Maharashtra Stamp Act: Understanding Its Impact and Changes

At any point, if any movable or immovable resource/asset changes ownership, to get it stamped or legalized – a specific amount of tax has to be paid to the state government, which is known as stamp duty. The Maharashtra Stamp Act states such resources and assets on which the stamp obligation must be paid to the state government. The Act additionally specifies the measure of the amount that is to be paid to the state authorities.

The Bombay Stamp Act: A Cornerstone of Revenue Collection in Maharashtra

The Bombay Stamp Act, enacted in 1958, is a pivotal legal framework that governs the collection of stamp duties on document-based transactions within Maharashtra. Originally applied to the greater Bombay region, this act became an integral part of Maharashtra’s legislative environment following the state’s formation in 1960.

This Act mandates the payment of stamp duty, which is essentially a form of tax, on various documents including transfer deeds, agreements, certificates, bonds, and leases. The primary purpose of this duty is to confer legal authenticity to these documents while generating revenue for state administrative functions.

Over the years, the Bombay Stamp Act has been amended multiple times to respond to the dynamic economic conditions and real estate market of Maharashtra. These amendments ensure that the stamp duty rates are adjusted and practices streamlined to enhance compliance and minimise evasion.

The implementation of this Act is crucial for the state as it not only secures revenue but also supports the maintenance of a robust legal documentation system, which is fundamental to the functioning of both governmental and private sector transactions.

What is the Maharashtra Stamp Act?

The Bombay Stamp Act 1958 now known as the Maharashtra Stamp Act 1958, applies to every one of the agencies that are referenced in Maharashtra Stamp Act Schedule 1, on which the stamp duty is payable to the state. There was an amendment in the Maharashtra Stamp Act recently and the changes are inclusive to the modification of stamp duty on the agreement in Maharashtra on gift deeds, incorporation of electronic payment of stamp duty, an update on penalty clauses, and an increment on the amount of stamp duty under certain instruments provisions.

As of January 25, 2024, there are notable updates regarding the Maharashtra Stamp Act. Firstly, the 1% stamp duty concession for women purchasing residential property continues. This reduction applies to the standard rates, which vary between 2% to 5%, and the previous 15-year lock-in period for beneficiaries was abolished as of May 31, 2023.

Additionally, the Maharashtra government introduced the ‘Abhay Yojana’ amnesty scheme in December 2023. This scheme, in its second phase until March 31, 2024, allows the regularisation of inadequately stamped documents with reduced penalties. Benefits include a complete waiver of stamp duty and penalties for amounts under Rs. 1 lakh and a 50% waiver on stamp duty with full penalty exemption for amounts over Rs. 1 lakh.

Importantly, the stamp duty rates for the fiscal year 2023-24 remain unchanged from the previous year.

Latest Maharashtra Stamp Act

The Maharashtra Stamp Act latest involves several important changes and continuations of previous policies as of 2024:

1. Stamp Duty Concession for Women: Maharashtra continues to offer a 1% stamp duty concession for women purchasing residential property. This initiative aims to encourage property ownership among women. The earlier 15-year lock-in period that restricted the resale of these properties to men has been abolished as of May 31, 2023 (Housing).
2. Stamp Duty Rates: Standard stamp duty rates have been restored to 5% in Mumbai after a temporary reduction during the pandemic. These rates apply from April 2021 onwards, with specific concessions for certain types of properties and transactions.
3. Amnesty Scheme: The Maharashtra government has extended the Stamp Duty Amnesty Scheme until June 30, 2024. This scheme provides relief for properties that had incomplete or missing stamp duty payments dating back to 1980. The extension allows property owners to regularise documents with waived penalties under specified conditions.

Maharashtra Stamp Act 2015

On 24 April 2015, the original Maharashtra Stamp Act 1958 received the affirmation for it to be called the Maharashtra Stamp Act 2015. There were a few changes made to the Act – the stamp duty rate of certain instruments under Schedule 1 was increased. Therefore, the Maharashtra Stamp Amendment Act 2015 first came into order.

How is Stamp Duty Payable?

• Stamp Duty can be paid by:
• Using Stamp Paper
• Using Adhesive Stamps
• Online Challan
• EBSTR
• Franking

Stamp Duty Rates in Maharashtra

There are various factors that decide the stamp rate duty on property in the state of Maharashtra (or any state). Naming a few of these factors – the locality of the property – urban or rural, the total cost of the transaction, etc. The Maharashtra stamp duty Act 2020, reduced the stamp duty on properties for the next two years. This is only applicable in the areas falling under the Mumbai Metropolitan Region Development Authority (MMRDA) and municipal corporations of Pune, Pimpri-Chinchwad, and Nagpur. This means that stamp duty on properties in Mumbai, Pune, and Nagpur, was charged at 5% (4% stamp duty + 1% metro cess).

