Buyer Guide

Whenever any movable or immovable asset changes hands, the buyer has to pay a certain amount of tax to the state government, to get it stamped, which is known as stamp duty. The Maharashtra Stamp Act specifies such assets and instruments on which the stamp duty has to be paid to the state government. The Act also details the amount of duty to be paid to the government.

• The Act The Maharashtra Stamp Act was passed in 1958 and applies to all the instruments mentioned in Schedule 1, on which the stamp duty is payable to the state. The Act was amended recently and the amendments include a revision of stamp duty on gift deeds, inclusion of e-payment of stamp duty, revision of penalty clauses and increment of stamp duty under certain instrument clauses.
• Rates & Registration Stamp duty rates on property depend upon several criteria across Maharashtra state. This includes whether the property is located in urban or rural areas, total cost of the transaction, etc. The registration charges in the state are 1% of the total cost, for the properties priced below Rs 30 lakhs and capped at Rs 30,000 for properties priced above Rs 30 lakhs. Also, according to Article 34 of the Maharashtra Stamp Act, which was amended in 2017, stamp duty on gift deeds is 3% of the property’s value. However, if the property in consideration is a residential or agricultural property and is gifted (without any payment) to family members, then, the stamp duty is Rs 200.
• Calculation Stamp duty is calculated on the basis of ready reckoner rates and the property value mentioned in the buyer-seller agreement. In Maharashtra, the stamp duty on property varies as per the location. For instance, stamp duty for a property located in the municipal limit of urban areas in Mumbai will be 5% of the market value, while a property located within the limits of any gram panchayat will attract stamp duty of 3% of the market value.
• Payment of Duty According to the Maharashtra Stamp Act, all instruments chargeable with duty and executed in Maharashtra, should be stamped before or at the time of execution, or on the next working day following the date of execution. However, if the deed is executed out of the territory, it can be stamped within three months after it is first received in India.
  
  The stamp papers must be in the name of one of the parties to the transaction and not in the name of the chartered accountant or lawyer of the parties. Moreover, the date of issue of the stamp paper must not be more than six months older than the date of the transaction.
  
  Stamp duty charges can be paid by way of adhesive or impressed stamps on the deed. In addition to this, the adhesive stamps used on the deed is cancelled at the time of execution, so that it is not available for reuse.

If you are a non-resident Indian (NRI) planning to buy a property in India, time could not have been better for you to do so. While India's real estate sector has seen a price correction in the recent past, buying property in Indian has also become more lucrative with favourable currency rates.

An NRI buying an immovable property in India does not require any special permission. However, the payment can't be made in foreign currency. NRIs can make the purchase using Indian currency, the Rupee, through funds received in the country by means of normal banking channels. These funds have to be maintained in a non-resident account under the foreign Exchange management Act (FEMA) and the Reserve Bank of India (RBI) regulations. There are also no restrictions on the number of immovable properties that an NRI may purchase, either residential or commercial.

• Property Type NRIs can buy all sorts of immovable properties in India other than agricultural land, farm house and plantation property. To acquire agricultural land/plantation property/farm house in India, they have to get approval from the RBI and the government.
• Taxes When an NRI sells a property in India, TDS (tax deducted at source) calculation is done at the rate of 20.6 per cent on long-term capital gains and 30.9 per cent on short-term capital gains. However, the final taxation rate is similar for NRIs and resident Indians. If an NRI has a lower tax slab applicable to him, he can apply for a refund of the TDS by filing their income tax return.
• Home Loan The RBI has given a general permission to banks and housing finance companies registered with the National Housing Bank to provide loans to NRIs for buying residential property in India. Sanctioned in Indian currency, the loan has to be repaid using the same currency. However, the loan amount, according to the regulations, cannot be credited directly to the bank account of an NRI and has to be disbursed to either the seller's or the developer's account. The loan can be repaid using funds in an NRI's NRO/NRE account or FCNR deposits.
• Power of Attorney As they live outside, NRIs have an option to give PoA to their friends or relatives to complete the property purchase process in India. The PoA can be general or specific about the rights your representative can exercise.
• Repatriation of Funds There are certain guidelines for repatriation of funds. An NRI or Person of Indian origin (PIO) may repatriate the proceeds from the sale of immovable property in India on the conditions mentioned below:
  
  The property must have been purchased in accordance with the FEMA directives, applicable at the time of purchase.
  
