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Rights and responsibilities of home buyers as per MahaRERA

Posted on by HomeCapital Team

Since the inception of the Real Estate Regulatory Authority (RERA) Act in 2016, the RERA along with the respective State RERA organizations continue to work for safeguarding the interests of homebuyers. These state-specific bodies have boosted transparency in the real estate sector and have established some mandatory rules for buyers and developers as well. MahaRERA, the RERA body for Maharashtra, is a state-recognized organization that helps home buyers and also works toward promoting transparent transactions in the real estate sector. 

Implementation of the RERA Act brought significant relief to home buyers at various stages and eliminated several malpractices in the real estate market. The authority not only protected the interests of innocent buyers but also initiated strict action on delayed possessions, changes in area calculations, extra charges, etc. But to avail of these benefits, home buyers must be aware of their rights and exercise them when they face any breach of trust between the two parties.  

Here, we will elaborate upon various rights and responsibilities of home buyers defined by MahaRERA.

Rights of home buyers

Section 19 under Chapter 5 of the RERA Act, 2016 lays down certain rights of home buyers which have been listed below:

1. Construction schedule and date of completion

Each home buyer has the right to know about the completion date and phase-wise construction schedule. This information must comprise basic services such as water supply, electricity, sanitation, etc. 

2. Information about a project

Home buyers have the right to know detailed information about any housing project before purchasing a home such as layout plans and specifications, approvals from authorities on sanctioned plans and specifications, and clauses mentioned in the sales agreement. 

3. Possession

Every home buyer is entitled to claim the possession of his house/apartment, whereas the apartment owner’s association is entitled to claim the passion of the common area including lifts, lobbies, amenities, etc.

4. Documentation

Home buyers have the right to keep property documents, once he/she obtains physical possession of the house.

5. Refund

In case a developer is unable to complete give possession of the property, the buyer can claim a complete refund of the amount paid for the property. Besides, home buyers can also register a complaint with the RERA to charge an interest on the refund amount along with compensation from the developer. Moreover, if the home buyer is not satisfied with the RERA’s order on a complaint he/she can also file an appeal with the Appellate Tribunal.       

With every ‘Right’ there comes a ‘Responsibility’ too, so MahaRERA has also defined some responsibilities for home buyers.

Responsibilities of home buyers

Further, Section 19 under Chapter 5 of the RERA Act, 2016 also states certain responsibilities of home buyers as listed below:

1. Possession within two months

Home buyers must take physical possession of the house within 60 days after the developer receives the occupancy certificate from the development authorities.

2. Timely payment

Home buyers are mandated to pay all the amounts at regular intervals agreed upon in the sales deed with the developer along with maintenance charges, municipal taxes, electricity and water charges, registration charges, etc. Developers can levy interest on the pending payments in case of respective installments or other charges.   

3. Property Registration

Home buyers must register the property and should participate in the formation of the Apartment Owners’ Association (AOA) or Residents Welfare Association (RWA), after taking possession of the property.   

Recently MahaRERA has also made mandatory disclosure of the sold or booked inventories to avoid multiple transactions for the same property. The move will further safeguard home buyers and bring more transparency in the real estate sector. The regulatory body has also asked all the home buyers to check the legal title of the property they are planning to own a house, as it has discontinued the sale of a property without a legal title. Home buyers can also check the detail of a project title on the MahaRERA website. The regulatory body also suggests home buyers crosscheck the project details such as project title, rights, interest, land seller’s name, and the land is free from any encumbrances.

It will be possible to do house registration online now. Know how?

Posted on by HomeCapital Team

Online registration of houses will soon be a reality in Mumbai and across Maharashtra, as the State government has made e-registration of property mandatory for first-time homebuyers. The move will accelerate the pandemic-hit slow rate of property registration in the State.

Benefits to home buyers and developers

Homebuyers now need not wait for long in queues and pay a visit at Deputy Registrar’s office for property registration. However, the facility of e-registration will only be available to projects and developers registered under RERA (Real Estate Regulatory Authority). Most of the buyers were hesitating to visit registration offices due to Covid restrictions. The new regulation will help first-time homebuyers to stay safe and own their dream house, without risking their lives by stepping out in a time of pandemic.

A robust advanced software system will help RERA registered developers to provide online registration facilities, in coordination with the registration authorities, to first-time homebuyers from their premises.  According to the office of Inspector General Registration and Controller of Stamps, about 25-30 RERA registered developers in MMR (Mumbai Metropolitan Region) will start offering e-registration services.   

