Labourers work at the construction site of residential buildings on the outskirts of Kolkata, India. Reuters
In a move that will benefit about 3.5 lakh dwelling units, India’s finance minister Nirmala Sitharaman has said that the government will set up a fund and contribute Rs10,000 crore in it to complete construction of unfinished projects in affordable and middle income category housing. It will contribute in the proposed fund for the housing sector while the rest of the investors would include LIC and other institutions and private capital from banks, sovereign funds and development finance institutions.
The fund will be professionally run with experts from the housing and banking sector. In a further boost she said that there will be relaxation of ECB guidelines for affordable housing.
The housing building advance will be provided and a special window for affordable and middle income housing will be made available.
Projects that are 60 per cent complete will get last mile funding through special window. While there will not be interference with the projects that are under NCLT as the tribunal will decide what has to be done. Housing finance companies have also been allowed to borrow funds from overseas on easier terms to provide better liquidity.
However, on a closer examination it looks as if the relief measures are piecemeal in nature and grossly inadequate considering the massive damage already done by unscrupulous promoters and a solution is still elusive even after implementation of Insolvency and Bankruptcy Code. This is because the funds will become available provided the projects have not defaulted on payments or tagged as bad debt, 60 per cent complete and the unit cost is less than Rs4.5 million.
One fails to understand why there are strings attached to it when the housing sector as a whole needs a pragmatic approach and a lasting solution to its multiple problems.
In fact there is an imminent need to show the exit door to defaulting promoters and efforts should be made to complete the projects in limbo as thousands of homebuyers in major metros are servicing home loan account for years together and paying interest besides penalty for no fault of theirs with no solution till in sight.
I am owning land in Chennai which has been encroached upon by a few people and one has constructed temporary structure on the land. As I am in the Gulf, I have stuck a deal with a developer who will make arrangements for their relocation. A portion of the agreed amount has been paid as advance. When the capital gains liability will arise? Please clarify. Narendra Kumar, Sharjah.
Capital gains will become payable for the financial year during which the land has been transferred to the developer. You may have given power of attorney for development and to obtain statutory approvals from the appropriate authorities. Your agreement should stipulate the time when you will transfer the possession of the land.
You may have received a portion of the consideration as advance but liability to pay capital gains arises in the financial year in which you part with the possession of the land in favour of the developer.
I have recently acquired immovable property by way of gift from one of my relatives in India. As a PIO, can I sell and repatriate the sale proceeds? Kashyap, Dubai.
Yes. You can repatriate the immovable property acquired by way of gift. The sale proceeds of immovable property should be credited to NRO account only. From the balance held in NRO account, you may remit upto $1 million, per financial year, subject to the satisfaction of authorised dealer and payment of applicable taxes.
Is TDS now compulsory while investing in property in India? I am planning to invest in resale apartment valued at Rs7 million in Bengaluru. Kindly clarify. Sameer, Dubai.
Yes. As per section 194-IA of the Income-tax Act, in case you are buying certain immovable property in excess of Rs5 million, you are required to deduct TDS (tax deducted at source) at the rate of one per cent from the payments made to the seller. Non-deduction of TDS may result into penalty and prosecution. The obligation is on the purchaser to deduct TDS.
At the same time whenever you are entering into property transactions, make sure that you obtain the Permanent Account Number of the seller and deduct TDS only at the rate of 1 per cent specifically when the property purchase value is Rs 50 lakhs or above.
The new Form No. 26QB which is a challan-cum statement of deduction of tax under section 194 IA contains certain important details which are required to be completed while making payment of TDS in respect of purchase of the property of the value of Rs 50 lakhs or above.
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