  The amount repatriated cannot exceed the original amount paid for the property, if the property was acquired in foreign exchange remitted through normal banking channels or out of funds held in an FCNR (B) account.

The Real Estate (Regulation and Development) Act, 2016 (RERA) is an Act passed by the Indian Parliament. The RERA seeks to protect the interests of home buyers and also boost investments in the real estate sector. The Rajya Sabha passed the RERA bill on March 10, 2016, followed by the Lok Sabha on March 15, 2016 and it came into force from May 1, 2016. 59 of its 92 sections were notified on May 1, 2016 and the remaining provisions came into force from May 1, 2017. Under the Act, the central and state governments, are required to notify their own rules under the Act, six months, on the basis of the model rules framed under the central Act.

• Requirement For long, home buyers complained that real estate transactions were lopsided and heavily in favour of the developers. RERA and the government’s model code, aim to create a more equitable and fair transaction between the seller and the buyer of properties, especially in the primary market. RERA, it is hoped, will make real estate purchase simpler, by bringing in better accountability and transparency, provided that states do not dilute the provisions and the spirit of the central act. The RERA will give the Indian real estate industry its first regulator. The Real Estate Act makes it mandatory for each state and union territory, to form its own regulator and frame the rules that will govern the functioning of the regulator.
• Regulatory Authority The Act establishes Real Estate Regulatory Authority in each state and union territory. Its functions include protection of the interests of the stakeholders, accumulating data at a designated repository and creating a robust grievance redressal system.
• Registration According to the central act, every real estate project (where the total area to be developed exceeds 500 sq mtrs or more than 8 apartments is proposed to be developed in any phase), must be registered with its respective state’s RERA. Existing projects where the completion certificate (CC) or occupancy certificate (OC) has not been issued, are also required to comply with the registration requirements under the Act. While applying for registration, promoters are required to provide detailed information on the project e.g. land status, details of the promoter, approvals, schedule of completion, etc. Only when registration is completed and other approvals (construction related) are in place, can the project be marketed.
• Reserve Account or ESCROW One of the primary reasons for delay of projects was that funds collected from one project, would invariably be diverted to fund new, different projects. To prevent such a diversion, promoters are now required to park 70% of all project receivables into a separate reserve account. The proceeds of such account can only be used towards land and construction expenses and will be required to be certified by a professional.
• Agreement The Act prescribes a standard model sale agreement to be entered into between promoters and homebuyers. Typically, promoters insert punitive clauses against home buyers which penalised them for any default while similar defaults by the promoter attracted negligible or no penalty. Such penal clauses could well be a thing of the past and home buyers can look forward to more balanced agreements in the future.
• MahaRERA The Maharashtra Real Estate Regulatory Authority (MahaRERA) came into existence on May 1, 2017. Deemed as one of the most active real estate regulatory authorities in India, the Maharashtra Real Estate Regulatory Authority (MahaRERA) has over 25,000 registered projects and 23,000 registered property agents, as of February 27, 2020.

Ministry of Housing and Urban Poverty Alleviation (MoHUPA) has introduced in June 2015, an interest subsidy scheme called Credit Linked Subsidy Scheme (CLSS) under Pradhan Mantri Awas Yojana (URBAN)-Housing for All, for purchase/construction/extension/improvement of house to cater Economical Weaker Section(EWS)/Lower Income Group(LIG)/Middle Income Group (MIG), given the projected growth of urbanization & the consequent housing demands in India.

The government has been trying to support the cause of housing, through its ‘Housing for All by 2022’ mission. Under this mission, the government has come out with two schemes, to partly fund the interest of the borrowers in urban areas. The first scheme, which is very liberal in terms of the interest rate subsidy, is applicable to the Economically Weaker Sections (EWS) and those under the Low-Income Group (LIG). The other scheme covers the Middle-Income Group (MIG). Let us discuss the first scheme in detail.