Requirements for e-Registration of houses

For developers to provide e-Registration of houses in Maharashtra, the following are a mandatory:

  • Housing project must have more than 200 houses with RERA affiliation
  • Buyer and seller need to produce their ADHAAR card details along with other necessary property documents
  • The developer’s office must comply with all the norms for property registration at their premises.  

The facility of e-registration will streamline the house registration process ensuring a transparent eco-system in place. Earlier property registration was a long day process with stricter window timings and buyers would take long to complete various formalities for house registration procedure.     

CREDAI-MCHI, a registered body of realty developers in MMR, has extended their gratitude towards the revenue minister for accommodating their demand. The new directive will not only accelerate and ease property registration in Mumbai and across Maharashtra but also bring more revenue to the sector and the government as well.   

Selecting the best property developer

Posted on by HomeCapital Team

One spends a good amount of time researching before buying a smartphone. Then if one wishes to buy a property, it would definitely be a longer process than buying a smartphone. The purchase of a property is one of the most significant things on people’s bucket lists. It is seen as a mark of success and felt by the grandeur of emotions. Property purchase demands a heavy investment and for some people, it is a once-in-a-lifetime decision. So, the process of property purchase has to be followed with great care and attention to detail. Therefore, selecting a developer is one of the important aspects of this process.

Freezing your buying preferences

At times, selecting the property is preceded by affordability and locality. However, some property developers also launch budget homes or compact homes in localities that have a higher average price in comparison to affordable localities. Alternatively, they provide flexible payment schemes which can facilitate the home purchase even in an expensive area. Hence, it is always better to freeze your preferences like budget, size, locality, amenities, etc. Nevertheless, at the same time, it is essential to have a look at what developers have to offer.

Details to know while selecting the right developer

Post finalizing your preferences, having a thorough knowledge of developer/s where you are venturing to buy your house is extremely important. Below are the various factors to know the developer.

i. Being RERA certified

This is the first and foremost step to know about your property developer. Check whether your developer is RERA registered. The RERA in principle has been established by the government to protect the interest of property purchasers. Every state has it own RERA website that has complete details about the developer and the project in consideration. It is helpful to visit the RERA website to get the required information.

ii. Online presence

Since the advent of digitisation, almost all developers have their online presence. You can visit their websites and/or LinkedIn pages to seek information about them.

iii. Experience screening

It is always better to choose an experienced developer than a new developer. A developer who has successfully delivered and developed at least 5-7 projects has a track record that can be analysed.

iv. Status of ongoing and completed projects

You can always check the ongoing projects in terms of layout, offerings and timeline. The timeline of ongoing projects is known and can be validated in due course. Delay in completion can never be unseen. Also, a visit to completed projects gains vital insights. Each completed project has its own story to tell with regard to design, quality, timeline, compliance, approvals etc.

v. Meeting previous home buyers

This activity can get you the most authentic information. Existing home buyers of your prospective property developer can possibly equip you with chronological information of the project development as well as the developer. Not only one will know about the design, quality and timeline but also about the financial aspect. This will make it easier at the time of negotiation if purchase is considered.

vi. Construction quality check

This can be done by visiting the ongoing sites for an emerging or experienced developer. Also, after visiting previous completed projects of an experienced developer, construction quality check can be done. Previous home buyers will also inform about the maintenance part which includes leakage and other structural issues in the warranty period.

vii. Timely delivery of the project

For an ongoing project, one can take a rough judgement for timely delivery depending on the milestone of the project. And for the completed projects, the data about the same is easily available. A project delivered on time is a mark of financial stability and a proactive and efficient management team.

viii. Meeting the developer’s sales personnel

Once the above checks are done, you can consider meeting sales personnel to procure more information about the property as well as the developer. Here, you can check the options for the property as well as finance.

Around 3-6 months is a good amount of time to thoroughly research and finalise the developer and the property. In a nutshell, the big decision of buying a property should never be taken in a hurry. It has to be meticulously planned over a period of time.

How are interest rates for home loans decided?

