Reduce uncertainties of home purchase with competent broker 

Professional certification and experience can boost the odds of finding the right individuals

Purchasing a house comes with a fair share of uncertainties. However, these uncertainties get significantly reduced when you have a competent, professional, and credible broker to assist you.

Check credentials

A few elements bolster a broker’s credibility. He should have enrolled with his state’s Real Estate Regulatory Authority (RERA).

Find out if the broker is part of an association, such as the National Association of Realtors (NAR). “If a broker is part of an association likes ours, and he indulges in any wrongdoing, you can report him to the association,”

Also, check if the broker posses a professional certification. “Maharashtra RERA has empanelled five institutes to teach a 20 hour course on real estate to practising professional, which is allowed by a test. The Indian Institute of Real Estate run by NAR is one of the institutes that offer this course”

While the above filters are not fool proof, they will guide you towards a person who has invested time and effort in equipping himself for the job and is present for the long haul.

Experience counts

When it comes to experience, more is better.”An experienced broker would have witnessed and handheld his clients through both bull and bear phases,’ In his view, a broker should ideally possess at least 10 years of experience.

Experience in local market

When you narrate your requirements to your broker, he should be able to suggest a number of options.” The inventory the broker possesses is very important,”

Try to assess whether the broker has good knowledge of the princes prevailing in the area you are interested in, and is able to provide the pros and cons of various projects.” The location of one project might be good, but it developer’s track record may not be sound. The broker should be able to guide you on these counts”

Only by speaking to several brokers and assessing the depth of their knowledge can a customer make the right choice. The developer should also possess knowledge   of the area’s master plan, the government’s infrastructure related plans for it.

Engage with a recommended individual

Don’t get taken in by people who advertise a lot. Go by testimonials.”Ask for the number of the broker’s past clients and speak to a least three or four.

Check with friends, family, and colleagues. If several of them recommend a particular broker, your chances of finding a sound professional increase.

Carry out an extensive online search. Also check their social media accounts. Many clients nowadays share their experiences with a particular broker on social media. Google Reviews is another useful source.

Guidance on valuation

The broker should be able to provide his clients guidance on a property’s valuation. The broker should have a good knowledge of the rates at which recent transactions took place. He should also be able to factor in other variables such as the quality of interiors or maintenance charges to arrive at the right valuation.

Don’t overpay

The brokerage rate can vary from one region to another who operates in the National Capital Region, the buyer and the seller both pay 1 percent plus goods and services tax (GST) in the secondary market. The seller pay 2 % plus GST while the buyer pays 1% plus GST, In case of rentals; the brokerage fee is one month’s rental fee plus GST.

The client should clarify right at the start whether he will be required to pay any additional charges (documentation-related). Finally, the broker should have knowledge of the documentation involved in a real estate transaction. “He should understand the intricacies of the agreement to sell, sale, deed, etc., the key clauses therein, and should be able to explain their implications to his client.

POTENTIAL MINEFIELD

The broker should be aware of who owns the land that the project is being developed on, and whether there are any development agreements between the real estate developer and landowners.

If there is a dispute in the project, and there is stay on it, the broker should keep his clients away from such projects.

The broker must only sell RERA-registered projects and not unapproved ones.

The broker should know whether an under-construction property has received key approvals.

The brokers should be aware of whether a ready-to-move-in project has received the occupation certificate.

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 Ensure credit reports reflect loan closure, get NOC from lender

The Reserve Bank of India (RBI) recently issued new guidelines or standardising lending practices among banks, non-banking financial companies (NBFCs), and other regulated entities (REs). The directives address issues faced by borrowers, specifically the prompt release of property documents once a loan is repaid.

According to these guidelines, lenders must return all original property documents held as collateral within 30 days following the complete repayment of a loan. An RE will have to compensate a borrower at the rate of RS 5,000/- for everyday of delay. Explaining why the guidelines have been issued, Association of Registered Investment Adviser “There is inconsistency in adherence to RBI’s Fair Practices Code, which has resulted in customer complaints and disputes.”

