360 degrees Real Estate Services: July 2018

How will Mumbai Metro impact the Real Estate Market in the City?

4:39 PM

How will Mumbai Metro impact the Real Estate Market in the City?
With Mumbai struggling with transportation infrastructure for long, we look at how the multiple metro rail lines planned for the city, will help the commuters and the impact it will have on the real estate sector

Transportation infrastructure in cities across the globe, has a proven positive impact on real estate and also along the peripheral micro-markets of the cities. There is optimism, hence, that the development of the metro rail in Mumbai, will bring about a transformation and boost the realty sector. “Hopefully, the Mumbai Metro’s upcoming corridors, will be operational in 5-10 years. Any planned infrastructure results in massive real estate growth, in and around the corridors and a similar impact could be seen when the VAG (Versova-Andheri-Ghatkopar) Metro line became operational, transporting a large number of commuters daily between the western and eastern parts of the city. Similarly, residential and commercial properties located close to the upcoming metro hubs, will command a premium,” says Rajat Khandelwal, chief marketing officer, Omkar Realtors and Developers Pvt Ltd.

Mumbai Metro rail and its impact on real estate growth

Dharmesh Jain, CMD of Nirmal, points out that with the metro coming up, property rates in Ghatkopar, Andheri east and west, have soared. “Andheri east, which was only a commercial area earlier, now has many residential projects too. JP Road, Andheri west, had a lot of traffic woes. However, after the metro was opened, not only have the roads become comparatively free but the demand for housing has also increased. Affluent builders have already started developing projects there,” he adds.

The metro network is a blessing for Mumbai, as commuting from any part of the city to another, will become easy, says Khandelwal. “The metro will uplift those areas, which are far from the suburban railway stations. It will also have a significant impact on the lesser-known areas covered along its routes. One can expect approximately 10-50 per cent appreciation, in the short term. The areas under the metro route that is already operational, have already witnessed an appreciation of 10-20 per cent,” Khandelwal elaborates.

Micro-markets that are likely to benefit from the Mumbai Metro

The combined effect of mega-projects, such as the Eastern Freeway, Santacruz-Chembur Link Road (SCLR) and the monorail, have positively impacted the residential and commercial markets in Andheri, Jogeshwari and Ghatkopar.

“Developers’ interest in projects near the metro routes, has been increasing and there is an upward pressure on prices. The micro-markets that are likely to benefit are CBD (central business district), SBD (secondary business district) north and the western and eastern suburbs. Moreover, residential developments in Thane and Navi Mumbai will receive a boost, due to improved connectivity with the commercial hubs in the western suburbs and SBD north,” explains Surabhi Arora, senior associate director, research, Colliers International.

Should home seekers invest in real estate near Mumbai Metro projects?

When a metro project is announced, there is generally a spurt in the capital values of localities near its route and then, it tends to gradually slow down. Property rates again pick up, once the construction work nears completion. “The population density of residential areas near a metro will increase, after it becomes operational, as people prefer proximity to transport modes, along with the increase in demand for offices and retail spaces. Apart from the areas that are adjacent to the metro line, sometimes, the impact of the metro is also felt in nearby locations. The impact is especially profound, when metro stations are located at commercial centers.

“The residential localities in the vicinity appreciate due to increased connectivity to the commercial hub. This was evident with the first phase of the Mumbai Metro, from Versova to Ghatkopar , which provided east-west connectivity, improved the standard of living and reduced travel time.

Similarly, the upcoming Metro phases – Metro Line 2A (from Dahisar-DN Nagar), Metro Line 7 (Dahisar east-Andheri east) and Metro Line 3 (Colaba-Bandra-Seepz) – are likely to boost residential launches along the metro corridors,” states Ashutosh Limaye, head, research and REIS, JLL India. It is, hence, wise to investing in a project, where a metro rail is expected to come up in the vicinity, to get good returns, he concludes.

- by Purnima Goswami Sharma

Source : Housing.com

Stamp Duty

What is Stamp Duty? What are the Rates & Charges of Stamp Duty on Property?

3:52 PM

What is Stamp Duty?

What are the Rates & Charges of Stamp Duty on Property?

Buying a house is one of the most important decisions that one makes in their life. Investing in real estate or buying a new home takes your hard-earned money and best of knowledge to get the perfect home. And it is really important to ensure that all the paperwork is completed. One of the most important documentation is property registration and stamp duty.

Property registration completes your ownership of the property and stamp duty is a major part of registration. Registering the property with your own name helps you gain the legal right to the property and will also help you avoid any dispute in future related to the property you have bought. And in this article, we will be telling you each and every detail related to stamp duty and how it is calculated. Here, have a look!

What is Stamp Duty?

Stamp duty is a government tax that is imposed on property transactions. It is payable under the Section 3 of the Indian Stamp Act, 1899. One needs to pay the stamp duty at the time of property registration. The amount of stamp duty varies from city to city and also according to the real estate type.