Posted on by HomeCapital Team

Home loans have gradually become an essential part of the home buying process over the past two decades. Easy home loan sanctions and property verifications are enabling homebuyers to own their dream house. At present, there are a plethora of lenders who offer home loans at varying interest rates to home buyers. The interest rate for home loans is decided on the basis of several factors which play a key role in selecting the lending institution. The interest rates further decide the EMI amount and in turn the affordability of the same for the applicant. Though, some of the factors that decide interest rates are fixed but some are variable that may change the interest rate for home loans and the EMI amount.

Key factors that impact the home loan interest rates

Here are five factors that can affect the interest rate. Keep a tab on these to ensure repayment is as affordable as possible

Loan tenure

Repayment time of home loans also affects the rate of interest and EMI amount. For instance, a home loan for shorter tenure is offered at a lower rate of interest, even if the monthly installment is higher, compared to the longer tenure. Applicants may choose repayment duration on the basis of their financial capacity and convenience.      

Credit score

A credit score is one of the prominent factors that are considered for disbursing the home loan and applicable interest rate. Home buyers’ credit score is a record of the applicant’s past repayment schedule, creditworthiness, and financial discipline. A lower credit score attracts a higher rate of interest and vice versa. A credit score between ‘700’ to ‘800’ is considered good, and individuals with a credit score range closer to 800 get the best deal on home loan interest rate.

Repo rate 

RBI releases repo rate for banks on a regular basis that serves as a benchmark for applicable interest rates on lending. The central bank also allows different banks to offer varying interest rates to their customers. A bank may offer different interest rates to different customers depending on other factors such as credit score, loan duration, salary, down payment, interest type, etc.

Home buyer’s job profile

Individuals with consistent job profiles or steady income come under the low-risk category compared to those who have inconsistent jobs and income profiles. Low-risk home buyers are offered a lower rate of interest for homes, while the high-risk category gets a higher rate of interest. Individuals who fall under low-risk category include government and PSU employees, charted accountants, doctors, salaried professional,s or people working in reputed private sectors companies.  

Loan-to-value ratio 

Loan-to-Value (LTV) ratio refers to the percentage amount of the total property value that can be financed through a home loan. If the LTV is higher, then the interest rate will be higher as a higher disbursal of the loan amount is considered risky. If a buyer pays a higher amount of down payment then both the disbursal amount and subsequent interest rate on a home will be lower.  

Type of interest

Banks offer different types of interest rates for home loans and homebuyers can select from floating, fixed, and mixed interest rate options to suit their needs. The fixed interest rate doesn’t change throughout the tenure while the floating interest rate varies with changes in the repo rate released by the RBI. The mixed interest rate remains fixed for a limited period and then converted to a floating interest rate.      

Location of the property

The location of the property also impacts the rate of interest offered on home loans by the banks. A property located in an urban location attracts lower home loan interest rates while a project in remote or isolated areas is offered with higher interest rates.

Interest calculation on a home loan is a mix of multiple factors mentioned above. Lending institutions or the bank’s preference for a range of these factors may vary, depending on several aspects. Though each bank offers a clear policy guideline on interest rate calculation and disbursal of the sought amount, but homebuyers can always be well informed in advance about their creditworthiness and choice of interest rates as well as the lending institution to avail best rates on home loan.      

How you can check Unified Payments Interface(UPI) ID

Posted on by HomeCapital Team

India being one of the largest economies in the world is mainly a cash-based economy. Cash transactions constitute around 12% of the GDP. This is quite a high percentage compared to other emerging economies. If the cash component is higher, it brings few challenges with it like cash management, lack of records, evasion of tax and forged currency. In order to make India less cash-dependent, in 2016 Reserve Bank of India (RBI) reaping the benefit of the emerging digitization trend gave birth to the National Payment Corporation of India (NPCI). The NPCI launched a mobile-based payment system through which real-time bank transactions can be done known as Unified Payment Interface (UPI). This move redefined the Financial Technology (FinTech) Industry.

What is Unified Payment Interface?

Unified Payment Interface (UPI) is bank to bank instant real-time fund transfer system based on a mobile platform. For UPI a transaction, a smartphone is the principal device for both customers and merchants.

Unified Payment Interface has been a great revolution in FinTech Industry. Earlier, it was all about online web transfers and debit/credit card transactions. However, UPI has become instrumental in achieving a greater share for single transactions amounting to Rs. 1 lac.