Loan closure 

After paying the last equated monthly instalments (EMI), borrowers need to send a written letter to the lender requesting the closure of their loan accounts and the return of collateral documents, “If you need additional documents, such as invoices or detailed statement of account, make a specific request. Such records could come in handy in the future.

A lender will process the closure request and return all the original documents, usually within 7-10 working days. Make sure that all the documents you submitted at the time of taking the loan are returned, ”Some of these documents include the sale deed, title deed, loan agreement, and power of attorney.

Other documents include a final statement, possession letter, a No Objection Certificate (NOC), and other correspondence related to loan closure that after obtaining all documents, you should store them in a secure location. It is also advisable to make duplicates. Before signing an acknowledgement receipt, customers should verify in a bank official’s presence that all pages in a document are intact.

No objection Certificate

The NOC, also known as a closure letter, is a legal document that verifies a loan has been fully paid. “It is essential for legal purposes and to establish clear ownership of the property. Asking the lender for a final statement that details all the payments made towards the loan: Principal, interest, and other charges.” The  NOC should mention the property details (like address), the borrower’s name, home loan account number, loan starting and closure date, and amount borrowed and repaid. It should also mention that all dues have been paid and the property is debt-free.

Establish clear title

It’s essential to possess a clear title:  One that is free of liens or levies from creditors. “Possessing a clear title improves your bargaining positions when you go to sell the property. Both the borrowers and a bank representative must appear at the registrar’s office to remove it. A property on which there is a lien can’t be sold. Once a loan has been closed, the lending institutions must update the credit bureaus. “Monitor credit reports to ensure they accurately reflect the loan closure without discrepancies. Once the bank has issued the NOC and the lien has been removed, apply for a fresh encumbrance certificate (EC) from the registrar. The updated EC should document all property related transactions, including loan repayment. If the EC does not reflect the loan closure, borrowers need to approach both of the lending institution and the registrar. While the RBI’s guidelines aim to streamline the loan closure process, borrowers must remain proactive.”There are chances that a few things may be skipped, so monitor closely and ensure that each step is executed properly.

GUIDE TO REMOVING CAR HYPOTHECATION

Repay the car loan and collect all relevant documents from the lender, along with a No Objection Certificate (NOC).

Visit the Regional Transport Office (RTO).

Fill in Form 35 for the termination of hypothecation. Each state has its own format for this form, which can be found online or at the RTO.

Submit original Form 35, signed and stamped by the borrower and the bank; original bank NOC; copy of PAN; copy of car insurance policy; original registration certificate ; address proof, etc.

Get documents verified by RTO and pay the required fees.

Collect updated Registration Certificate (RC) at the given time.

Your car loan hypothecation will be removed once you collect your updated RC.

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 Travelling abroad? Tailor policy sum insured to destination country’s healthcare costs

Don’t accept any cover that comes with your travel package; understand coverage, exclusions and sub-limits, then buy

With the festival season approaching, many Indians are preparing for international vacations. While they are likely to expend significant time and effort on crafting the perfect itinerary, and selecting ideal 

destinations, fights, and accommodations, travellers often overlook the importance of carefully choosing a travel insurance policy. Instead, they may unthinkingly accept whatever plan their travel agent includes with their package. This lack of scrutiny could prove costly if any mishap occurs while they are abroad

Key parameters to check Sum insured: 

The sum insured must be adequate. “If you are travelling abroad, especially to a country with higher sum insured. At the same time, avoid over-insuring yourself. ”you may go for a relatively lower sum insured if you are visiting a country whose medical costs and exchange rate are relatively lower.

 Other factors that should go into determining the sum insured include the duration of the trip, your age, whether you are travelling alone or with your family, and whether your family members or you have pre-existing health conditions. Choose a higher sum insured if you are going on a long treip, and if your age is above 45. 

Coverage:

The plan must cover loss of luggage, flight cancellation, loss of important documents, and medical costs (including Covid-19 coverage). “If you plan to carry expensive items such as jewellery, electronics, etc., then enquire about the available add-on covers.

Not all travel policies cover adventure sports. Goel suggest that if you plan to indulge in such activities, you should find a plan (or one with a rider) that covers these activities. Also, consider buying coverage for emergency trip extensions and home burglary.

