Month: May 2017

Housing tax is assessed on the basis of the annual valuation of the property. In India taxability builds upon the source of income and residential status. If the source of income is a rented apartment, located inside anywhere in the country, the amount collected from it is going to be taxable in India as per the existing, statutory property tax rules of India . Any property (residential/commercial) whether self occupied or let out comes under Indian property tax rules. Annual tax rate for a rental apartment depends on facts like-

• Amount earned as a rent
• Municipal Valuation
• Tax rate determined by the IT department (Fair rent)

If you qualify as an NRI, then Indian property tax has nothing to do with your income earned and received in the outer country of India won’t be taxable under Indian property tax or IT rule. There are various tax deductions processes which a rental revenue has to look over, such as-

• Municipal taxes paid to the local civic body
• Standard deduction at 30% of the total taxable value
• Interest paid on a loan taken for building development, maintenance, addition or renovation of the property.
• Pre-construction period deduction(accessible in 5 installments ensuing the completion year)

The principal amount repayment of housing loan is also eligible for deduction under section 80c (Max deduction of Rs. 1, 50,000). You won’t be eligible to file an IT return unless  your total taxable earning in India (counting rental income and/or any other source of income) does not surpass the maximum amount not chargeable to tax (Rs2,50,000). But for people who lives in US and collect rent from India, in such cases applicable deduction could be claimed in US for taxes paid in India under the Double Taxation Avoidance Agreement between India and the US.

Income tax is payable on any sum of amount, movable/immovable property not including any gift received from any relative. There’s no gift tax in India. Thus, in case a relative, who stays in abroad and transfers money in your account through NEFT, depends on the relation it won’t be a subject to tax in India. Under income tax law- a. spouse, b. brother or sister, c. brother or sister of the spouse, d. brother or sister of either of the parents, e. any lineal ascendant or descendant, f. lineal ascendant or descendant of the spouse, g. spouse of the person referred to in clauses (b) to (f) above fall under the terms relatives. So, receiving any gift from any mentioned relative won’t attract IT obligation.
_LNN (Liyans News Network)- For property investment/ Sell/Rent visit the leading property portal in Kolkata. Get attractive deals on buying luxury property.

 

After the central Real Estate (Regulatory & Development) Act, 2016 came into force in May 1, 2017; Maharashtra is considered as one of the first RERA notifying states and the rules under the state Act is established as Maha RERA. Now under the Maha-RERA co-promoters will also have to maintain separate account to deposit 70% of the sale progress derived from the home buyers. The Maharashtra Real Estate Regulatory Authority (RERA) has notified a clause for the real estate co-promoters with an objective of restraint the fund diversion.

Any person or firm related to the project promoter through any agreement or arrangement is liable to share total revenue or total area, will be treated henceforth as co-promoter of the project. This will also include land owners, who work in an agreement with the builder to jointly construct a project.

The agreement with the promoters will decide the accountabilities of such co-promoters; they will be at par with the promoter of the project for any withdrawals from the allotted bank account. Such Individual or organization should submit a form B of Maha RERA rules, 2017.

The regulator of Maha RERA notification declares that co-promoters are those people who are related with the project development thorough any agreement or arrangement of the promoter. These people are designated to a share of the total area developed in the realty project. Such agreements should distinct the share of the co-promoters and ac copy of the same should be uploaded on the regulators’ portal during the time of project registration.

With the booking land prices, most of the developers are seen coming up with the joint development ventures. Such joint development agreements are materializing in an extensive proportion in Mumbai and Pune. Under these agreements, developers land into a deal with the landlords to jointly develop land parcels in exchange of a direct payment and a share in the proceeds of the complete construction.

According to the Maharashtra state notification Act, “The sale proceeds to these individuals or organizations should not be considered as cost of the project and withdrawn from designated bank account merely by the virtue of this arrangement.”

“West Bengal will soon finalize its respective RERA rules. Market will witness an upsurge in the sale volume with the RERA implementation as people willing to buy property in to Kolkata want to stalk the market change after state RERA declaration. With RERA implementation much-awaited positive buying sentiment will be drawn nearer, as the consumers won’t have any headache related to project deliverance and project quality,”- said West Bengal RERA expert Mr. Mahesh Somani.

– LNN(Liyans News Network)

 

Despite union government’s ardent instruction several states failed to meet the deadline of state real estate rules notification. West Bengal is one of those states, who has yet not finalized their drafts. RERA came into force on May 1, 2017. Central government has extended the time period for another 3 months, which completes on July 1. But sooner or later RERA will be implemented in West Bengal too, and according to that as potential buyers one should know how it would regulate the residential property sale in Kolkata.
The central Real Estate Regulation and Development Act (RERA) has been diluted by several states which have by far notified their state RERA norms. As per RERA developers must upload their project details, step-by-step development process (3 months basis) on RERA official site followed by the personal details of himself. Documents related to the project and land for e.g.- land registration, clearance certificate, title deed everything need to be visible before the potential investors. The unadulterated execution of RERA in Bengal will genuinely push the residential property sale in Kolkata, securing buyers’ interest throughout.

RERA will focus on the carpet area based price for the both commercial and residential properties across the country. As of now the residential property sale in Kolkata has been practicing based on the super-built area, but after May 01, carpet area of the property will be set as a key parameter of the project pricing starting from affordable to ultra luxury projects.

