Archive for August, 2016

TDS Obligation of a Home Buyer

Posted on: August 26th, 2016 by Nahars Commander No Comments

The best suggestion given to all the people who are looking to save on TDS (Tax Deducted on Source) from their income is to take home loan and buy a house. It is said that two purposes are solved at the same time. First is that you have your own house and the second is that you can claim tax savings for the next fifteen or twenty years (depending upon the tenure of your loan).

But there is a small catch to buying home which people are rarely told about. Like any other product there is a fine print of Buyers beware to purchasing homes too. No, it is not related to bank loans or the interest or the condition or the locality of the house. Yes these are important and are known factors about which there have been several discussions and several suggestions have been given by many knowledgeable people.

What I am trying to point out here is something which is rarely talked about. About a clause which is there but never mentioned by the buyers. Builders and promoters tend to have selective amnesia while promoting and selling their houses to the potential customers. It is not their fault and they cannot be blamed for it too. It is the buyer who needs to know their responsibilities as a potential house owner when it comes to paying their taxes related to their house.

There are several taxes which a house owner needs to pay but one of the most important taxes is related to the houses which costs more than 50 lakhs. The rule states that the purchaser of an immovable property is mandatorily required to withhold tax at the rate of 1% from the seller if the cost of the property is more than 50 lakhs. The main point here is that the tax rate of 1% is to be applied on the total amount and not the amount exceeding 50 lakhs. That means if the cost of the house is 75 lakhs then 1% tax has to be considered on the whole of 75 lakhs and not 25 lakhs (which is exceeding more than 50 lakhs). Also it is important that the tax amount that has been deducted should be deposited within 7 working days from the end of the month in which the tax has been deducted.

But this rule does not apply to people who are purchasing rural agricultural land. I can already see awe struck faces which reads “WOW, we never knew about this rule”. Well, now you know about it and sometimes it is better late than never. You can know more details about the TDS obligations by visiting the site Before I end this article let me warn you that if there is a delay in the payment of taxes from your side you will be penalized and the penalty is 200 per day for the number of days that were lapsed.

Impact of GST on REAL ESTATE – Positive or Negative?

Posted on: August 11th, 2016 by Nahars Commander No Comments

There has been a definite positive vibe in the market from the time GST (Goods and Services Tax)
has been passed in the upper and the lower house of the Parliament of India. The mood has been upbeat among the investors and the markets have been showing upward trends. These are very positive signs as far as investors are concerned. According to our Prime Minister GST will be helpful in killing tax terrorism.

But the common man is still apprehensive. The common man still does not know whether GST Bill is going to bring a definitive change in their lives or not. The three main factors which are directed to the lives or a common man are food shelter and clothing. His main concern is whether the cost of these three commodities will go down or not? If answered in a nutshell then yes it will go down on a long term. Short term effect is still a speculation and will be known only when the GST rate is finalized.

The common man’s dream of a shelter of his own is a dream of a life time. The real estate market has gone through a slumber for last few years due to high interest rates and other financial factors. Consumers have been vary of buying a house as they are not sure whether they will be able to pay the monthly EMI due to high interest rates. Therefore many builders have suffered huge losses.

Real Estate Industry’s contribution to India’s GDP is around 7.8%, and it generates second largest employment opportunity after IT Industry.

With the changes in the structure the speculation is that the tax will be lower than the existing cumulative taxes. But if the final rate is equal or higher than the tax % that is present in the current scenario then it will be a dampener and will burst the bubble of hype that has been created. That is because it will increase the final cost of purchasing a flat or a house which is under construction.

The picture looks murky for now but in the long term it should be beneficial for both the buyer and the seller and the real estate industry should be seeing an upward trend. That is because of rationalization in tax related compliance and expected gains in sectors like cement, steel, banking etc. which are directly related to Real Estate industry.
But how will all this affect the so called common man who is not able to realize his dream of owning a house? It is very simple equation, as the increase in cost was passed on to the consumers by the constructors in the same the benefits will also be passed on to the consumers. But how is that going to happen?

With the rationalization of related sectors the constructors will not need to pay extra for these commodities resulting in lower construction cost which means the cost of the house will definitely go down when it comes to the end customer.

Having said that we all need to wait till the rates have been fixed and till then all these points are mere speculations.