Exclusion:

Many policies don’t cover pre-existing ailments and complications arising from them, after-effects of a recent surgery, and also on. “Ensure that your pre-existing conditions are covered by the policy even if it means paying a higher premium. Failing to do so could result in significant out-of-pocket expenses abroad,”

Sub limits:

Most policies come with caps or sub-limits for specific coverage. These reduce the effectiveness of the policy considerably. “Ensure that the full sum insured is usable, if that is not possible; choose a policy whose limits are not overly restrictive.

Don’t end up with a lemon

Many travellers accept a plan from their travel agent without checking the parameters mentioned above. Travel agents are not well-placed to provide guidance on the right policy for you. “Travel agents may have tie-ups with only a limited number of insurers, so you won’t get an opportunity to compare a large number of plans and prices.

According to, the policy offered by travel agents could be basic, with a limited sum insured and much exclusion, whereas you may require a comprehensive cover. Instead of buying from your travel agent, consider visiting the portal of a leading insurance aggregator. Compare various policies, their features and prices. These portals even allow you to customise a plan according to your requirements.

Avoid purchasing, and being charged for, add-ons that you don’t need.”An add-ons cover for adventure sports is infructuous if that traveller does not intend to participate in such activities.

Some intermediaries charge their customers for providing basic assistance services such as helping with the claims process or providing emergency support. Insures and their distributors typically provide these services without levying any cost. Finally, declare all pre-existing ailments with complete transparency at the time of purchase. “Failure to declare these conditions can lead to denial of claim.

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 Seek refund if alterations in real estate project plan affect you

You can ask for your money from the developer even if you had earlier given consent to alterations

The National Consumer Disputes Redressed Commission (NCDRC) has ordered a hefty refund Rs 33 Crore, along with 12 percent interest, to three flat buyers in World One project in Upper Worli (Lower Parel), Mumbai

The developers were held liable for promoting the project without the requisite statutory approvals and for prolonged delays, exceeding four years, in handover. While property buyers faced many issues earlier, the enactments of the Real Estate Regulatory Authority Act of of 2016 (Rera Act) has led to a significant increase in transparency and accountability within the sector. The Act empowers homebuyers and allottees by granting them several rights.

Construction timeline

Under Rera, developers must inform buyers about the stage-by-stage schedule for project completion. This information should be clearly stated in the sale agreement or the allotment letter. “Any delay entitles the allottee to the remedies mentioned in the Rera Act.”

Experts say the homebuyers should not sign the Builder-Buyer Agreement (BBA) if the construction schedule is not mentioned in it. Raj Khosla, founder and managing director of MymoneyMantra.com, informs that homebuyers can also acquire a detailed construction schedule of their project from the Rera website.

Home loan borrowers should ensure that disbursements by the bank are aligned with construction stages, she should check in the Tripartite Agreement and the loan agreement that Agreement and the loan agreement that the disbursal of the loan amount is based on the stage of construction or the construction schedule.”

Right to posses the property

According to section 19 (3) of the Rera Act, buyers are entitled to claim possession of the property building associations are entitled to lay claim to common areas on date of possession. Homebuyers should check the BBA for a default clause ( the provisions in a contract that states what will happen if either party defaults or fails to hold up their end of the agreement) for anything that may be disadvantageous to them.

Right to refund

Section 19(4) of the Rera Act entitles allottee to a refund if the developer doesn’t comply with the terms of the sale agreement. “Under Section 18 of the Rera Act, an allottee is entitled to seek a full refund with interest for the period of delay.” The Supreme Court had ruled in a consumer’s complaint case that an individual’s cannot be kept waiting indefinitely for the possession of her allotted property and is entitled to a refund as well as compensation.

The right to refund exists even if the buyer had consented to alternations in the project plan initially. “If the allottee feels that the changes will affect her adversely, she has the right to seek a refund, even if she had given her consent in the allotment letter.”This is because the consent was given without knowing the full implications of the intended changes, which were not disclosed to her earlier.

