CBIC sets May 10 as deadline for realtors to opt for old GST rates
Real estate developers can choose between the earlier and revised goods and services tax (GST) rate till May 10, failing which they will be deemed to have migrated to new tax rates. The time window follows the decision of the GST Council last month to allow realtors to choose between a 12 percent rate with the option of input tax credit (ITC) or 5 percent without it, and in the case of affordable housing projects, an 8 per cent rate with tax credit or a 1 percent rate.
The reduced rates decided in last month’s meeting kicked in from April 1. Further, the definition of affordable housing was redefined by linking it to cost as well as carpet area: flats up to Rs 45 lakh and with a carpet area of 60 sqm in metros (Delhi-NCR, Bangalore, Chennai, Hyderabad, Mumbai-MMR, Kolkata) or 90 sqm in non-metro areas. The Central Board of Indirect Taxes and Customs (CBIC) has issued a notification giving real estate companies a one-time option to choose either of the tax rates. “Provided that in case of an ongoing project, the registered person shall exercise one time option … to pay central tax on construction of apartments in a project at the rates as specified …. by the 10th of May, 2019,” the CBIC said.
You can’t have biased agreements, SC tells developers
In a move that could provide much-needed relief to homebuyers and level the field with builders, the Supreme Court has held that real estate developers cannot have agreements that are biased against buyers. The apex court pointed out that such a contract would fall under unfair trade practices of the Consumer Protection Act. A two-judge Bench of Justice U U Lalit and Justice Indu Malhotra was hearing a builder’s appeal against the National Consumer Disputes Redressal Commission’s (NCDRC’s) judgment, asking it to refund the entire cost of a flat to the buyer for inordinate delay in handing over possession of the property. While affirming the NCDRC’s judgment, the two-judge Bench said the agreement that the builder signed with the buyer was “wholly one-sided and unfair” as there were stark incongruities between the remedies available to both parties.
“Builders do have such clauses in their agreements but the courts have tried to balance the equities between builders and flat buyers from time to time. That does not change the fact that there is an over-legislation in the sector, as there are many avenues available to buyers,” Simranjeet Singh, partner at law firm Athena Legal said. The buyers, Singh said, can approach Real Estate Regulatory Authority (RERA), National Company Law Tribunal (NCLT), NCDRC and other for a redress of their complaints. Industry experts, on the other hand, believe that the apex court has unfolded a fair-play game between buyers and builders. Previously, builders charged almost double the penalty amount from buyers in case they defaulted or delayed payments. On the contrary, if builders delayed the project, their penalty rates were nearly half. Thus, this ruling by the apex bank has ensured a level-playing ground for both buyers and builders.
Things to look for in an under-construction project
It is a known fact that real estate is an effective investment tool, and it is highly profitable if an individual puts money at the initial stage. Property is priced the lowest at its launch and the cost appreciates as construction progresses. “An investment made during the earlier phases of construction is bound to reap more returns over the long-term. It is imperative to time the property purchase well to gain maximum profits. Although it is safer today to buy a house in an under-construction project owing to RERA, it is still essential to keep a few things in mind before making such a purchase. An attractive brochure or big hoarding of an upcoming residential project appeals to everyone, especially those looking for a house. However, there is always the doubt whether it is safe to invest all the money in the under-construction project. The dream home that he or she has been waiting for is in pictures and may take years to see the structure in reality. Hence, it is important to consider certain factors while planning to invest in under-construction projects.
Area Focus: Bandra calling
Bandra is blessed with a robust social infrastructure, this micro-market boasts of quality housing developments and excellent connectivity. Competitive Edge: Bandra West, an upscale neighborhood in Western Mumbai, is home to many leading personalities from the cricketing and film industry. Due to the demand from these high net-worth individuals, this micro market boasts of quality housing developments. At the same time, there are also mid-level properties available for rent to cater to the increasing presence of working professionals in surrounding areas. Connectivity and Infrastructure: The entire Bandra region is split by the local railway network. While East Bandra developed into a commercial hub, West Bandra transformed into a leading residential neighborhood. Proximity to the city’s domestic and international airport and the commercial district of Bandra Kurla Complex has provided an impetus to the residential market here. Additionally, Bandra West is centrally located, offering good connectivity to South Mumbai via the Bandra Worli Sea Link, to the Western Express Highway and Eastern Express Highway via Santa Cruz and the Chembur Link Road. The proposed Bandra-Mandwa-Belapur Ferry Route will further enhance the location’s attractiveness in years to come.