Cities	Stamp duty rates (w.e.f. April 1, 2021)	Stamp duty rates from September 1, 2020 till December 31, 2020	Stamp duty rates from January 1, 2021 till March 31, 2021	Registration Charges
Mumbai	5% (includes 1% metro cess)	2%	3%	Rs 30,000 (for properties above Rs 30 lakh); 1% (for properties below Rs 30 lakh)
Pune	6% (includes transport surcharge and local body tax)	3%	4%	Rs 30,000 (for properties above Rs 30 lakh); 1% (for properties below Rs 30 lakh)
Thane	6% (includes transport surcharge and local body tax)	3%	4%	Rs 30,000 (for properties above Rs 30 lakh); 1% (for properties below Rs 30 lakh)
Navi Mumbai	6% (includes transport surcharge and local body tax)	3%	4%	Rs 30,000 (for properties above Rs 30 lakh); 1% (for properties below Rs 30 lakh)
Pimpri-Chinchwad	6% (includes transport surcharge and local body tax)	3%	4%	Rs 30,000 (for properties above Rs 30 lakh); 1% (for properties below Rs 30 lakh)
Nagpur	6% (includes transport surcharge and local body tax)	3%	4%	Rs 30,000 (for properties above Rs 30 lakh); 1% (for properties below Rs 30 lakh)

Stamp Duty on Hypothecation Agreement in Maharashtra

Stamp Duty on hypothecation agreements in Maharashtra on instruments, pledges and mortgages on home loans in the province of Maharashtra was capped. As per the latest Maharashtra stamp act, the stamp obligation on such instruments is currently covered at a greater stamp duty of Rs. 10,00,000). This revision has been presented with impact from 1 July 2014.

Stamp Duty Charges in Maharashtra on Conveyance Deed

According to the amendments made to the Maharashtra Stamp Act 2015, Article 34 states that 3% of the property’s value is the stamp duty on conveyance deeds (gift deeds). However, if a property – Residential or Agricultural, is gifted without the family having to pay any sum of money, then the stamp duty rate is Rs. 200 as per article 34 of the Maharashtra stamp act.

Conveyance Deed	Stamp duty rate
Gift deed	3%
Gift deed for residential/agricultural property passed on to family members	Rs 200
Lease deed	5%
Power of attorney	3% for property located in gram panchayat areas and 5% for property located in municipal areas.

Stamp Duty on Indemnity Bond in Maharashtra

According to Article 35 of Schedule 1 of the Maharashtra Stamp Act 1958, and then the Maharashtra Stamp (Amendment) Act 2015 – the price of the stamp duty on indemnity bonds in Maharashtra is Rs 500.

Stamp Duty on Guarantee Agreement in Maharashtra

According to Article 5(h) (A)(iv), the stamp duty on bank guarantee agreements in Maharashtra is –

(i) If the loan amount is less than Rupees Ten Lakh – 0.1% of the amount stipulated in the contract, with a minimum of rupees 100.

(ii) If the amount exceeds Rupees Ten Lakh, the stamp duty on the personal guarantee in Maharashtra – 0.2% of the amount agreed in the contract.

Maharashtra Stamp Duty Impact on Property Registration

Property registrations saw a dip of 50% in the month of April as compared to that of the month of March after the Maharashtra government restored the stamp duty rate of 5% from 1 April 2021. According to the state government’s data, before the sanctions were to be lifted – in the month of March, Maharashtra (excluding) Mumbai saw a record-breaking spike of 2.13 lakh registrations. While only 90,500 registrations were made till 29 April. Maharashtra stamp duty had a huge impact on property registrations.

Official announcement of the cut of stamp duty on loan agreements in Maharashtra had seen a boost in property sales, especially in Mumbai (Bombay, as we know, is one of the most expensive cities in India). There were many Bollywood A-listers such as Hrithik Roshan and Jahnvi Kapoor who were seen buying properties. Between September 1 and October 17, 2020, luxurious properties were registered across 25 registration offices in Mumbai that were collectively worth 2200 crores.

