are also available to Mumbai CST. Numerous flyovers are being constructed on the Ghod bunder Road. This will sort out the traffic issues at Kapurbawadi, Waghbil and Manpada junctions.
“Thane has everything from work places to schools, just a stone’s throw away .
It has emerged as an attractive property destination for investors and end-users, with upcoming locations like Ghodbun der Road, Badlapur, Kalwa,“ says Abhishek Kapoor, vice-president, Rustomjee Group.
Thane is no way behind its parent city Mumbai as far as infrastructure is concerned too. The area possesses good schools, colleges, hospitals and other necessities of daily use.
So, if you too are considering buying a home in the Mumbai Metropolitan Region, Thane can be the suitable choice for those looking for property that offers value-for money .
Source: Times Property, Mumbai/ Bureau