Holding period begins from flat allotment: ITAT
In a decision that will benefit many taxpayers, the Income Tax Appellate Tribunal (ITAT), Mumbai bench, recently held that the date of allotment of a house shall be treated as the date of acquisition. The holding period will be counted from this date and not from the registration date. Gains from the sale of a long-term capital asset are treated as a long-term capital gain (LTCG). For an asset to be regarded as long-term, the holding period of a house is 24 months. Prior to the 2017-18 financial year, it was 36 months. The tribunal’s decision is important as a taxpayer (under Section 54-F) is entitled to a deduction from LTCG arising on sale of a house if investments are made in another house within a stipulated period. This deduction reduces the taxable component of the capital gains and results in lower tax outgo. On the other hand, if the gains arising on the sale of a house are treated as short-term, purchase of a new house will not entitle a taxpayer to any such benefit.
Creating a Smart Home is easy with the right tools and simple taps
A few years ago, creating a smart home with coordinated controls for lighting, multiroom audio, and heating and cooling required a comprehensive home-automation system and a renovation. Today, many of those functions are accessible through affordable, consumer-friendly products. But there are now so many home technology products available — capable of performing so many different tasks — that it can be difficult to figure out where to start. Here is some advice from technology experts on how to do it yourself.
Check your WiFi: Most smart-home products use wires for power but rely on WiFi to communicate with the internet and smartphones. A home WiFi network is a requirement and the range of that network matters. In larger homes, a single WiFi router may not be enough. The way to create a robust home network is to install a mesh WiFi system to create a single network over a larger area and prevent dead zones. Start with one thing: There is no need to make your home a technological wonderland on day one. You can start with a single smart plug. That will allow you to turn a lamp on and off using an app. Choose the thing that seems most useful for your lifestyle — a smart dimmer, thermostat, speaker, security camera or something else — and add other things later.
Goodbye Tax on House sale
Selling your property can be taxing. However, you can now skirt the Capital Gain Tax (CGT) and profit from your property decision. With the festive season having commenced for the sector, realty transactions are taking place at a brisk pace. Hence, if you are looking to buy another apartment by selling your existing property, bear in mind: you will have to pay the Capital Gain Tax (CGT) on it as well. After all, every property transaction is scrutinized by the tax department.
What is Capital Gain?: Capital gain is of two types: Short Term Capital Gain (STCG) and Long Term Capital Gain (LTCG). So, if you have bought a property and you sell it in less than two years (24 months) of the purchase date, your STCG is calculated by deducting the cost of acquisition, including the money spent on renovating the property, and the transfer cost (from the sale price). “STCG is taxed as per your normal income tax slab of the relevant year of the sale,” informs Nagesh Sharma, founder, MeraLoanDoctor. LTCG is calculated when you hold the property for more than two years and then sell it. It is taxable at 20 percent of the gains earned from the sale. Here, while the calculation is the same as that for short-term gain, the cost of acquisition and improvement is adjusted for inflation. This is called indexation.
The Fine Prints in Property ad you must understand
Are you looking at an ad stating ‘no GST’ on that new home, but don’t understand the logistics? We decode advertising jargon for you… Get assured returns till two years: If you have bought the house for an X amount, the composite price paid by you is higher (if you are an investor). After all, the rules are different for an end user. So, basically, the money coming back to you every month is ‘yours only’. Pay 5% and the bank pays next 65%: Here the buyer pays five percent as down-payment, then the bank shells out 65 percent and eventually at the time of possession, you pay the remaining 30 percent. Also, from the time the bank starts paying, you simultaneously start disbursing your pre-EMI (interest on the amount). And the actual EMI (principal + interest) starts post possession of the property. – Abhishek Kulkarni, managing director, Million SqFt Realty Private Ltd
Zero stamp duty: It does not mean that there is no incidence of stamp duty charged on the property. The developer is going to pay it on your behalf and has included it in the total cost of the property as well. Technically, you are not getting a discounted rate for your house as the composite cost is inclusive of the stamp duty. RERA-compliant project: As per the law, all projects have to be registered under the Real Estate (Regulation and Development) Act, 2016. Hence, it simply means that the developer has registered his project before initiating construction; however, there could be deviations during the construction phase. 1-BHK Rs40 lakh onwards: The quoted figure is only the Base Selling Price (BSP) of the property. It does not incorporate other charges, which will ultimately make a difference to the overall cost of your property. – VIVEK DAHIYA, managing director – north, Cushman & Wakefield India.
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