TDS on the Property from June 1, 2013

It is an added liability now for all the owners who own the property above 50 lakh. According to Union Budget 2013-14 an additional tax is now being imposed on property transactions. In order to track real estate transactions more widely, the Finance Minister has introduced this new TDS provision through Section 194IA with the current TDS provisions contained under the Income Tax Act. This provision will be in effect from tomorrow i.e. 1st June 2013.

The bill has proposed that purchaser of an immovable property worth Rs 50 lakh and above, which excludes the agricultural land is required to pay withholding tax at the rate of 1% from the consideration payable to a resident transferor and also that the tax will be cut from the total value and not the balance amount. The sole idea behind this policy was to bring transparency in the whole process of property dealings.

This will add to the responsibilities of buyers as they will have to deduct the tax amount from the payout and deposit it with the government. So, for instance if the property is of Rs 1 crore then a tax of Rs 1 lakh is deductible.

Now, every buyer will have to obtain a TAN number to comply with the provision, deposit the tax deducted within the specified time limit with the government and file the quarterly TDS returns mentioning the Permanent Account Number of the seller. He will also have to issue a TDS certificate to the seller. The proposed TDS provision is required to be applied on gross transaction value and not on the net gains.


Property in Gurgaon

GURGAON REAL ESTATE IN 2013

Though the UNION BUDGET-2013 was not up to the expectations of the Realty Sector still, this industry has not lost hope. If we go by expert advice, year 2013 has a lot in its store for the Real Estate Industry. Most of the development and growth is expected to be in Gurgaon and Noida. The prices of residential projects are likely to appreciate in 2013 which will attract many investors to the market.

When we talk about Gurgaon, there was an improvement in the year 2012 as compared to year 2011 in terms of residential projects. Research shows that in year 2012 around 22,000 new residential projects were launched in Gurgaon.

The question is what attracts investors to Gurgaon?  The reason is quite visual. The development in past 25 years has helped the city to achieve the title of Millennium City. Drastic growth in the commercial and industrial sectors has driven the growth and development of Real Estate in Gurgaon.

Current year-2013 will mainly be dedicated to the development and completion of the projects by the builders. Gurgaon acts as a magnet to all sorts of investors; be it in residential or retail. The highest appreciation will be seen on Dwarka-Gurgaon Expressway and Golf-Course extension road. The factor behind this development is that these locations enjoy close proximity to the capital city-Delhi.  Another positive point is that Golf-Course extension road promises steady construction schedule.  This led to the growth in the lifestyle and here is the city today offering best of Restaurants, 5 star hotels, Clubs, Golf-course, best of schools offering good education, high street markets, malls and off-course luxurious residential projects making Gurgaon a city with ideal climate for business and residency.

When so many people started to migrate to the city due to their work, growth of amenities, facilities and infrastructure in the city became the need of hour. The city at present is the most happening place as it has many pubs, lounges, great eating-joints and clubs. The development of IT/ITeS, MNCs and corporate offices has forced the young professionals to settle in the city as well. Gurgaon has become a place where young India dreams and dares to achieve. Gurgaon for them is young and fast city which gives a lot of opportunities to grow.

Like we know that perfection exists only in dictionary, Gurgaon too has some drawbacks. Though the development plans were high but in the past years Government failed to keep up the pace with the rapidly upcoming residential projects. Slow infrastructure development in the city disappointed many investors and buyers giving Gurgaon a bad status. Gurgaon government is doing all it can to make the city rise up among the neighboring NCR cities. Providing broad roads for the swift flow of traffic, manicured parks to provide greenery to the city and improvement in the infrastructure is all the government is working at. Changing shape of Gurgaon is not only attracting the working class but also the businessmen and the elite classes as well.

Talking about the future; it is bright and promising. The city shows a lot of potential and will continue top the realty charts.

Property in Gurgaon

BUDGET 2013-14: Impact on Real Estate Industry

‘Realty sector of any country is capable of uplifting country’s economy’

Real Estate Industry has gained an altogether new status in past few years. The industry has seen major ups & downs in the last few years. Allowing FDI in 2002 was a major turning point for the Industry. Though, last year has been challenging for Realty sector but, this year is predicted to be a mixed bag of opportunities.

To buy a house and keep it forever is typically an old story. Now, people want to invest in property as they see investing in Property a safe and a high return solution in comparison to stocks or mutual funds.High Interest rates, low economic growth are the prime reasons behind a fall of 12-13 percent in the absorption rate by the customers. Due to this slow down, the Builders were launching fewer projects in the market.

Not only the Realty sector but also the investors were hoping a lot from the Union Budget 2013. The demand of Real Estate Industry was to lower the interest rates on loans and simplify the process of approvals and increase the process transparency.

Finally on 28^th of February, Mr. Chidambaram announced his 8^th Union Budget. He announced to start an Urban Housing Fund to match up the huge shortage of houses in the urban areas. Mr. Chidambaram quoted in his speech that, “I propose to ask National Housing Bank to set up the Urban Housing Fund and, in consultation with RBI, I propose to provide Rs. 2,000 crore to the Fund in 2013-14”. To boost up the sector further, another clause has been added for the first-time home buyers. The first-time investors availing up to Rs 25 lakh in 2013-14 can get an additional interest deduction of Rs 1 lakh in the first year above the existing 1.5 lakh benefit.

Apart from this, the allocation towards the Rural Housing Fund has been increased to 50%. For the luxury and premium apartments the abatement in service tax has been reduced to 70% from 75%. This would result in an increase of about 0.6% in effective service tax rate. The Budget for 2013-14 also proposed to levy a one per cent TDS on properties of above Rs. 50 lakh.

The Impact of Budget 2013-14 is neutral providing a little encouragement to the market. This Budget is expected to bring liquidity for the urban housing and thus increasing the demand in the industry.

Property in Gurgaon