Unique features of Unified Payment Interface

Below are the main features that male UPI applications unique:

  1. Usage of mobile device as the principal device for all payments.
  2. Payments through internet can be anytime, any moment and from any place throughout the year 
  3. Multiple bank accounts can be accessed through a single mobile application.
  4. Single click and Two Factor authentication through a single application on mobile phone adhering to RBI Regulations.
  5. Facility to pay and collection requests through “virtual payment addresses” and not the account details by using “aliases” like UPI ID, mobile number or QR code
  6. A Single payment interface for merchants

Benefits of Unified Payments Interface

The primary benefits of UPIs are as follows:

  1. Seamless payments for customers with 24/7 x 365 availability and receipts for merchants
  2. One-click – Two Factor Authentication for Bank Transactions
  3. Accessing Multiple Bank Accounts through a single app
  4. Usage of Virtual Addresses prevents the sharing of other credentials
  5. Innovative UPI is a secure and safe option

Here is a step by step guide to check UPI ID post download and setting up the UPI app

1. Google Pay (GPay)

  • In the top right corner, tap on your profile picture
  • After clicking that you will be on your UPI profile page.
  • You will find all UPI IDs associated with that bank account under payment methods

2. BHIM

  • After opening the BHIM App, on the homepage click on “Profile”
  • You will find a QR Code and your UPI ID will be just below it starting with your registered mobile number @upi. For e.g 1234567890@upi

3. Paytm

  • Click on the Paytm app icon to open
  • Click on the top left corner where your name initials are.
  • The navigation bar will be opened with your name and UPI ID at the top.  The UPI ID will be your phonenumber@paytm

4. Phone Pe

  • Click the PhonePe app icon to open
  • Click on your profile picture on the top left corner of the screen
  • Tap on “MY UPI ID” to access your MY UPI ID to view your UPI ID. It will be in the form of phonenumber@ybl.

5. Mobikwik

  • Click Mobikwik app to open
  • At the top right corner in the bank account section click the bank account whose UPI ID you wish to view. Your UPI ID will be your mobilenumber@ikwik.

Unified Payment Interface has now become a popular payment option and the need of the hour. Majority of small businesses have already adapted to UPI. Even medium and large businesses have also begun using UPI.  It is highly convenient option and eliminates the hassles of cash handling marching towards making India, a cashless economy. For merchants, it is best to use to payment gateway services to feel a safe and secure transaction experience.

How is apartment living evolving as per changing times and needs

Posted on by HomeCapital Team

The pandemic has given rise to WFH (work-from-home) culture extensively. The changing working needs have impacted the choice of homebuyers as renewed demand for a bigger size apartment. The 2 BHK and 2 BHK + study, which were popular among the middle-class segment until last year. Homebuyers now prefer 3 BHK apartments and they are not hesitating to go to emerging locations outside the cities. According to a survey by Prop Equity, in the first quarter of the year 2021, the total sale of 3 BHK units rose to 30,169 from 25,307 units in the first half of the year 2020, registering a growth of 19% year on year (YoY) basis.  

Demand for apartment living in the current scenario  

In the current scenario, the demand for spacious 3 BHK units have increased up to 35% from previous 25-30%. Homebuyers are also assessing their affordability as well as financial feasibility before buying a house in leading real estate markets. As people are spending more time at home only, so a trend of buying bigger spacious units is prevailing among the middle class segment, who can afford or stretch the budget for a 3 BHK unit. Comfortable living and space for everyone are the two major that are driving the 3BHK size segment sales.    

Region3 BHK units sold in 2021 (First quarter)3 BHK units sold in 2020 (First quarter) Percentage increase (YoY)
Delhi NCR4988443312%
Pune4171310734%
MMR4273278153%
Chennai2387166543%

*Source: ANAROCK consultants 

Reasons for rise of bigger apartments

Demand for bigger size is not only fueled by the WFH and e-Learning concepts, which are expected to continue in long term also, but also other favorable factors such as lower interest rates, decreased property prices, and growing health awareness among the citizens are also bringing 3 BHK size on average homebuyer’s wish list. People are looking for all necessary amenities at their large size home like workout space, workstation, entertainment zone, kids study rooms etc., due to pandemic led restrictions.           

Homebuyers are also looking for multi-utility rooms, and the real estate market is moving beyond prime city location to mini metros, micro markets, peripheral locations apart from tier 2 and tier 3 cities as well. These markets are not only offering spacious homes at affordable rates but also fulfill the environmental metrics for a health conscious homebuyer.