Since stamp duty is added to the cost of the property, it is better to have an idea before you finalize the deal of your property. Also one need to pay stamp duty on time, otherwise, you will be charged penalty for the delay. In any kind of delay 2% penalty charge is added every month to the charge. This penalty charge can maximum go to 200% of the actual charge.

The stamp duty in Delhi charges are:

Stamp duty is @3% if it is done by a woman and @5% if it is done by a man

The registration fee is 1% of total value of Sale Deed + Rs. 100/- as pasting charge.

Though, the charges vary from state to state and according to the property type.
Here, have a look at the charges in different states of India.

Haryana- 12.5% of consideration

Chhattisgarh- 7.5% of consideration

Punjab- 6% of consideration

Madhya Pradesh- 7.5%

Tamil Nadu- 8%

Bihar- 7% + 2%

Assam- 8.25% of consideration

Maharashtra- 10%

Rajasthan- 11%

Meghalaya- 4.6% (up to 50K), 6% (50K-90K), 8% (90K- 150K), 9.9K (up to 150K)

Uttar Pradesh- 8%

Nagaland- 7.5% of consideration

Jharkhand- 7% + 2%

Tripura- 5% of consideration

Kerala- 8.5%

Goa- 8% of consideration

Karnataka- 10%

What is Property Registration?

Property registration is a process of registering the documents related to your property according to section 17 of the Registration Act, 1908. When you register the purchased property, you need to pay stamp duty on property and registration charges for the same.

When you purchase a flat or property directly from the builder, the registration of property gives you the right to legally use, own and dispose of the property. And when you purchase a flat or a property which is being transferred from one hand to another for the second time, you will have to pay registration charges.

The process of property registration is done at the office of the sub-registrar and that has jurisdiction over the area in which the property is situated or bought. In Indian states, land registration involves a computerized process, where middlemen are not required.

GST impact on Stamp duty and Property registration

Stamp Duty on property & Registration charges remains unchanged. These charges collected are different in each state. Generally, Stamp duty is between 4-10% and registration charges vary from 0.5-1% of property value.

When is the stamp duty payable?

The stamp duty is payable before the execution of the legal documents that is property registration. When you are buying a property, the stamp duty is generally paid within 30 days of settlement of property document.

What is the penalty charge?

If there is any delay in the payment of stamp duty, then the extra charge is added to the stamp duty charge and that extra charge is called penalty charge. The penalty charge is generally 2% for each month the stamp duty charge is delayed. This penalty charge can go a maximum of 200% of the actual stamp duty amount.

Who is liable to pay?

For stamp duty on property, the buyer/purchaser is liable to pay the charges. But in case of exchange of the property, both the parties have to pay charges equally.

Documents required for Stamp Duty

The documents you need to carry may vary from state to state, but given below are some of the documents which are generally required for stamp duty:

Deed of partition

Power of attorneys

Conveyance of mortgaged property

Mortgage deed

Transfer instruments

Lease deeds

Certificates of sale

Gift Deed

Exchange deed

Tenancy agreement

License agreement

How to Pay Stamp Duty?

There are 3 different ways to pay stamp duty on property. Have a look!

Physical appearance and stamp paper

Being physically present is one the most basic way to pay stamp duty, as you can yourself legally do all the paperwork for yourself. By being physically present, you need to purchase a non-judicial stamp paper with the impressed stamp. Once you are done with purchasing the stamp paper, then all the details regarding the transaction can be written or typed. Though, finding an authorised vendor selling stamp paper is not an easy task. Many times, there is a shortage of form/ stamp paper and you must again next day. Also, if the amount to be paid as stamp duty is big, then you may require many stamp papers. Although, nowadays many people do not prefer paying stamp duty by being physically present as it takes a lot of time.

Franking

Franking is the process where a franking agent puts a stamp on your documents, which indicates that the stamp duty has been paid. Before executing the transaction, you must contact an authorized band who will then act as a franking agent to deposit the stamp duty.

Every state has different franking charges, a minimum amount is prescribed for franking to every state. Thus, you need to refer to the charges according to the state you live in.

E-stamping

To make stamping easy, the government has introduced a new way to pay charges and this process is called E-stamping. Nowadays, in many states, E-stamping is compulsory as it is done online. The best part of E-stamping is that you do not have to search for authorized vendors to buy stamp papers, you can easily get stamp papers for E-stamping on Stock Holding Corporation of India Limited (SHCIL). Stock holding corporation of India Limited has been appointed as an official stamp paper vendor for e-stamping. SHCIL is also known as the central record of keeping agency for the total e-stamps used.

To pay stamp duty through e-stamping, you must visit Stock Holding Corporation of India Limited (SHCIL) website. There you must select your state to check if e-stamping is available in your state. Then, you will get all the information that you need while paying stamp duty. Now you must fill up the application form available on the website and then give it to the collection centre of stamp duty along with the charges.

Also, you can pay the charges by your Debit card, credit card, demand draft, online banking or cheque. After paying the stamp duty, you will receive a certificate of e-stamp and it will have a unique certificate number that is also called UIN that confirms the issue date.

