Tamil Nadu government declare “No registration fee, stamp duty for new apartment”

The welcome move comes shortly after some sub registrar offices demand registration of apartments attracting stamp duty and registration fees.

The registration department in Tamil Nadu has clarified that there is no need to pay stamp duty and registration fees when they are ready to occupy new apartments and buildings. The move comes in the wake of an effort brought in during the COVID-19 crisis and is set to provide some relief for house buyers.

It should be noted that this is only applicable to the first sale of the property.

The Inspector General of Registration  issued an order that defines the Undivided Share (UDS) of a property under the bracket of stamp duty and registration fee.

If a document is submitted for registration for the first sale of an undivided part of the land, the registration authorities are instructed that the subject of the sale document for the sole reason of issuance of completion certificate being competent to the building. Do not demand or urge to be included. A communication from the Inspector General of Registration for Sub-Registrars said.

This will help house buyers save a combined 11% stamp duty and registration fees that they will have to pay for the new apartment.

State Treasurer of the Builders Association of India S Ramaprabhu said that the order is subject to UDS only for stamp duty and registration fee.

For example, the price of a new flat is Rs 60 lakh, out of which UDS is Rs 20 lakh and the remaining Rs 40 lakh is the price of the apartment. House buyers do not require stamp duty and registration fees on the building. This is a welcome step for property buyers in completed projects as it does not attract GST,” he said.

Real estate has not grown well in the last few years due to several policy changes. The current epidemic has also dealt a severe blow to the industry. It is anticipated that the move will boost consumer sentiment and help in faster recovery of the sector.

Impact on Indian Housing Market due to COVID-19

Corona virus proliferation has further delayed a recovery that may be due to measures launched to revive various government demands, however, it does not appear that prices will fall immediately. Niranjan Hiranandani, national president, NAREDCO, says that "reviving Indian realty is the second largest employment generator, not only from the point of view of GDP growth, but also for job creation as the multiplier effect of more than 250 affiliated industries in the region is.

Recently, the Center announced more tax breaks and lower interest rates on home loans to make purchases more attractive, besides setting up Rs 25,000 crore stress fund for speculation.

He called for a slowdown in the residential segment, which has already stalled housing sales, project launches and price increases in India's residential realty sector, which is under pressure due to mega regulatory changes due to Real Estate Regulatory Authority (RERA), Goods and Services Tax (GST), Demonetization and Benami Property Law.

According to rating agency ICRA, the epidemic, if not soon included, will not only significantly affect the economy, but will adversely affect the cash flow and project delivery capabilities of developers.

"Although in the case of a prolonged outbreak, the impact on overall economic activity is likely to be deeper and more sustained, resulting in a more significant impact on developer cash flow and project execution capabilities, leading to a wider credit negative impact." ICRA said in a recent note that the three-month deferment announced by the RBI on loan on March 28 would provide some comfort to the builders.

“The injected liquidity of Rs 3.74 lakh crore (by RBI) with a three-month moratorium on all loans by financial institutions will ease short-term liquidity concerns and help developers as well as homebuyers. It is a great relief for developers and buyers to help ease the challenges they currently face,” says Ramesh Nair, CEO and Country Head of JLL India.

Anticipating the delay in completion of the project and supporting the builder community, the Real Estate Regulatory Authority in Maharashtra has announced a 3-month extension in the completion deadline of the project.

Recall here that real estate developers in Mumbai, the state capital and India's financial nerve center, have the largest selling stock in the top nine markets.

“Due to the 21-day lockdown outbreak of COVID-19, both manufacturing and sales activity has come to a complete halt in the entire real estate sector. At many sites, construction workers have also moved back to their hometowns. Even after the lockdown, the activity will only recommend slowly, which will cause project delays anywhere between at least 4 to 6 months,” said Sharad Mittal, CEO and head, Motilal Oswal Real Estate Funds. Welcoming the announcement of Maharera, Mittal said that although it cannot fully compensate the sector with actual project delays that are likely to be direct, 'it is certainly a decision in the right direction, to support real estate developers and the region. Overall in this global crisis.

STAY HOME, STAY SAFE, STAY ALIVE

Real Estate Sector benefits for Budget 2020

The Government of India has made its final presentation about the Union Budget of the session. The Union Budget has received some big news, acknowledging torpidity in the real estate sector that has been struggling with shallow growth over the past few years. The government has made some important disclosures that will provide the necessary ease to the common people. , Including home buyers as well as builders. This is an interesting budget, in which the government has tried to help the industry to control the decline in the real estate industry.