The scenario of apartment living in the Mumbai Region

A study report suggests that, in MMR region alone, the size of newly launched apartments has been decreased by 25% between 2014 and 2019. Affordability and pricing were remained two major reasons for this trend apart from less time being spent at home by an average Mumbaikar.       

However, the pandemic seems to reverse this trend as demand for larger size homes is back among homebuyers. The importance of that extra room or space be it a study room, a balcony, or half bedroom are making homebuyers to think before buying the new house. The changed work culture and home-schooling coupled with limited outing due to restrictions are pushing the demand for bigger flat size.         

The positive impact of the reverse trend was seen in recent launches in Peripheral Central Suburbs and Navi Mumbai markets. These regions saw an increase of 5-10% in apartment size after July 2019. The table below shows the difference in apartment size launched during different periods in these two suburbs.      

Micro-marketArea in Sq ft (Year 2014)Area in Sq ft (Year 2019)Decrease in Size (2014-2019)Area in Sq ft (post-July 2019)Increase in size (post-July 2019)
Peripheral central suburbs76861124%67110%
Navi Mumbai 85768520%7225%

*Source: Knight Frank Research

An addition of a balcony and study room also does not affect the cost much but enhances the quality of life for homebuyers. In fact, renters are also looking to buy their own apartments because of longer hours being spent at home. Customers also prefer more space over luxury and proximity to prime locations in the current scenario. The trend of larger size apartments is expected to expand across prominent real estate markets in other MMR Region as well.

How to check your CIBIL score online

Posted on by HomeCapital Team

In the financial domain, there are several customer-centric processes or activities which have certain pre-requisites or eligibility standards. These are essential parameters to make the process smooth and hassle-free for the customer and as well as the financial institution.  The Credit Information Bureau has established this standard in the form of a score called as CIBIL Score for borrowing and lending purposes.

What is a CIBIL score?

A CIBIL score represents the creditworthiness of an individual. It is prepared by TransUnion CIBIL, one of the four credit bureaus functioning in India (other bureaus include Experian, CRIF High Mark, and Equifax). CIBIL score stands for Credit Information Bureau of India Limited score. This is the parameter that determines the worthiness of credit and the ability of the repayment of an applicant.

CIBIL score is a three-digit number derived through an algorithm based on the applicant’s historical financial data. Earlier, data used to take from a period of 24 months but now CIBIL has modified its algorithm to procure the data from a period of 36 months. A good CIBIL score is between 700 and 900. It is a trust builder between the borrower and lender.

Relation of CIBIL score with homebuyers and financial institutions

CIBIL score check is the primary and most efficient decision-making tool to lend for financial institutions. Also, it is an effective tool for a homebuyer to understand the probability of procuring a loan in advance. For a homebuyer, it is advisable to get CIBIL score checked prior to making any advance payment to the developer if procurement of loan is to be followed. Later sections will speak about the benefits of a high CIBIL Score.

How to check your CIBIL Score

Follow the basic steps below to generate your credit report on HomeCapital:

Step 1 – Visit the HomeCapital website. To create an account, first, click on Sign Up

Step 2 – Fill in your basic details such as name, email ID, city, and mobile number. Set up a password and then log in

Step 3 – Click on Home Finance and you will come on the page of Credit Score

Step 4 – Basic details such as name, email ID, mobile number will be prefilled. You will need to fill in details like gender, PAN, monthly salary, and date of birth. Accept the basic terms and click on “Get My Credit Score”.

Once your CIBIL score is generated, you can click on “Download Report” to download your detailed CIBIL report in PDF format and proceed to become a homeowner.

What is Soft Credit Pull and Hard Credit Pull

When a credit report is pulled to check your credit score, an inquiry is conducted. A credit inquiry could be done in two ways:

  1. Soft Credit Pull – is a credit check done by the applicant themselves or when an employer carries one as part of the employee’s background check. It is also known as soft Inquiry or soft credit check. These checks may not be recorded by the credit bureau, and they are not associated with a particular application for new credit. Hence, this type of check does not affect the CIBIL score. Thus, prospective homebuyers can check their CIBIL score occasionally to keep a track of their creditworthiness.
  2. Hard Credit Pull – is a credit check carried out by a financial institution or any other authorized lender. It is done specifically along with credit applications like a home loan or credit card application. It is also known as hard inquiry or hard credit check. Hard credit pull does affect the credit score by few points. More of these hard credit checks done greater will be the fall in the credit score.