Stamp Duty Calculator

The stamp duty charges on property registration vary from state to state. Each state has different charges set for Stamp duty. For example, charges of stamp duty in Delhi is @3% if the vendee is a woman and @5% if the vendee is a man, while the stamp duty in Punjab is @6%. Thus, calculating stamp duty yourself is a bit tricky, so, using a Stamp duty calculator online is the best option you can use. Online stamp duty calculator will automatically calculate the charges on the property you have to pay on your property. You just have to select your state and value of the property.

- Article posted by Imperia Structures

Source : Zricks

Goods & Services Tax

One Year of GST - Good, Bad Or Ugly for Real Estate?

10:00 AM

One Year of GST - Good, Bad Or Ugly for Real Estate?

The Goods and Services Tax (GST), a revolutionary tax reform rolled out in July 2017, has effectively replaced the previous Gordian Knot of multiple taxes like VAT, central excise duty, commercial tax, service tax, octroi, etc.

It has made India a ‘tax-neutral’ nation – and while it evoked a response best described as ‘mixed’ from real estate buyers, most of them are in favour of it.

This is natural, as the unitary tax compliance system has simplified the homebuying process – and with the passage of Input Tax Credit (ITC), there may not be a significant additional burden to buying a home.

Homebuyers in the affordable housing segment – specifically homes of up to 60 sq.m carpet area in size – have benefited significantly from the reduction of GST by 4% (from 12% to 8%).

However, even almost a year after GST implementation, the only real clarity that exists for property buyers is on the prevailing GST rate of 12% on under-construction projects.

There is still confusion about the amount of rebate that a prospective homebuyer is entitled to on the back of the pass-over of ITC. The confusion is not only about the percentage of ITC but also on the mode and tranche of the rebate.

On their part, developers are stating that they have to do multiple calculations to arrive at ITC and will pass it on only during the final tranches only. With this lack of transparency on ITC, homebuyers are understandably upset because as of now, their overall payment has increased.

The Ready-to-move Vs Under-Construction Debacle

On the one hand, ready-to-move (RTM) properties which have been issued completion certificates are out of the GST ambit and attract no tax from homebuyers.

On the other hand, under-construction (UC) properties attract 12% GST with full input tax credit (ITC). This is causing homebuyers to abstain from the UC option, which was earlier the more attractive one due to the cost arbitrage developers offered on them.

The added benefits to ready-to-move-in property buyers are immediate possession – read instant gratification – and freedom from stress with regards to completion risk and the uncertainty of construction-linked home loan EMIs.

Ongoing Challenges

Real estate stakeholders still face considerable challenges in the metamorphosis period from the pre-GST regime to the post-GST era. These include:

Complex tax slabs

Hiccups in the deployment of supporting IT infrastructure

Confusion about the integration of Input Tax Credit (ITC), and

Various blurred components of GST such as abatement for land values and anti-profiteering provisions

The lack of clarity on the rules and regulations under the anti-profiteering clause which was incorporated to pass on the benefits of ITC to end-users is a particularly prominent pain-point with GST as of now.

GST’s Impact on Pricing & Transparency

Although it was anticipated that GST will reduce property prices pan-India, we have in fact not seen such a significant impact on the ground.

If the stamp duty and registration fees would be subsumed under the GST regime, we would definitely see the overall cost of property purchase come down.

GST definitely is reducing developers’ construction costs by negating the morass of double or triple taxation to a more moderate level through input tax credit.

While there are no significant variations in the overall taxes, GST has certainly eliminated the tax-on-tax system. Also, shady transactions are being minimised considerably, bringing in transparency and accountability into the sector.

However, end-users have not received a consummate benefit because of the inherent ineffectiveness of the anti-profiteering provisions. They will only benefit if the base property prices are reduced and the developers pass on the tax credits to their customers.

While the tax-on-tax has been eliminated with the advent of GST, the overall outgo from homebuyers’ pockets seems to have increased, considering that even after passing on of ITC, they may have to pay 3-4% more than in the earlier service tax + VAT regime.

However, shady transactions are definitely reducing to a considerable extent and the cause of bringing more transparency and accountability into the sector is served. Additionally, the input tax credit is a boon to developers as it aids in bringing down the construction cost.

The Road Ahead

In line with its ‘One Nation, One Market, One Tax’ philosophy, the GST reform will in all probability benefit the Indian economy in the long run.

As the realty sector becomes more streamlined on the back of GST and other landmark reforms such as RERA, investor and consumer sentiments will become more positive and further strengthen the entire system in the future.

- by Anuj Puri Chairman, ANAROCK

Source : Zricks

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How will Mumbai Metro impact the Real Estate Market in the City?

What is Stamp Duty? What are the Rates & Charges of Stamp Duty on Property?

One Year of GST - Good, Bad Or Ugly for Real Estate?

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How will Mumbai Metro impact the Real Estate Market in the City?

What is Stamp Duty? What are the Rates & Charges of Stamp Duty on Property?

One Year of GST - Good, Bad Or Ugly for Real Estate?

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