Recent Judgements on Maharashtra Stamp Duty

The Bombay High Court in a recent judgement directed the Government of Maharashtra to reimburse excess stamp duty, within about a month from the date of the receipt of the application. If the authorities fail to do so, they are applicable to pay interest at the rate of 12% p.a. The above order was applicable even on the stamp duty on education loan in Maharashtra. 

In a landmark ruling, the High Court decided in favour of Macrotech Developers Ltd and Palava Dwellers regarding their land purchase under ‘Integrated Township Projects’ in Kalyan and Bhiwandi. These projects qualified for a 50% reduction in stamp duty. The state initially rejected the combining of this discount with another waiver on stamp duty for conveyance agreements, but the High Court ruled that both concessions are applicable concurrently. Consequently, the state was ordered to refund any excess stamp duty paid within a specified timeframe.

Maharashtra Stamp Duty Act has seen various amendments through time. Legal matters may seem hard to keep up with and a little hard to understand, but don’t let that stop you. We at NoBroker are here to help you. Click on the link below and we will assist you on legal matters. If you have any queries, leave them below and our experts will get back to you.

Frequently Asked Questions

Important Details About Delhi Rent Control Act That Every Delhite Should Know

The rent of a real estate property in Delhi is determined according to the Delhi Rent Control Act. The laws and regulations were constituted so that tenants and landlords had rights and obligations and operated under the law. The Delhi Rent Act was framed to keep a check on rent, and untimely eviction, and to provide affordable housing to the weakest sections of the city. Since 1958, the act has been amended to keep up with time. Let’s take a look at some of the significant features that have been included in the original Delhi Rent Control Act 1958.

What Is the Delhi Rent Control Act 1958?

The Delhi Rent Control Act 1958 was drafted by the government of India to safeguard the rights of tenants and landlords of the city. The Delhi Rent Act aims to provide affordable housing to all sections of society, keep a check on the increment of rent, and provide security to tenants towards untimely eviction. 

The Delhi Rent Control Act outlines specific grounds for eviction, such as non-payment of rent or misuse of the property by the tenant. The Rent Act applies to all residents residing within the limits of the New Delhi Municipal Committee and the Delhi Cantonment Board. The Delhi Rent Control Act notes the rights and obligations of the tenants and landlords towards each other and the state of Delhi. 

Let’s take a look at some of the key provisions made with the Delhi Rent Act.

Delhi Rent Control Act: Key provisions

Delhi Rent Control Act Notes:

• “Landlord”: a person entitled to receive rent, either for a definite period on behalf of themself or the respective owner of the property.
• ‘Tenant’ is the person responsible for paying the rent of the premises. This includes anyone and everyone living on the premises during the tenure of the contract. Tenant also includes sub-tenant and in case of death, the person in possession is subject to the order of succession. 
• Exemptions: The act is not applicable on government premises or properties. 
• The rent should be transferred latest by the 15th of a month if there is no written date mentioned in the rental agreement. The tenant is also subject to receiving a receipt for the payment of rent if demanded.
• If the rent is paid on time, the landlord has no permission or rights to evict the tenant. 
• The rent increment has been fixed in terms of a ‘standard rate’.
• According to Section 7 (1), the landlord can hike the ‘standard rent’ if the property was renovated. In such cases, the increment shouldn’t exceed 7.5% of the total budget of the construction.  
• The tenant has the provision to sublet the flat. 

Latest Amendment Delhi Rent Control Act

After having the first official version in 1958, the Delhi Rent Act has been revised and amended quite a few times. There has been a constant demand for change in the code from the association of homeowners and in some instances tenants as well. The rules and regulations from Delhi Rent Control Act Bare Act have been amended since then. Let’s take a look at the most significant changes in Delhi Rent Control Act 1958

Delhi Rent Control Act 1958

The Delhi Rent Control Act, 1958 (DRCA) is a law that regulates rents and evictions in certain parts of Delhi, India. Its main purpose is to protect tenants from unreasonable rent increases and evictions.

Here’s a summary of some key points of the DRCA:

• Rent Control: Landlords cannot charge more than the “standard rent” for a property, which is determined by the Act.
• Eviction Protection: Tenants who pay rent on time and follow the terms of their lease agreement generally cannot be evicted. However, there are some exceptions, such as if the landlord needs the property for personal use.

Increase in Rent: Landlords can increase the rent under certain circumstances, but they must follow specific procedures outlined in the Act.