 

Let’s know about the carper area based pricing

Any property in north Kolkata with a super built area of 1500 sq ft in prime location, worth selling price of Rs. 5200 per sq ft, randomly we assume that within this 1500 sq area 1100-1200 sq ft is the carpet area of the very property and the remaining 300-400 sq ft is space is occupied by the walls, staircase, passage, lift etc. With the RERA implementation buyers are likely to pay for only the carpet area of the apartment.

 

How will it impact realty transaction?

Let’s us tell you property price is not going to fall in the coming years or soon, neither promoters will pay from their pocket for the common shared area of the apartments. Developers will include this price in the selling price of the property and for the eternity buyers will have to pay this cost. This particular execution is only to clarify the confusion of buyers related to super-built and carpet area, as mostly they are seen mixing the both terms and whirled in the trickery of the builders. This process will clarify the ambiguity between buyers and the builders.

Asking about the present status of residential property sale in Kolkata and upcoming RERA implementation in West Bengal, the RERA expert of WB chapter Mr. Mahesh Somani said, “The new pricing model will be a uniform platform for both the buyers and the builders. Buyer will be more aware of what they are paying for. Real estate practice will gain its much-awaited trustworthiness, as it’s surely going to strengthen the bond between buyer and seller. Else RERA has legal route for both of them.”

For residential property sale in Kolkata Mr. Somani added, “Not only in Kolkata RERA implementation is likely to fetch foreign investment and positive investments from reliable sources in the realty sector. But carpet based pricing won’t directly affect the pricing of projects.”

-LNN(Liyans News Network)

 

 

High-debt level is haunting after developers this time. The interest burden is likely to ascent by 15-20% during this FY. RERA defines that the minimum escrow account balance should have potential of 70% building completion. RERA will mount the debt levels upon the builders. Already the real estate market of India is going through market flatness; this move might make it to the base- as per the leading development companies of the country.

BSE Realty Index shows that the companies under its ambit had a combined debt of Rs. 52,598 in previous FY (as indexed till Sept. 2016), this year it gets a blow of 7.3 per cent up. In Sept. 2016 these companies had an average 0.8 times debt to their total equity. It won’t be surprising, if top developers have been set debt of 15-20 per cent in current Financial Year.

RERA is fiddling builders in its every fold and unfold, just to keep the market safe from further negative cash inflow. Without prior approval no project can be launched henceforth, that equivalent sum will be shooed. A developer won’t be able to juggle amount taken from consumers from one project to another. It’s mandatory for developer to keep 70% of the total advanced booking amount to their escrow account and use the amount for the same project development. Developers have been restricted from pursuing project sale acquirement.

Developers have to run into debt project-by-project this might lead to slump in new project launch. Any project should be done and completed with every required approval. Promoters are forbidden from advertising any project starting from commencement to completion. Previously they were able to finish a project with 50% from sale progress which is dropped down to 20-30% under RERA norms.

West Bengal RERA expert Mr. Mahesh Somani said, “Kolkata property market is relatively reasonable for every class of homebuyer.   But that’s not enough to push the sale volume. People willing to buy property in Kolkata are completely in riddle in terms of identifying the right time for property investment. RERA, implementation will definitely secure their interest but for now it’s adding up woes to the builders.”

Prime property markets in Delhi NCR, Gurugram, Mumbai and Kolkata is currently undergoing with 50% less in property sale in comparison to the previous accounting year. RERA shuts its doors for small scale developers of the town. Even biggies will find it challenging with business proceeds. Under this oddball market scenario developers can’t even think of price hike too.

– LNN (Liyans News Network)

 

Affordable housing sector now lures big PE firms and HFCs. Government’s push with lucrative incentives, advanced infrastructure and prompt approvals is turning this segment a major investment zone for Indian realty market. So far, this segment has been witnessing investment coming from small-scale investors. But now for meeting the deadline of 2022, government has geared up to attract biggies to generate major inflow in this segment.

Many major PE companies are now reaching this segment, for instance- Kotak Realty Fund which used to venture for MIG housing estates, now stretched its steps towards affordable housing segment.  Kotak thinks, they can earn actually a lot more against minimum investment. This segment has swift turnover to fulfill the cost of construction to the builders as well. Similarly, major construction companies have seen investing in low-budget flats in Kolkata in order to rotating a quick inflow.

‘’Low-budget flats have been receiving inflows from small-pockets of the country so far, thus these developers collect the resource from cheaper source of funds. Thanks to the latest infrastructural development the market is witnessing some of major contributions,” – said WB RERA expert Mr. Mahesh Somani.

As per the latest statistics, there is a shortage of 1.87 crore affordable homes, which is 95% of the scheduled housing program. Since, there is an increasing market demand; more developers should put their effort for this development to derive quicker money. Still some of the biggest market players think, when the inventories would achieve higher demand and higher selling volume, and then it would be correct time pour investment on this very segment. On the other hand, some find it really flexible on the stage of financing. In that case early-stage development would be the proper choice of investment. Based on location, price might differ, but again it reduces the risk of investment as well.

Experts, think that PE companies should set out new strategies while investing in low-budget projects. Normally PE investment comes on ‘last-in-first basis’ which they should alter for affordable housing segment. PE firms can take intermittent exits at early stage where small-ticket investment will keep the project going.

_LNN (Liyans News network)