• Elligibility In order to qualify for the subsidy, the individual or spouse should not own an all-weather pucca house, either in his/her name or in the name of any unmarried child of the couple, in any part of India. In addition to acquisition or construction of a new house, a borrower can also avail of this facility for extension of his existing house, whether self-acquired or inherited. If the borrower wants to avail of the benefits, for extension or enhancement of his existing house for addition of rooms, kitchen, toilet, etc., then, the condition of pre-existence of a pucca house, shall not apply.
• Qualification Moreover, the income for the purpose of qualifying under the scheme, is the income of the whole family as a unit and not of the head of the family only. For availing of the subsidy, the borrower has to submit a self-declaration, about the income and title of the property to be acquired, to the lender. As the government does not underwrite any part of the loan given under this scheme, lenders will have to follow their own due diligence process, for income and title of the property. The lender has to monitor the construction of the dwelling units financed under the scheme, like approvals for the building design, infrastructure facilities, the quality of construction, etc. The lender also has to verify the expenditure incurred up to different stages of construction, through site visits, etc.
• Subsidy The present value of the interest subsidy is calculated at 6.50%, for a maximum tenure period of 20 years, on the maximum loan amount of Rs 6 lakhs. The future outflow of interest at 6.50% is discounted at 9% and the present value so arrived, is reduced from the actual loan amount taken by the borrower. The maximum subsidy under this scheme can be Rs 2,67,280. The amount of subsidy will be reduced proportionately, if the loan amount is lower than Rs 6 lakhs. The subsidy benefit is only available for loans that are disbursed on or after June 17, 2015. The amount of original loan reduced by the net present value of the subsidy benefit, is the liability of the borrower and the EMI is computed accordingly, based on the agreed rate of interest.
• Processing Fee Under the scheme, the lender is not allowed to recover any processing fee from the borrower. So, in addition to reimbursement of the subsidy amount, the lender will also be given a lump sum of Rs 3,000, to cover their cost of processing the loan application for an amount upto Rs 6 lakhs. For additional loan beyond Rs 6 lakhs, the lenders are allowed to recover normal processing fees.
• Balance Transfer Although the borrower is allowed to shift his existing home loan, under which the subsidy benefit has already been availed, the borrower shall not be entitled to claim the subsidy again on such balance transfer. Moreover, you cannot avail the benefit under this scheme, by transferring your existing home loan after the notified date, as the subsidy is only available to the borrower when he first acquires or constructs the house. The house to be purchased, need not be new. It can also be a resale house from another owner or a builder.
• Prepay the loan The PMAY subsidy that you have availed of, is applicable only if the loan is active for the entire period and hence, if you prepay some amount, the subsidy amount will be reversed and you will miss out on some part of the benefit.
• Other Conditions The house to be constructed or acquired under this scheme, should be in the name of the female head of the household or alternatively, in the joint name of the male head of the household and his wife. However, if there is no adult female member in the family, the house can be acquired in the name of the male member of the family.
  
  The house which qualifies for the interest subsidy, can either be a single unit or a unit under any multistoreyed building. The eligible unit needs to have basic facilities and infrastructure like toilet, water, sewerage, road, electricity, etc. The area of the house, will only include the area on which a carpet can be laid, meaning that it will not include the walls in the house or the outer wall of the house.

Buying your own house is a dream come true for everyone. The Indian government has always shown a great inclination to encourage citizens to invest in a house. This is why a home loan is eligible for tax deduction under section 80C. And when you buy a house on a home loan, it comes with multiple tax benefits too that significantly reduce your tax outgo. Many schemes like Pradhan Mantri Jan Dhan Yojana are flashing green light on the Indian housing sector by striving to bring down the issues of affordability and accessibility.