Delhi Rent Control Act 1995

The first amendment in Delhi Rent Act started off in 1988, with Delhi Rent Control (Amendment) Act. According to section 3(c) of the Delhi Rent Act 1995, the premises with monthly rents exceeding ₹ 3,500/- wouldn’t fall under the previous rent act of 1958. 

With the latest amendments in Delhi Rent Control Act, Eviction laws were regulated. The tenants acquired rights toward the property and the latest amendments didn’t affect the rights the tenants already enjoyed with the Delhi rent Control Act 1958.

With respect to Section 14, Delhi Rent Control Act, landlords were barred from taking legal action against a tenant on grounds of illegal possession if the lease had expired and the tenant still occupied the premises.

Delhi Rent Control Act 2016

In March 2016, there was widespread concern about landlords evicting tenants on grounds of a special provision in the Delhi Rent Control Act 1958. 

There was a demand for defining comparative hardship in the act, removal of summary procedure for the state of Delhi and one particular landlord not being entitled to file a bonafide eviction for more than one property under their name in the same city.

The aggregated parties demanded a change in the Model Tenancy Act to provide the same benefits to commercial tenants as it provided to residential tenants. However, the demands couldn’t take the shape of an amendment.

Key Provisions For Tenants And Landlords Under The Rent Control Act Delhi

There are many landlord rights as well as tenant rights in Delhi as provided by the Delhi Rent Control Act of 1958, under the Delhi Tenancy Act. These include:

• The tenant must pay the rent by the 15^th of every month in case there is nothing written in the rent contract. The tenant also has the right to ask for a receipt in writing in exchange for the rent.
• The landlord doesn’t have any grounds for eviction under the Delhi Rent Control Act if the rent is being paid in a timely manner. 
• If the tenant pays a ‘standard’ rent amount under the act, the landlord cannot evict the tenant for paying the negligible amount – a key reason why yields on rent in the central part of Delhi is quite low.
• The landlord is not allowed to increase the ‘standard’ rent, however, for renovations, the increase cannot be more than 7.5% of the overall expense incurred. The Delhi Rent Control Act establishes the Rent Controller as the key figure in the dispute settlement mechanism between landlords and tenants.

Delhi Rent Control Act: 2020

With the Model Tenancy Act, 2019, Delhi Rent Act 1958 was amended to formulate Delhi rent Control act 2020. This is the latest amendment to Delhi Rent Control Act. The rights of the tenants and landlords were revisited and detailed again. 

To maintain the entire real estate system and maintain a positive relationship between the tenants and landlords, registration and forming a contract became compulsory. The tenant will receive a copy by right and another copy should be sent out to the rent control authority. The authority is responsible for maintaining the records for the rent and duration of the tenancy. 

In case of expiration of the set period of tenancy, it will be considered renewed on a month-to-month basis with the same terms and conditions. According to Section 22, Delhi Rent Act, 2020, a tenant will remain a tenant by law under these circumstances and will be liable for rent contribution towards the property. 

Delhi Rent Control Act 2020 also saw a capping on the high limit of security fees demanded by the landlord against rented properties. In cases of commercial properties, a maximum of 2 months’ rent can be demanded as a security deposit. For non-residential property, a maximum of 1-month rent can be demanded as the security deposit.

The Potential Repeal Of the Delhi Rent Control Act

Due to the several challenges mentioned above and also covered in detail in the section below, the central government was reported in 2021 to potentially repeal the DRCA and replace it with a new rental act for the country’s capital city, similar to the approved Model Tenancy Act. Let us understand why.

Delhi Rent Control Act: Challenges

A lot of rules and regulations from the Delhi Rent Act are redundant in current times and pose a lot of challenges for landlords and, in some cases, tenants. The tenants are aware of the protections and rights provided to them through the act and its various amendments. There are instances where tenants refrain from building their own house just to enjoy the benefits of living on rented premises. 

Delhi was known for its architectural brilliance and the various monuments and buildings that adorned the city’s limits. However, the current situation is very different. Commercial and residential properties in Delhi yearn for their owners’ attention. The owners have almost given up on running a real estate business because of the redundant laws. For instance, based on the Delhi rent control act bare act, the landlord is entitled to increase the rent every three years. However, the increase in the base rate is so insignificant that the owners have lost all hopes of maintaining the property. This has resulted in a poor quality of residential and commercial properties in Delhi’s real estate market.