If the builders fail to give possession, the homebuyer should issue a legal notice. Roy says if the developer fails to deliver possession or reply to the notice, the buyer should lodge a formal complaint under Rera for cancelation and refund, including interest and compensations.

Access to documents

Section 19(5) of the Rera Act gives buyers the right to access all crucial documents (like No Objection Certificate), and plans (say, drawings) throughout the construction process. “The purpose is to allow the buyer to analyse the project’s status and whether there are any implications on her decisions to own a property in it.”If the developer does not comply, buyers can seek intervention under Section 35.

Verify all relevant documents before investing.”If the developer denies access to any document, treat it as a red flag,”

HOMEBUYER’S CHECKLIST: COLLECT THESE DOCUMENTS

The homebuyers should collect a copy of the flat’s unit booking from, allotment letter, and builder-buyer agreement from the builder.

Register the Sale Deed with the authority concerned and keep a copy

Don’t forget to ask the builder for a copy of the possession letter and all the payment receipts

Check the completion certificate issued by the authority concerned once the project is completed

Homebuyers should collect a copy of documents from the bank, such as the loan agreement and the tripartite agreement.

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 Gift deed takes immediate effect, reducing scope for any dispute

The flip side is that the donor relinquishes control over the property right away upon gifting it to heir

The Bombay High Court recently upheld a Senior Citizens maintenance Tribunal judgement. It revoked gift deeds executed by an elderly women in favour of her son and ordered the man to vacate the property. This decision sets a precedent for the validity and revocability of gifts deeds in India. Anyone planning to use a gift deed should acquaint herself with its intricacies.

Gift deed serves as critical legal documents, formalising the voluntary transfer of property without monetary exchange. “While not mandatory, it is advisable to execute a gift deed to create valid documentary evidence,”

Key clauses

A gift deed should include essential elements such as the description of the property or assets being transferred. It should mention details of both the donor and the done, including their names and addresses. “The document should contain the donor’s intent to gift the property and confirm the donee’s acceptance.

The deed must be dated and signed by both parties

According to Section 123 of the Transfer of Property Act of 1882 and Section 17 of the Registration Act of 1908, it is obligatory to register a gift deed.“It is mandatory to register a gift deed with the sub-register or else the transfer of property is not valid, furthermore, the gift of an immovable property must be attested by at least two witnesses.

Who is eligible?

Any person who is mentally sound and legally competent can execute a gift deed in favour of a living done. “Minors and individuals deemed mentally unsound cannot make a gift deed. The gift deeds allow for the immediate transfer of assets. They come into effect during a donor’s life time.

This helps mitigate family disputes that may arise among legal heirs later. Their downside is that the donor relinquishes all control over the transferred property, and certain tax implications may also arise.

Tax implications

Generally, gifts valued above Rs 50,000 are subject to tax in the hands of the recipient. That gift from relatives and those received on special occasions are exempted.

Stamp duty and registration fees are payable at the time of registering the deed. Stamp duty is calculated based on the property’s market value or the consideration amount, whichever is higher.

The applicable rate of stamp duty varies from state to state. “Maharashtra, for instance, imposes stamp duty based on whether the gift deed is for movable or immovable property, whether the done is a family relatives (the definition of relative under Income Tax and Stamp duty may differ), and the property’s market value.

Legal position

There have been judgements regarding gift deeds from multiple courts. The Maintenance and Welfare of Parents and Senior Citizens Act, 2007, prescribe the revocation of gifts deed in limited circumstances. To avoid revocation, be careful about the conditions n the deed. “Some experts suggest executing a registered will instead, which is legally difficult to assail post-death, rather than making a gift deed.

Will versus gift deed

While both instruments facilitate the transfer of assets, they serve different purposes. A gift deed is effective immediately and during the lifetime of the donor, whereas a will takes effect upon the donor’s death. Mittal says that cash gifts exceeding Rs 2 lakh attract equivalent penalties while gifts to wife or daughter-in-law could lead to clubbing provisions in the hands of the door.

For those dealing with the complexities of assets transfer, it is advisable to consult a legal expert and make an informed decision tailored to their individuals needs.

