DO you remember having the time of your life on your 15th birthday, only to have your elder sister storm in and put off the music? She was the party pooper because she brought the party to a grinding halt.
We are hoping that taxes and fees won't do the same to the real estate party that is rocking our country today. People have made their fortunes, educated their children and travelled the world through smart investments in real estate.
Before you sink a pile of cash, beware of the party poopers.
Sandeep Sadh, CEO, Mumbai Property Exchange, identifies four of the biggest villains starring in the property drama.
Now starring: Capital gains tax (aka Cruelty)!
Until last year, if you sold your property and invested the sale proceeds in specific bonds issued by the National Bank for Agriculture and Rural Development and the National Housing Bank, you would save capital gains tax on the sale proceeds.
Even with their lock-in period of 3 years, and minimal returns, they were the hot favourites if you wanted to escape tax.
But the party soon ended. The Finance Ministry decided to restrict the tax benefit to investments in National Highways Authority of India and Rural Electrification Corporation bonds as well as fixed a ceiling of Rs 6,500 crore (Rs 65 billion).
With these two avenues of investment filled, the government has no plans to raise the limit or come out with any other viable option.
If you are congratulating yourself on a Rs 30 lakh (Rs 3 million), profit for a house bought for Rs 50 lakh (Rs 5 million), and then sold it three years later at Rs 80 lakh (Rs 8 million), pause a bit.
You might stand to lose 22.44 per cent as income tax, ie, nearly Rs 6.75 lakh (Rs 670,000)!
It is worse if you don't hold on for three years, in which case you will pay 33.66 per cent!
Photograph: Allauddin Khan/Associated Press
Other comments
We are a Recruiting Manpower Consultancy established in 2005. It is registered as a Partnership firm. We have also registered Service Tax Number for the same.
Our partnership Business had yeilded result only by 2006, Whereafter we have paid all the service Taxes on Time.
One of the Partner has been in the same Business since 1994 and have had a Private Limited Company, which was dissolved in 2002. Again in 2003 has started another proprietorship Firm
Our Firm has been associated with a Chartered Accountant since 1994. He use to handle
All the tax matters, and has also helped in getting our Service Tax Numbers, Our Partnership Deed and also getting the same registered. Being associated and well known
to us we had trusted him totally and all our Tax papers were kept in his Office, we have never cross checked whether he had filed our Yearly Income Tax returns. We had been well in advance to his office to sign the paper to submit our Income tax returns before the Due Date for the year2005-2006 and had given him his payment in advance by cheque, and we revisited him again well in advance for to sign the paper to submit our Income tax returns before the Due Date for the year2006-2007 and had given him his payment in advance by cheque.
Professionally he should have atleast informed us that the Income Tax return for the previous year was not done, but he did not bother to inform nor did he refuse to take the payment for the following year.
We got to know about the Income tax returns not filed only when one of our client wanted to have our details for empanelment and we asked him to give us the copy of the tax return.
This year we are in big trouble as he is unable to file the returns for 2007-2008 and our new C.A says ethically he cannot do anything before we help him with previous records.
Our Income has crossed over Rs. 10 lakhs for 2007-2008.
Request you to advice us what do we do in such a case, and how can we being honest , law abiding citizens file Returns of our Income. Also would like to know if there is any governing body wherein we can put forth our case against the C.A who is actually in fault and has cheated us and put us in this akward situation and fight against the unjust done to us.
Posted by on 04 Nov, 2008 at 09:06 PM
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