Sometimes, the irregularities in code can be confusing and it has led to many court cases, some of which have gone out to be landmark cases for the Delhi Rent Control Act 1958. According to the landlords, Delhi Rent Control Act- Challenges are:

1. Setting Rent
2. Evicting Tenant from own property
3. High Maintenance and low profits 

Let’s browse through the most prominent reason for these petitions and what made these cases so special.

Petitions on Delhi Rent Control Act

The most significant reason for petitions against the Delhi rent Control Act 1958 is setting the standard rate, which is trivial considering the location. The archaic laws framed in 1958 favour the tenants. However, under certain circumstances, the landlord is allowed to evict. These circumstances are highly debatable and have faced a lot of petitions for amendment. The Transfer of Property act also provides a major loophole in Delhi Rent Act. Since 1958, the Delhi Rent Act has been amended and the change came after certain landmark cases made the judiciary rake its brain for years. According to the latest judgments on the Delhi Rent control act, the Delhi Rent Act, 1958 was amended in 2020. Some of the landmark cases to affect the original framework are:

Delhi Rent Control Act: Landmark cases

• Freddy Fernandes v. P. L. Mehra, 1973 R.C.R. 53(2)
• Ram Narain v. Lakshmi Dass Kundra, AIR 1971 Delhi 268 
• Madan Lal vs Hema Wati, ILR 1970 Delhi 519
• V. Dhanapal Chettiar v. Yesodai Ammal, AIR 1979 SC 1745
• Priya Bala Ghosh v. B.L. Singhania, AIR 1992 SC 639

Bonafide Requirement of Landlord Under Delhi Rent Control Act

According to Section 14, Delhi Rent Control Act 1958: Eviction of Tenants 

The landlord has no right to evict a tenant without valid grounds for eviction. If a landlord wants to evict a tenant, he needs to file a case with the Controller Authority if one or more of the following grounds are met:

1. The tenant fails to produce rent even after two months of the notice for arrears was delivered to them. 
2. Sub-letting the premises without the discretion of the landlord. 
3. The premise is a residential property and neither the tenant nor their dependents are residing in the premises for 6 months or more. A Notice for recovery of possession is required to be delivered to the tenant in such cases. If the premises remain vacant for 6 months or more, the landlord can file for eviction. 
4. If the landlord doesn’t possess any other suitable residential space, the place becomes Bonafide Requirement Of Landlord under Delhi Rent Control Act.
5. Violating terms of residential tenancy with commercial tenancy or vice versa. 
6. The property is a safety hazard and the landlord has a bona fide requirement for repairs that can’t be made while the property is being rented.
7. If the landlord has a bona fide requirement for alteration or addition to the premises. 
8. The premises were a part of a service agreement and the service ceased to sustain.

Latest Updates on Delhi Trent Control Act

The Model Tenancy Act was approved by the Union Cabinet in June 2021, and the states were invited to enact it. The Delhi Rent Control Laws, 1958 will be repealed by the government, and the new rent act will take effect. Since land is a crucial issue in the national capital, the centre must enact the law in Delhi. The traditional lease agreements between renters and landlords would not be affected by the new law.

Buying or renting a flat is anyway a cumbersome process. In cities like Delhi, the Delhi rent control act makes it even more difficult to find the best property for renting or buying. NoBroker has an innovative solution. You can buy or rent from a range of exclusive up-and-coming properties with NoBroker and save big on Brokerage and other hidden charges. Let the experts at NoBroker take care of all your real estate needs. Drop a comment under this blog and our executive team will get in touch with you, or click on the link below to get legal help with Rent control in delhi.  

FAQ’s

Karnataka Apartment Ownership Act of 1972: A Complete Guide for Everyone

In the Indian state of Karnataka, ownership and administration of apartment complexes are governed under the Karnataka Apartment Ownership Act 1972. The Act establishes a formal framework for the ownership of individual apartments or flats inside multi-unit buildings. It creates the idea of apartment ownership, in which each owner is the legal owner of their flat while jointly owning the building’s shared rooms and amenities.  The Association is in charge of the building’s common areas maintenance, repairs, and administration, which guarantees the appropriate operation and maintenance of the whole property.

The Act also specifies the rights and obligations of apartment owners and the Association, as well as the apartment rules and regulations in Bangalore , registration, and transfer of unit ownership. Additionally, it offers channels for settling conflicts between apartment building owners or between association members and owners. 