 

GIFTS DEED VERSUS WILL KNOW THE KEY OWNERSHIP

Gift deed: Ownership is transferred in the name of the done as soon as the gift deed is executed and possession of the property is handed over to the done

Will: Ownership of the property remains with the testator during his lifetime. The beneficiary gains ownership of the property only after the testator’s demise.

REGISTRATION AND STAMP DUTY

Gift deed; A gift deed must be compulsorily stamped as well as registered.

Will: A Will is neither required to be stamped nor registered.

INCOME TAX

Gift deed: Income tax is payable if the value of the gift exceeds Rs 50,000/-, provided the gift is not made to a relative.

Will: No tax is levied on assets received through a Will.

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 Tax liability exceeds Rs 10,000? Pay advance tax, avoid interest

Salaried employees with substantial other incomes should declare these to their employers to avoid tax liability

The income tax (I-T) department wrote to an estimated 500,000 taxpayers between April and August over zero or low advance tax (AT) payments. It sent these intimations after analysing “significant transactions “data for previous financial year and the first quarter of the current financial year. Taxpayers must understand AT-related rules to avoid getting a notice later.

What is advance tax?

Any tax-paying business or individuals who is salaried or self-employed has to pay AT if their total tax liability exceeds Rs10, 000 /- in a financial year. “The origin of this is the pay-as-you-earn scheme. The objective is to facilitate early tax collection for the government and to help taxpayers avoid the hardship of finding huge funds to pay tax.”

Salaried individuals

For salaried employees, the employer calculates the tax liability and deducts TDS (tax deducted at source) from the employee’s salary. Hence, they are not liable to pay AT.”However, if a salaried person has income other than salary (like rent, income, interest from fixed deposits, etc), and if the tax liability on such income equals or exceeds Rs 10,000/-, then they are liable to pay AT on those other incomes. Even then an employee can avoid AT by declaring this income with her employer, who can deduct additional tax evenly from the salary.

When estimating AT liability, prepaid taxes like TDS or tax collected at source are subtracted from the calculated tax liability. “If an employee’s fails to provide details of other income or deductions to their employers, the deduction of TDS can fall short, leading to an AT liability that needs to be settled later.”

If you have changed jobs, provide the salary details of the previous employers to the new employer to account for the same for TDS deduction, or else you may be liable to pay AT, a tax and financial services software platform: “If the new employers is not deducting tax as it should, pay the tax yourself to avoid interest on non-payment of AT.”

Professionals

Professionals must pay instalments every quarter on or before the due date, failing which they are charged interest, a network of tax and consulting experts: “Specified professionals such as doctors, lawyers, architects, etc., who have opted for the presumptive scheme under Section 44AD or 44ADA of the I-T Act, are required to pay their entire AT liability in one instalments applicable to other taxpayers) on or before March 15 of the relevant financial year.”

The presumptive income scheme is applicable only to resident assesses whose total gross receipts from profession do not exceed Rs 50 lakh. If the amount of cash received during the previous year does not exceed 5 percent of total gross receipt, the threshold limit for total gross receipt, the threshold limit for total gross receipt shall be RS 75 lakh instead of Rs 50 lakh, effective assessment year 2024-25. Note this change and calculate AT accordingly. Maini states that any payment made as AT on or before March 31 will be considered as AT for that financial year.

Non-resident Indian (NRIs)

NRIs are liable to pay income tax in India or income derived from Indian sources. If their tax liability in a financial year exceeds Rs 10,000, they are obligated to pay AT. “When an NRI receives salary income in India, whether directly or received on their behalf it becomes subject to Indian tax regulations and is taxed at the applicable slab rate.”

Double taxation avoidance agreements (DTAAs) between India and other countries are a critical considerations for NRIs: “If such an agreement is in place, the DTAA provisions can supersede the I-T Act provision if they are more favourable to the taxpayer. Hence, carefully evaluate the DTAA provisions as they can significantly impact tax liability.”

Any person making payments to an NRI must withhold tax at the prescribed rates if those payments are taxable in India. “Non-residents should be well informed about withholding tax implications because it is factored in when calculating estimated tax liability for AT purposes.”