• Deduction for Interest Paid on Housing Loan A home loan must be taken for the purchase/construction of a house and the construction of the house must be completed within 5 years from the end of financial year in which loan was taken. If you are paying EMI for the housing loan, it has two components – interest payment and principal repayment. The interest portion of the EMI paid for the year can be claimed as a deduction from your total income up to a maximum of Rs 2 lakh under Section 24. From Assessment Year 2018-19 onwards, the maximum deduction for interest paid on Self Occupied house property is Rs 2 Lakh. For let out property, there is no upper limit for claiming interest. However, the overall loss one can claim under the head of House Property is restricted to Rs 2 lakh only. This Deduction can be claimed from the year in which construction of the house is completed.
• Deduction for Interest Paid during Pre-Construction Period Say, you bought an under-construction property and have not moved in yet. But you are paying the EMIs. In this case, your eligibility to claim interest on the home loan as a deduction begins only upon completion of construction or immediately if you buy a fully constructed property. So does this mean you would not enjoy any tax benefits on the interest paid during the period falling between the borrowing of loan and completion of construction? No. Let’s understand why. The income tax law provides for the claim of such interest also, called the pre-construction interest, as a deduction in five equal instalments starting from the year in which the property is acquired or construction is completed, over and above the deduction you are otherwise eligible to claim from your house property income. However, the maximum eligibility remains capped at Rs 2 lakh.
• Deduction on Principal Repayment The Principal portion of the EMI paid for the year is allowed as deduction under Section 80C. The maximum amount that can be claimed is up to Rs 1.5 lakh. But to claim this deduction, the house property should not be sold within 5 years of possession. Otherwise, the deduction claimed earlier will be added back to your income in the year of sale.
• Deduction for Stamp Duty & Registration Besides claiming the deduction for principal repayment, a deduction for stamp duty and registration charges can also be claimed u/s 80C but within the overall limit of Rs 1.5 lakhs. However, it can be claimed only in the year in which these expenses are incurred.
• Additional Deduction under Section 80EE Additional deduction under Section 80EE is allowed to the home buyers for maximum up to Rs 50,000. To claim this deduction, the amount of loan taken should be Rs 35 lakhs or less and the value of the property does not exceed Rs 50 lakhs. The loan must have been sanctioned between 1st April 2016 to 31st March 2017. And on the date of sanction of loan, individual does not own any other house. Section 80EE has been reintroduced effective from FY 2016-17. Earlier the deduction allowed under Sec 80EE was available for 2 years FY 2013-14 and FY 2014-15 only.
• Additional Deduction under Section 80EEA The budget 2019 has introduced additional deduction under Section 80EEA for home buyers for maximum up to Rs 1,50,000. To claim this deduction, the stamp value of the property does not exceed Rs 45 lakhs. The loan must have been sanctioned between 1 April 2019 to 31 March 2020. And on the date of sanction of loan, individual does not own any other house. The individual should not also be eligible to claim deduction under section 80EE.
• Deduction for Joint Home Loan If the loan is taken jointly, then each of the loan holders can claim a deduction for home loan interest up to Rs 2 lakh each and principal repayment u/s 80C up to Rs 1.5 lakh each in their individual tax returns. To claim this deduction, they should also be co-owners of the property taken on loan. So, loan taken jointly with your family can help you claim a larger tax benefit.

Among the many taxes that home buyers have to pay on property purchase is the Goods and Services Tax or GST on flats. Many changes have already been made in this tax regime, in a short span of time since it came into force in July, 2017.

• Taxes Pre-GST Before the GST came into force, a variety of state and central taxes were imposed on buildings, through the course of the construction of a housing project. While these taxes increased the cost of project development for developers, no credit against this tax was available to the builders against the output liability. Some of the taxes that real estate developers had to pay before the GST came into force included Value Added Tax (VAT), Central Excise, Entry Tax, LBT, Octroi, Service Tax, etc. The cost incurred on these taxes by builders, was then transferred to the property buyer.
  