The realty sector that changes key are:

Exemption of TDS

The proposal to reduce GST on homebuyers is very helpful. Under the current Income Tax Act (Sec-194L), a person who is responsible for paying rent, has to deduct TDS on the amount paid if he passes more than Rs 1 lakh 80 thousand during a financial year. The Interim Budget 2019 proposed to increase this exemption limit from Rs 1 lakh 80 thousand to Rs 2,40,000 for a year. This step will be very useful for property owners who rent their property for business as they will receive higher rental income which will doubtless be deducted as tax. The move may entice more investors to buy a second home.

Demonetization rent

According to current regulations, when a person owns several residential homes, they can now choose one of them as "self-occupied" and the other will be seen as renting by default. Prior to this, no one would have to pay any tax on the "self-occupied" property, but the other would be charged the same as the house that was rented.

With this move, the government has tried to increase second home sales by meeting the criteria for genuine self-occupiers who already own a house. For self-occupied second homes, where families are living, consumers do not have to pay any tax on the rental income.

On the other hand, for the real estate industry, where flats / apartments serve as its index, the tax exemption on constitutional rent was proposed to be increased from 1 year to 2 years. This means that builders or developers will not have to pay any outstanding interest on their untax properties for a period of two years, for a period of two years after the completion of the project.

Income tax per year Rs. 5 Lakh

As per the Budget 2019 proposal, salaried employees with an income of up to Rs 5 Lakh per year will be exempted from income tax, and if they avail the 1.5 Lakh exemption available under 6.5 Crore per year, then earning 6.5 Lakh per year. Employees with the same will be exempted. Income Tax Act. However, tax rates have been retained. The proposal to give tax exemption for income up to Rs.5 Lakh will help in increasing the budget of the home buyer and may also provide for the demand of housing.

The new standard deduction limit, which is Rs 40,000 as per last year's budget, has been increased to Rs 50,000.

LTCG discount

Under Section 54 of the IncomeTax Act, the benefit of saving capital gains will increase from an investment in a residential house to a capital gain of up to two crore rupees for a taxpayer in two residential houses and this benefit can be availed only once in a lifetime.

Tax Benefit Expansion on "Housing for All by 2022"

Section 80-IBA was added on 1 April 2017 of the Income Tax Act to allow a 100% deduction on any profits or gains from the business of developing and building. This benefit is proposed to be extended for one year now, that all housing projects to be registered and approved under the Real Estate Regulatory Act by 31 March 2020. The move will force builders to develop more and more affordable housing projects but this tax exemption proposal is directed at setting limits based on the location of the house and the carpet area.

An interest grant on a home loan of 4% will be provided for housing loans up to Rs 9 lakh, with an income of Rs 12 lakh per year and a rebate of 3% on home loans up to Rs 12 lakh for those earning Rs 18 lakh. Last year has already been offered in the interim budget last year to improve housing demand benefiting homebuyers.

The conclusion

Apart from this, the above changes which have a great impact on the real estate sector, other proposals are those that give tax exemption to individual taxpayers whose annual taxable income is Rs 5 lakh and for a salaried employee from Rs 40,000 in standard deduction amount. There will be an increase of up to Rs 50,000 Profitable investors.

Real estate market in Gurgaon

2018 did not live by the expectations, for the real estate industry, and the market was on a slowdown from the starting of the year due to the execution of game changing policies by the government.

2020 Gurgaon is shining better than expectations, with multiple factors enhancing Gurgaon real estate development on several fronts. 

The real estate trends expected for Gurgaon in 2020:-

Economy: India’s economic growth is balanced to create more job opportunities and Gurgaon is a hub of every major business. This will lead to the establishment of jobs and more people moving to the city will lead to housing demand. There will be both, the end-users buying homes as well as the investors buying properties to generate rental income from.

GST: GST is now working absolutely smoothly and there are talks of bringing the entire real estate segment under it. The execution and reformation of GST are not just advantageous for the businesses, but also for the buyers.

Affordable Housing: he government’s initiative towards affordable housing has started creating results and more and more developers have started building projects to provide to the residents.

New launches:  Things are finally heading in the right direction and various developers are launching many new projects.  This includes both in the luxury segment as well as in the affordable.Investors are believed to be back in the market to create submissive income through rentals as there is a lot of workforces in the city, who needs housing, but does not want or cannot afford to buy one.

RERA act (Real Estate Regulatory Authority): It was introduced in 2016 to protect the interests of the home buyers. The main objective of RERA is to provide relief to buyers from malicious builders. In which the area of land proposed to be developed does not exceeds 500 sq meters or the number of apartments proposed to be developed does not exceed 8.