Senior citizens

Singh informs that a resident senior citizens (age 60 year or above) not having any income from a business or profession is not liable to pay AT. Non-resident senior citizens, regardless of the nature of their income, are liable to pay AT. “Non-residents must adhere to AT provision even if their income is solely from investments sources.”

Points to keep in mind

Failure to pay AT or underpayment may result in penal interest under sections 234B and 234C of the I-T Act. “Missing payment by a single day in a quarter ads an interest liability of 3 percent.”

Singh explains that no interest is charged if the shortfall in AT payment is due to unexpected or underestimated capital gains or speculative income. He adds that the interest, when applicable, is calculated using simple interest. Surana urges taxpayer to download the challan generated after AT is paid, as the BSR code and challan number will be required while filing tax return.

STICK TO A SCHEDULE FOR PAYMENT OF ADVANCE TAX

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Correct errors and omissions in ITR with updated return

Remember that an updated ITR can’t be used to declare lower income, claim losses, or request more refund

While the original deadline to file income-tax return (ITR) was July 31, individuals can still file a belated, revised, or updated return, based on their circumstances and timing.

If you have not yet filed an ITR for the 2022-23 financial years (FY23), you can file a belated return. If you have already filed your ITR, but now realise that there was a mistake or you misreported your income, you can file a revised return.

The finance Act, 2022, introduced the concept of updated return (ITR-U) under section 139 (8A). “It is form that allows individuals to update their ITRs and correct errors or omissions. Taxpayers have a two year window from the end of the year in which they initially filed their return to make amendments.”

An individual taxpayer who is eligible to file an updated return can do so even if she has not filed an original or a belated return.

Who can file

An updated return can be filled if the return was not filed, income was inaccurately reported, the incorrect tax rates were applied, to reduce carried-forward losses, or to correct the wrong income category. “An updated return can be filled for original belated or revised return. However, only one updated return is allowed per assessment year.”

In FY24, a person can file an updated return for assessment year 2021-22 and 2022-23.

Pros and cons

If taxpayer is liable to file an ITR under Section 139, she can comply with this requirement by filling an ITR-U, thereby protecting herself from penalties for misreporting or underreporting income. “Filing ITR-U helps evade scrutiny assessment under Section 143(3), best judgement assessment under section 144, and income escaping assessment under Section 147.”Taxpayer can also protect themselves from surveys, search and seizure proceedings by filling ITR-U.

As for the cons, “This return can’t be filled to claim refunds, losses, or a refund in excess of what was claimed in the original or belated ITR.

When to file updated revised or belated ITR

If you missed the July 31, 2023, deadline for filing your ITR for FY23, you have the option to file a belated return. “A belated return allows you to file your ITR after the deadline, but there are new consequences. You may be liable to pay a penalty and interest or any tax payable. Also, you can’t revise belated return once it’s filled.”

Furthermore, losses under certain heads of income, such as capital gains and business income, can’t be carried forward to future years if you file a belated return. If you’ve not filled the original ITR, instead of waiting to file an updated return, go for a belated return, “If someone missed the July 31, 2023 deadline to file their ITR for the year 2022-23, it is better to file a belated ITR rather than an updated ITR. Filing a belated ITR by March 31, 2024 is a way to fulfil tax obligations and reduce the risk of having to face any consequences.”

“If the taxpayer failed to disclose certain incomes and pay the appropriate tax, they should file an ITR-U.”

Note that the updated ITR can’t be used to declare lower income, claim losses, or request income refunds. “When there is an error, additional income has to be disclosed, or if there is any mistake in the original or belated ITR, which may result in a refund also, a taxpayer can file a revised return until December 31 of the relevant assessment year.”

However, no refund can be claimed with ITR-U.

HOW TO CALCULATE TAX LIABLITY FOR UPDATED RETURN

Consider the income tax payable

Next, consider the interest and free payable for non-filing

You will also have to pay an additional tax

This will equal 25 percent of the tax if the return is filled within 12 months of the end of the relevant assessment year.

It will be 50 percent if the return is filled within 12-24 months of the end of the relevant assessment year.

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