Application of Karnataka Apartment Ownership Act 1972

There are apartment association rules and regulations in Bangalore as per the Karnataka Apartment Ownership Act of 1972. Its applicability spans a broad spectrum of concerns pertaining to apartment complex creation, administration, and governance. Here is a thorough rundown of how it is used:

1. Apartment Owners’ Association Formation: The creation of apartment owners’ associations is one of the Act’s primary uses (AOAs). According to the Act, owners of apartment buildings are required to organise an organisation to oversee the common spaces and amenities when a certain proportion of the units are sold. The management, care, and administration of the whole property fall within the purview of this organisation.
2. Ownership and Rights of Apartment Owners: The Act outlines each apartment owner’s obligations and rights. It recognizes the shared ownership of common spaces like stairwells, hallways, and elevators, as well as private ownership of apartments and amenities like apartment car parking rules in Bangalore, gardens, and leisure centres. As long as they follow the Association’s regulations, any owner is free to enjoy the common spaces.
3. Apartment Ownership Registration: The Act lays forth the steps involved in registering apartment ownership. In order to protect the interests of each apartment owner, the developer or promoter of the complex must complete a Deed of Apartment that precisely specifies the unit’s size, borders, and attached amenities. In order to prove legal possession, these deeds are then registered with the appropriate government.
4. Common Area and Facility Management: Under the Act, the Apartment Owners’ Association is given the authority to oversee common spaces and amenities on behalf of all owners. This covers fire safety rules for apartments in Bangalore including keeping track of maintenance fees, doing upkeep and repairs, making sure everyone is safe, and setting up gatherings or activities for the community. When it becomes essential for the effective administration of the property, the Association may also recruit employees or contractors.
5. Dispute Resolution Procedures: Providing procedures for settling disagreements between apartment owners or between owners and the Association is another meaningful way that the Act is put to use. It permits the creation of forums or tribunals for the purpose of resolving disputes pertaining to ownership, upkeep, ordinances, or any other issue involving the apartment building.
6. Bylaw Amendment: Under the Act, the Apartment Owners’ Association is able to create bylaws that specify how the property will be managed and administered. These apartment owners association bylaws Tamil Nadu can address matters like meeting etiquette, choosing office holders, enforcing penalties for infractions, and the processes for amending the bylaws themselves. Any modifications to the bylaws must be implemented in compliance with the Act’s requirements.
7. Developer and Promoter Regulation: The Act also governs the actions of developers and promoters who work on the building and retailing of apartment buildings. It places responsibilities on developers, including delivering unambiguous title documents, finishing projects on schedule, and following authorised building blueprints and specifications.

To summarise, the apartment association rules in Bangalore encompasses a broad range of regulations that oversee the creation, administration, and control of apartment buildings within the state of Karnataka. It offers a legal framework for apartment ownership, protecting each owner’s rights and obligations and encouraging peaceful cohabitation and adequate upkeep of common areas.

Karnataka Apartment Ownership Act 1972 Rules

The primary purpose of Tamil Nadu apartment ownership rules is to control several facets of apartment ownership, management, and administration. This is a thorough summary of what these apartment rules in Bangalore may include:

1. Apartment Owners’ Association (AOA) formation:

• The AOA’s founding regulations, such as the minimal proportion of units needed to establish the organisation.

• The steps for holding the first general assembly of apartment owners, which will elect officers and approve bylaws.

• Conditions for registering the AOA with the relevant authorities.

2. Apartment Owners’ Rights and Obligations:

• Regulations defining each unit owner’s obligations and privileges, such as the use of shared spaces and amenities.

• Responsibilities for sinking fund payments, apartment maintenance rules in Bangalore, and other AOA dues.

• Rules pertaining to the remodelling, modification, or alteration of sure flats.

3. Oversight of Public Spaces and Infrastructure:

• Rules governing the upkeep, restoration, and repair of shared spaces, including parking lots, stairwells, and hallways.

• The methods for selecting employees or outside contractors to maintain shared facilities.

• Guidelines for using facilities, including community halls, gyms, and swimming pools.

4. Budgeting and Financial Management:

• Guidelines for the creation, approval, and execution of the Association’s annual budget; • Policies governing the acquisition of maintenance fees, fines, and other charges from unit owners.

• The need to have accurate financial accounts and accounting records.

5. Dispute Settlement Procedures:

• Dispute resolution procedures for apartment owners, owners and the Association or Association members.

• The creation of a committee or tribunal dedicated to resolving disputes.

• Guidelines for the complaint filing, evidence submission, and hearing processes.

6. Regulations and Bylaws:

• Rules controlling how the AOA conducts its meetings, such as quorum requirements and vote protocols.