Advantages of high CIBIL score

A high CIBIL score has quite a few advantages like:

  1. Higher limits on loans and greater limit on credit card – A large amount of a loan implies an increased risk for the financial institution. Lending to the individuals who are not responsible enough with credit multiplies the risk. Hence, if a loan is approved to an individual with a low credit score, the quantum of the loan approved may be much smaller than what they applied for. Thus, a high CIBIL score could see higher amounts of the loan being approved easily.
  2. Chances of having a pre-approved home loan by the banks are greater – Pre-approved home loans are offered to selective customers by banks. A lot of scrutiny in the form of a good CIBIL score threshold and your account balances happen before releasing a pre-approved offer. Individuals that have a good credit score, might have higher chances of getting a pre-approved loan from the bank.
  3. Eligibility for low-interest loans is gained – Lenders in the country price their loans based on the risk profile of the applicant. This has ensured that the creditworthy get lower rates of interest. In other words, those with a high credit score are benefitted. Interestingly, since home loans are big-ticket long-term loans, even half a percent of increase in interest rate can create a significant impact.
  4. Quicker approval of loans – A high CIBIL score is an indicator of your creditworthiness. This allows your lender to make decisions regarding your applications at a faster pace. A high credit score proves helpful when you need some quick funds and apply for a home loan. For applicants with an average CIBIL score, lenders have to consider many other factors to determine your creditworthiness which delays your loan.
  5. Eligibility for long tenure loan is established – Even though, a long tenured loan can reduce the quantum of your EMI, it is riskier for lenders. A high CIBIL score allows you to get approval on longer tenures on your loans.

How to pay TDS for your new home

Posted on by HomeCapital Team

In certain large transactions , the tax has to be deducted at the point of payment and paid to the government . Apart from the taxes that  homebuyers pay, there is one more tax which they have to pay by deducting it from the amount paid to the developer That is tax deducted  at source(TDS).

Why and when the TDS has to be paid?

Section 194IA of the Income Tax Act, 1961 states that 1% of the final value of the property has to be deducted by the buyer on the behalf of developer and to be paid to the Government. This is only applicable to the properties of the value of more than Rs.50 lakhs.  This tax was introduced as an objective to collect it from the source of income of the developer.

TDS is deducted at the time of transaction when the final amount is to be credited in developer’s account. It is mandatory that , the buyer obtains the PAN of the developer while paying the TDS. Failing to provide the same will result in paying 20% of the final amount as TDS. The buyer pays it through the form 26QB. After the TDS is paid, buyer has to provide the TDS certificate which is in form  16B to the developer. This is procured with 10-15 days after the TDS payment. 

Step by step guide to how to pay TDS online:

Step 1 Navigate to the TIN website

Login to http://www.tin-nsdl.com

As soon as you visit the site, a prompt will appear asking “Have you linked your Aadhaar with PAN” then click continue

After that another prompt of “Welcome to TIN website” of Income Tax Department authorization information notice, click continue.

One more prompt of “Attention PAN Card Applicants”, click continue or closing the window is also fine.

Step 2 Proceed to required section

Go to the service tab in the top bar and then proceed by clicking on ‘e-payment-Pay taxes online’. A new window with different challans will open

Step 3 Navigate to TDS on property (Form 26QB)

Scroll down to the to find TDS on Property (Form 26QB).

On clicking Proceed, the following window will appear:

Step 4 Enter the required details

If you are a corporate payer then select 0020 or else select 0021. Details like financial year, assessment year, type of payment,  will be auto-populated. Thereafter fill in the required details like resident/non-resident status and PAN details of buyer and seller address of transferee as well as transferor, complete address of the property, the amount paid in figures and words, and tax amount to be deposited. . After all the property details have been entered, the homebuyer can finally proceed to the Payment info tab.

Step 5 Paying the TDS

On the payment info tab, payer will find 2 modes of payment, one is through net banking facility and other is to pay by visiting a bank branch from the specified list of banks.By choosing net banking, it takes the payer to the selected bank’s interface and post the payment, a challan 280 is generated with a tick on 800 indicating the payment of TDS on property sale which can be printed for future reference.

NOTE: If the homebuyer chooses to pay offline by visiting the bank’s branch, Form 26QB generates a unique Acknowledgment Number with a validity of 10 days. This has to be taken to the bank with the payment cheque so that the bank processes the payment and generates a challan.