Infrastructure: Gurgaon is now well connected with surrounding area like Delhi, Faridabad and Sohna and major roads like NH-8, Dwarka Expressway, Southern Peripheral Road, Golf Course Extension Road, shall provide an improvement to connectivity.

There is also lots of growth expansion happening in terms of civil infrastructure as well as private one in terms of schools, hospitals, commercial space etc. It surely looks like Gurgaon offers excellent returns on investment for investors and an attractive lifestyle for end-users. For those planning to invest in 2020, Gurgaon is definitely a sure shot destination to grow your  

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Realtors challenge the constitutional validity of the National Anti-Profiteering Authority

Mumbai: The government claimed by some real estate developers to practice in the court of the National Anti-Profiteering Authority (NAA) of constitutional validity and claimed that the body does not have the authority to engage on punitive penalties for it.

This happens after the NAA slapped notifications on 50 real estate developers beyond India to benefit from the Goods and Services Tax (GST). According to a warrant appeal registered in the Delhi High Court, the NAA is on a standard with a tax bench, but it is not actually a judicial member as a part of it.

Through the GST framework, the benefits of rate reduction have to be passed on to customers. If a firm is inadequate to do so, it can be fined and invested for profiteering from tax management. Split with anti-profiteering requirements in the GST Act: “A reduction in the price of tax on any supply of property or assistance or input tax credit shall be passed on to the beneficiary (consumer)." This same reduction in prices.

Input tax credit applies to a mechanism supporting the GST framework, in which the company when purchasing funds when it purchases raw materials or any other charges can be levied on the buyer when marketing assets or services is done.

Many real estate developers based in Mumbai, Chennai, Delhi and Bengaluru had to pay fines as they did not run on the benefits of input tax credit to customers.

According to inquiries by the NAA, developers are not spending on the advantages of input tax credit to customers. Real estate developers are investigating the NAA's jurisdiction to raise concerns over fines.

Khaitan & Co. partner Abhishek A. Rastogi said, "What is of concern is that the legal requirements (section 171) do not exist for interest," it said.

This is when the vested tax department initiated the developers' investigation on the development credit to which they were entitled. Real estate professionals had initiated taxes paid under the pre-tax regime on their GST responsibilities and the tax department directed them to change their activities.Many real estate developers had sought transaction credits on under-construction flats and were entitled to property or inventory for these, but the tax department denied the allegations by sending notifications. Taxes for some of the best players are in the hundreds of crores.

The NAA has also examined some additional divisions, such as FMCG and Pharma, for profiting from GST rate cuts in the past. The NAA investigated tax administrators and CFOs of about 150 Buyer Goods and Pharma Corporation to find that their stock was sold at low rates after the GST rollout on June 30, 2017, with publishers and stockists.

Some organizations also engaged the government and the complex tax department above GST on these occasions which could put long-term land lease agreements at risk.

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Builders can get 10 years tax exemption on rental profit tax on rental housing

According to the Income Tax Act in India, income from property is considered taxable. This tax is levied on income derived from a commercial, residential or industrial property. If income is received from a property, the owner of the property is required to pay tax on the actual income as well as the rental tax received from the property. Deemed rentals are analyzed by estimating the potential income that a property can achieve keeping in mind the parameters and dynamics of the market.

Rental Houses Tax on Property Income

Income from self-occupied property is deemed to be income from rented property and vacant property i.e other than self-occupied house, is taxable under the section "Income from property". The taxpayer is required to pay tax on the "annual taxable value" of the property, which is calculated after adjusting the deduction under section 24 from the Net Annual Value (NAV) of the property.

Tax waiver of 10-years

In lieu of the decline and slowdown in investment in the real estate sector, the Finance Ministry is open to considering a 10-year tax waiver for real estate developers on the gains from rental housing. This can be detrimental to supporting revived investments and subsequently promoting a slowing economy.

Pleading by Real Estate Industry

To address this issue, real estate developers have been directed by the ministry to make suggestions to address the challenges faced by the industry. In addition, developers have been asked to present a rental business model where deductions are reimbursed and exempted from taxes for a period of 10 years. The real estate industry has long been demanding that the government take steps to rectify liquidity shortages due to lack of funds from banks and NBFCs.

Current GST Waivers

Earlier in 2019, the GST Council dropped GST on sluggish housing to 1% on affordable housing and GST on 8% (without input tax credit) on under-construction houses to boost sluggish demand. In real estate. In addition, for ongoing residential projects, builders have the option to choose between the old GST and the new GST to facilitate input tax credit issues.

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