• Bylaws include term limits, the election of office bearers, and their functions and duties.

• Procedures for amending rules and bylaws, including how to ask apartment owners for their consent.

7. Control over Developers and Advertisers:

• Laws placing restrictions on promoters and developers in relation to the building and selling of flats.

• The prerequisites for securing the required apartment permission rules in Bangalore and approvals from local authorities.

• Instructions for completing and registering apartment deeds and other pertinent paperwork.

8. Adherence and Implementation:

• Measures for ensuring adherence to related regulations and the Act.

• Penalties for breaking the Act or its regulations, such as fines, privilege suspensions, or legal action.

• Dispute resolution bodies’ or the AOA’s enforcement mechanisms.

The responsible body designated under the Karnataka Apartment Ownership Act of 1972 usually formulates these regulations after consulting with many parties, including government agencies, developers, and owners of apartments. Their purpose is to ensure that apartment complexes are managed and governed in a fair, consistent, and transparent manner, which will keep tenants happy and in a smooth-running environment.

How the Karnataka Apartment Ownership Act 1972 Benefit?

For apartment owners, tenants, developers, and the society at large, the Karnataka Apartment Ownership Act of 1972 offers a number of advantages. The following are some of the main ways that the Act helps different parties:

1. Legal Framework: The Act provides a precise legal foundation for apartment complex ownership, management, and governance. It offers clarification and assurance about property ownership by outlining the rights, duties, and responsibilities of apartment owners and the Apartment Owners’ Association (AOA).
2. Protection of Rights: The Act guarantees the protection of property rights by outlining the rights of individual apartment owners as well as the collective rights over shared spaces. It ensures fair access to and usage of shared amenities while defending owners’ rights in their units.
3. Effective Management: By establishing AOAs, the Act makes it easier for apartment complexes to be managed effectively. For the benefit of all residents, these groups are authorised to oversee common spaces, collect maintenance fees, perform upkeep and repairs, and enforce laws and policies.
4. Maintenance and Upkeep: Shared accountability for the upkeep and maintenance of communal spaces and amenities is advantageous to apartment owners. This shared responsibility guarantees that the property is well-maintained, increasing its value over time and lessening the financial and administrative strain on individual owners.
5. Community participation: By creating AOAs, the Act encourages collaboration and community participation among locals. It gives locals a forum to express their opinions, take part in decision-making, and collaborate to achieve shared objectives, promoting a feeling of community and belonging.
6. Dispute Resolution: The Act offers procedures for resolving conflicts between apartment owners, between owners and the Association, or between Association members. This prevents disputes from becoming worse and provides a systematic framework for settling disputes in an unbiased and equitable way.
7. Developer Regulation: The Act controls the actions of promoters and developers who build and market residences. To protect the interests of purchasers, it places duties on developers to guarantee openness, excellence, and adherence to legal standards.
8. Encouragement of Ecological Lifestyles: The Act promotes sustainable living via its requirements for the upkeep of public spaces, including parks, gardens, and leisure centres. It encourages the growth of green areas, energy-efficient buildings, and ecologically beneficial projects, all of which contribute to a community that is healthier and more environmentally aware.

The Karnataka Apartment Ownership Act 1972 benefits all parties engaged in the ownership, operation, and usage of such assets by fostering orderly growth, effective administration, and peaceful living in apartment complexes.

In conclusion, The Karnataka apartment Ownership Act 1972 provides a complete framework for apartment owners, occupants, developers, and the community.  The Act protects property rights, promotes effective management, and encourages community involvement by establishing a clear legal framework for ownership, management, and administration. It makes maintaining common spaces and facilities easier, improving residents’ quality of life and property value. 

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Frequently Asked Questions

Maharashtra Apartment Ownership Act 1970: Details and Application

The Maharashtra Apartment Ownership Act 1970 governs apartment ownership and management in Maharashtra, India. This legislation addressed the rising apartment living trend and provided a legal foundation for apartment complex administration. The statute requires the creation of a cooperative society or group of unit owners to maintain, repair, and manage common spaces and amenities in the complex. Residents feel more connected when common areas and facilities are managed collectively. 

The statute also governs unit ownership transfers and disputes between residents or the organisation and individual owners.  Also, the Maharashtra Apartment Ownership Act of 1970 regulates apartment complex connections and affairs, fostering orderly growth and peaceful living. Let’s learn more about this act and its benefits. 