Steps to obtain Form 16B:

Step 1 Register on TRACES

For first time users, click here to register. After registration, approved Form 16B can be obtained and can be issued to the developer.

A week after payment, check Form 26AS and the payment is reflected under “Details of Tax Deducted at Source on Sale of Immovable Property u/s 194(IA)”

The details like TDS certificate number (which TRACES generates), name and PAN of deductee, transaction date and amount, acknowledgment number (same as the one on your Form 26QB), date of deposit and TDS deposited are given by Part F.

Step 2 Navigate to Form 16B

Once the payment is reflected on 26AS log onto TRACES portal, select the download tab and click on “Form 16B (for the buyer)”

Step 3 Enter details for Form 16B

Complete the process by filling the PAN of the  developerand acknowledgement number details and click “Proceed”

Step 4 Verification and submission of details

Post verification of all the details entered click on “Submit a request”

Step 5 Download Form 16B

It will take few hours for the above request to be processed. Then select Form 16B in the Downloads tab in “Requested Downloads”. It appears as a downloadable zip file (pdf file inside) with password as date of birth of the Deductor in DDMMYYYY format. However, if the status of Form 16B appears as “submitted” then the same process has to be repeated after few hours.

Questions?

Should you any queries then feel free to write to us at [email protected]

Applicability of TDS on purchase of your new house

Posted on by HomeCapital Team

Buying a property requires a decent amount of paperwork which includes various financial transactions and furnishing tax liabilities as applicable under the law. Tax Deducted at Source (TDS) deduction is one of such mandatory clauses, if the sales deed exceeds the value of more than INR 50 lakhs. Here are a few important details about TDS deduction for first-time home buyers.  

Tax deducted at source

Tax Deducted at Source or TDS is an advance tax collection by taxation authorities, right at the source of income. As per the income tax regulation, any individual who is making some specific type of payment to someone is liable to deduct TDS and deposit it into the central government’s account. The deducted amount is later credited into the account of PAN card holder after through assessment by the income tax officials.      

When TDS is deducted?

Section 194IA mandates a homebuyer to deduct 1% tax of the sales value of the transaction if the total purchase is worth INR 50 lakhs or more. The law covers land, commercial property and residential property except agricultural land. In case a property has an agreement value of Rs 70 lakh then TDS has to be deducted on the entire amount – that is Rs 70 lakh. Thus INR 70,000 is paid to the government towards TDS.

According to the Budget 2019, any property purchased on or after 1 September 2019 will require TDS to be paid at 1% on the consideration value of amenities as well. This includes charges such as nature of club membership fee, car parking fee, electricity or water facility fee, maintenance fee, advance fee or any other charges of similar nature.

It is important to note that TDS is to be paid on the entire sale amount. For example, if the agreement value of a house is Rs 90 lakhs, TDS will be paid on Rs 90 lakhs and not on the amount exceeding INR 50 Lakhs i.e. Rs 40 lakhs. Post the budget 2019 amendment to section 194-IA, in the above example, if on or after 1 September 2019, you have paid Rs 2 lakh towards parking fee, Rs 1 lakh for water facility fee and Rs 1 lakh for electricity fee, your sale consideration would be Rs 94 lakh. Thus 94,000 would be required to be paid as TDS (Rs 94 lakh at 1%). In case the transaction is carried out from 14 May 2020 to 31 March 2021, the rate is 0.75%.

TDS deduction, necessary documentation, and payment mode

Property buyer must deduct the TDS either at the time of signing the sales deed or during any advance payment, if paid prior to executing the conveyance deed. The deducted TDS amount   must be deposited within 30 days’ time from the last date of the month in which the deduction is made.

Necessary documents to deposit TDS in central government account include the following:

  • Form-cum-challan No. 26QB (one form for each homebuyer in case of multiple buyers)
  • Developer’s details (PAN, mobile number, name, email and address)
  • Homebuyers’ details (PAN, mobile number, name, email and address)
  • Property details (address, total value of transaction, date of agreement, payment date etc.)

Unlike other TDS deductions, property transaction does not require TAN number for execution of TDS.

TDS payment can be made in both online and offline mode through a bank challan, which would be updated on the IT department’s website by the bank. Once the TDS is submitted, homebuyer can download the TDS certificate and handover the certificate to the developer within 15 days. In case of any delay in TDS payment, the buyer may have to pay a penalty.      