  Moreover, as buyers had very little clarity over the various taxes and the applicable rates, developers were also in a position to manipulate numbers, to keep the deal to their best advantage. For a common buyer, it would have been an uphill task, to find out the VAT, Central Excise, Entry Tax, LBT, Octroi and Service Tax rate applicable on property construction.
• Post GST Implementation With much fanfare, the GST regime was launched in India on July 1, 2017. Touted to be the biggest tax reform in India after Independence, the GST subsumed multiple indirect taxes, to offer a uniform regime to the tax payer. Initially, the GST for real estate was kept higher but the Narendra Modi-led government, which launched the revolutionary tax regime, reduced the rates in 2019. This was done, in a bid to make properties more affordable to the common man and to boost its ambitious ‘Housing for All by 2022’ target.
• GST on Construction & Building Material The Goods and Services Tax (GST) covers real estate in India through works contracts and building and constitution works, as all components used in the development work attract GST. To put it simply, covered under the new regime is the Indian construction industry, which continues to attract high rates of taxes through a blend of levies imposed on the purchase of various building construction materials.
• Affordable Housing as per GST According to the government-determined definition, housing units worth up to Rs 45 lakhs qualify as affordable housing. However, the unit must also conform to certain measurements. A housing unit in a metropolitan city qualifies to be an affordable house, if it costs up to Rs 45 lakhs and measures up to 60 sq metres (carpet area). The Delhi-National Capital Region, Bengaluru, Chennai, Hyderabad, the Mumbai-Mumbai Metropolitan Region and Kolkata are categorised as metropolitan cities. A housing unit in any other city barring the ones mentioned above in India, qualify to be an affordable house, if it costs up to Rs 45 lakhs and has up to 90 sq metres of carpet area.
• GST on Maintenance Charges Flat owners are liable to pay 18% GST on residential property, if they pay at least Rs 7,500 as maintenance charge to their housing society. Housing societies or residents’ welfare associations (RWAs) that collect Rs 7,500 per month per flat, also have to pay 18% tax on the entire amount. Housing societies which have an annual turnover of less than Rs 20 lakhs are, however, exempted from paying the GST. For the GST to be applicable, both the conditions should apply – i.e., each member should pay more than Rs 7,500 per month as maintenance charge and the annual turnover of the RWA should be higher than Rs 20 lakhs.
• GST on Rental Income Landlords do not have to pay GST on real estate rental income, as long their premises are let out for residential purposes. However, the GST regime treats renting out of residential property for business purposes as supply of services, thus, including rental income under its purview. An 18% GST on residential flats is charged on such rental income under the new regime, if the rent amount per year exceeds Rs 20 lakhs. In this case, landlords also have to register themselves, to pay the GST on their rental income.
• GST on Home Loan While there is no applicability of the GST on home loan repayment as far as the borrower is concerned, financial institutions offer several ‘services’ as part of home loans. Based on the fact that these are services, the applicability of GST comes into picture. Consequently, if you are taking a housing loan, the bank would charge GST on the processing fee, technical valuation fee and legal fee.
• GST on Govt. Houing Schemes The government has clarified that government-led mega housing projects meant for the common man, will attract only 1% GST under the new regime. These housing schemes include as the Jawaharlal Nehru National Urban Renewal Mission, the Rajiv Awas Yojana, the Pradhan Mantri Awas Yojana and housing schemes of state governments.

Each one of us desires to live in a home that is comfortable, calming and rejuvenates us. It is important to understand that the energy within a house, affects the people who occupy it. One’s environment helps in building a foundation for a healthier mind and body and Vastu Shastra offers ways to create a healthier life. If followed correctly, Vastu Shastra can help the home’s residents to become physically and mentally healthy. Here’s how to attract positive energy at home:

Vastu Tips for Main Door Vastu principles improve a living space, according to the principles of harmony and energy flow. The main door of a house is the entry point for energy. A door that opens outward pushes energy away from home. So, have the main door opening clockwise. Opportunities may be limited, if the door does not open fully. Ensure that the lobby near the main door is not dark. Good lighting stimulates positive flow of energy and promotes balance and harmony within the premise. Every house should have a threshold (umbra) on the floor, at door frame. It protects the house from external negative influences.

Declutter for Positive Energy One can positive energy into a house, by decluttering and cleaning the space. Clutter creates stagnant energy and impedes the flow of positive energy. Avoid keeping chipped, cracked or broken things. Clean the cupboards and drawers and clear things that are no longer in use. Keep the house clean and ensure that there are no cobwebs. Add few spoons of sea-salt to the water and mop the floor with it. It is believed that mopping the house with salt water, will reduce the effects of negative vibrations.

Vastu Compliant Construction There is a strong connection between the energy of the house and the health of the occupants. Ancient architecture was all about proportions and planning the structure in a manner that it is always in sync with the magnetic field of the earth and harmony of colours. It is most important to commence the construction at the right moment (muhurat) and to use non-offensive building materials. Every built space has three types of energies – cosmic, earth and structural. To make the space positive and to ensure that all three are in harmony with each other, keep the centre of the space, which is called the Brahmasthan, free of any kind of structural violation. This will ensure that the flow of cosmic energy is balanced. Earth energy can be balanced by keeping the north-east corner lively. Structural energy can be harmonised, by ensuring that there is no clutter in the space.

Rectifying Vastu Faults According to Vastu experts, one can also attract positive vibes to enhance the health and well-being of the occupants, by simply arranging or correcting items in the surroundings. If the bathroom is directly opposite to the kitchen, keep the door closed and use a Vastu energy partition on the door frame to separate these opposing energies and to block the negative energy. Mirrors bounce back energies. Hence, if the bed on which one sleeps, is in the line of the mirror, it is advisable to remove the mirror or to cover it, for better sleep. A tulsi plant is a must for the home, as it clears negative energy.

Decor tips for positive energy

• Fresh air and sunlight aids positive energy at home. So, ensure that you keep the home’s windows open, for some time in the morning.
• Aquariums are akin to moving water and it is auspicious, when placed towards the north-east.
• Avoid having a tree, pole or pillar facing the main door. It is called a dwar vedh (door obstacle). Similarly, avoid having dead plants near the door.
• Keep the bathroom door closed. Always keep toilet lid down, when not in use. Ensure that there are no leaking taps at home. Use pleasant fresheners in the bathroom.
• Do not keep medicines in the kitchen.
• Switch off all electronic and Wi-Fi systems, while taking rest.
• Play soothing divine music or chanting of mantras at home, for some time in the morning.
• Ensure that the furniture edges are not sharp. Avoid excessive use of red, black and grey in the home’s décor.
• Avoid having split levels in the floor.
• Pictures at home should always be positive. Avoid photos depicting war, loneliness, poverty, etc. To generate positive energy, display pictures of nature.
• For a calming effect at home, light a diya, camphor or add soothing fragrance like sandalwood.
• Do not keep trash at the entrance of your house.
• Avoid using broken cutlery.
• Dispose all those items that you haven’t been using for a long time.
• A puja room shouldn’t be made under the stairs or in the bedroom.
• Hang wind chimes or bells near the main entrance. According to Vastu Shastra, the sound of soothing music attracts prosperity and wealth at home.
• Consider having an indoor garden, where you can sit and soak in the fresh energy every morning. You can opt for bamboo or flowering plants or even a money plant, to start with.
• Avoid painting your main entrance door in black colour. Instead, opt for dark brown shades. The main door should open in a clockwise direction.
• Place all electronic appliances in the living room in the south-east direction.
• Hang paintings of a waterfall, a goldfish or a flowing river, according to Vastu, bring good luck and wealth. If you are looking for overseas career opportunities, place a painting of foreign currency, flying birds, racing bikes and cars.
• According to Vastu, clocks energise a direction. Therefore, make sure that all clocks in the house are in working condition. Remove all non-functional clocks, as it signifies delays or a stagnation in your finances. Place all clocks in the north or north-east direction.
• According to Vastu, feeding birds brings wealth and positive energy. You can keep a bird feeder in your yard, terrace or balcony and fill it with water and grains. Make sure you keep these vessels clean.