Buying your first house or plot for building one is a very important decision from a financial perspective and personal growth point of view. But, sometimes, first-time homebuyers or young professionals may not have sufficient savings to fund the initial amount for down payment to buy a housing property. HomeCapital supports such individuals by helping them purchase their first house by offering an interest-free unsecured personal loan of up to 50% of the down payment. This assistance can be paid back in 12 EMIs.

Should you opt for a longer home loan tenure or a shorter one?

Posted on by HomeCapital Team

Are you considering a home loan to become a homeowner? Well, like several other aspects of home loan including the choice of bank, interest rate, and amount, selecting the tenure of home loan repayment is also very important. Both, short and long tenure are having their own benefits, and the selection of tenure solely depends on the applicant’s needs and repayment capacity. Though experts suggest various benefits attached to each type, but homebuyers should have a proper understanding of both types of tenures, especially first-time home buyers.

Benefits of long-term home loans

Here are some benefits of long-term loans:      

1. Higher eligibility

Eligibility of a home loan is calculated on the basis of repayment capacity of the borrower in form of EMIs. The monthly amount for repayment is fixed as a percentage of borrower’s monthly income. The EMI is lower with longer tenure and disbursal amount is more than the short term one. With increased loan amount, home buyers can opt for a better and bigger sized home. 

2. Flexibility of repayment

If a borrower wants to prepay the loan, then there is no penalty charged by the lending institution. Prepayment option has two different provisions according to the fixed or floating interest rate.

  • Under floating, interest rate borrower can repay the partial or entire amount to ease out the EMI burden on his earnings.          
  • While, under fixed interest rate, the borrower can only pay a fixed amount annually without any penalty. This helps homebuyers to repay the home loan earlier the initial tenure.   

3. Tax exemptions

Section 80C of Income Tax act allows a deduction of up to Rs. 1.5 lakhs to borrowers for repaying the principal amount. Nowadays, the quantum of home loan that is needed to buy a decent property, is about 80 – 90% of the value of the house. The principal component, in the home loan repayment, will be much greater for a shorter home loan tenure, as compared to a loan with a longer duration. Also, in case a homebuyer opts for a shorter home loan tenure, a significant portion of the home loan repayment will be wasted, as they would not be able to claim the deduction under Section 80C beyond the specified limit. This exemption is not applicable in repaying the short-term home loan, as principal amount would be quite large compared to long term.

4. Lower EMI amount  

For longer tenure loan, the EMI also decreases i.e. for a fixed interest rate the monthly payment amount decreases as the home loan tenure increases. For a home loan amount of Rs. 50 lakh, the EMI amount calculated at 6.75% interest rate for different tenures will be as given in the table below:    

Tenure (Years)Home loan EMI (Rs.)
40771
3032,430
2534,546
2038,018
1544,245

According to these terms for a loan of 50 lakh, the EMI for 15 years tenure will be around Rs. 44,245 against Rs. 32,430 for 30 years tenure, which is 30% lower.  

Benefits of short-term home loan tenure 

According to research a loan with a longer tenure is suitable for salaried people within the age group of 25 to 45 years. It is also beneficial for self-employed professionals within the age group 30 to 40 years. A loan with longer tenure helps younger individuals to own a house earlier with more advantages like tax exemptions and tax rebate under section 80C while repaying the loan. Below are some benefits of short-term home loans:      

  1. The tenure for short-term loan is usually 10 – 15 years or less and borrowers can quickly get free from debt and own the house in their name very early.
  2. Short term loan is disbursed very swiftly and requires minimal paperwork due to small loan amount.
  3. Since the repayment period for short term loan is smaller, so the EMI amount is generally higher but overall interest charged on loan is lower.  

After thorough evaluation of borrower’s profile, repayment capacity, loan amount and other factors, banks offer various tenures to home buyers according to their convenience. Most of the borrowers try to repay the loan as soon as possible and get rid of the obligation.  Though, experts suggest that longer loan tenure suits salaried individuals, self-employed individuals between the age group of 30 and 40 years can also afford longer tenures, as they do not have a fixed retirement age. Younger individuals can also enjoy tax exemptions for maximum years with longer tenures under section 80 C. But both tenures have their own benefits and obligations and depends on an individual’s choice. A homebuyer can opt for any type of repayment schedule after assessing the benefits of each type.