Application of Maharashtra Apartment Ownership Act 1970

All Maharashtra apartment buildings and complexes are covered under the 1970 Maharashtra Apartment Ownership Act. It covers apartment ownership, management, and government in such complexes.

Some significant places where the Maharashtra apartment ownership rules applies:

1. Apartment Owners groups: The legislation governs the creation and operation of groups or societies of apartment owners within a complex. It describes how to form these organisations and their duties.
2. Ownership Rights and Responsibilities: The statute defines individual unit owners’ rights and responsibilities within a complex. It establishes the ownership structure, including common spaces, amenities, and unit borders.
3. Management and upkeep: The legislation governs common area and facility upkeep in residential complexes. It distributes maintenance costs and manages common facilities fairly.
4. Transfer and Inheritance of Ownership: The statute governs apartment ownership rights and property interest transfers. It covers inheritance and ownership succession.
5. Dispute Resolution: The statute addresses problems between apartment owners, the association, or the interpretation and implementation of the act.

The 1970 Maharashtra Apartment Ownership Act covers all areas of apartment ownership and administration in the state to promote orderly government and harmonious living in apartment complexes.

Removing Property From The Act’s Regulation

Removing a property from the Maharashtra Apartment Ownership Laws 1970 requires a legal procedure and compliance with the laws. A summary of possible methods:

1. Review the Act: Read the Maharashtra Apartment Ownership Act of 1970 to learn how to remove a property from its regulation. Check for relevant provisions.
2. Consult with property law specialists to discuss removing the property from the act’s regulation. They can explain the processes and verify legal compliance.
3. Get clearance from the association or management committee if the property is in an apartment complex administered by an association or society. This may include meetings and consensus or following the association’s bylaws.
4. Prepare legal papers to establish the property removal from the act’s regulation. As needed by the statute and apartment association rules in Mumbai, this may entail authoring resolutions, agreements, or governing document revisions.
5. Filing with Authorities: Submit needed paperwork to authorities as per legislation. Depending on the property and regulatory requirements, this may include filing with government authorities registering property or cooperative associations.
6. Compliance: Meet legal and procedural conditions for property removal from the act’s regulation. This may involve paying fees, meeting deadlines, and following government rules.
7. After completing the removal procedure, inform all impacted parties, such as association members, renters, and stakeholders, of the change in regulatory status.

To lawfully remove the property from the Maharashtra Apartment Ownership Act of 1970, complete the legal processes and get professional counsel.

Share of Property Owned By The Owner

According to the Maharashtra Apartment Ownership Act 1970, each owner’s share of property in an apartment complex is usually based on the size of their apartment unit compared to the total area of all units. This ownership share gives the owner rights and obligations in the complex’s organisation or society.

Here’s how owners’ property shares are usually determined:

1. Ownership share often depends on the size or area of the apartment unit held by the owner. Ownership shares are more outstanding for larger units and lower for smaller ones.
2. To determine ownership share, use a percentage of the total area of all units in the apartment complex. Owners generally have a 10% ownership share if their unit is 10% of the complex’s total space.
3. Ownership shares grant rights and duties within the apartment owners’ group or society. Examples include voting rights at association meetings, proportional representation in decision-making, and ownership-based maintenance contributions.
4. The ownership portion is established in title deeds and other legal documents linked with the property. These papers determine apartment complex rights, duties, and liabilities by owner proportion.

Owners must comprehend their ownership share and its consequences for governance, decision-making, and financial duties under the Maharashtra Apartment Ownership Act of 1970-governed apartment complex.

Maharashtra Apartment-Flat Ownership,1963 And Maharashtra Apartment Ownership Act, 1970: A Comparison 

 It is necessary to distinguish between the historical context, scope, provisions, and objectives of the Maharashtra Apartment Flat Ownership Act 1963, and the 1970 Act.

1. History

The 1963 Maharashtra Apartment-Flat Ownership Act

• The Maharashtra Apartment Flat Ownership Act of 1970 was an early Indian law governing apartment flat ownership and administration.

• The law was designed to address the rise of apartment living and provide a legal framework for flat ownership in multi-unit residential complexes.

The Maharashtra Ownership of Flats Act was adopted with the rise of apartment living, especially in metropolitan areas, highlighting the need for precise restrictions on individual flat owners’ rights and obligations.

The 1970 Maharashtra Apartment Ownership Act

• The Maharashtra Apartment Ownership Statute, 1970, updated and replaced the 1963 statute.

• The act updated and modernised apartment ownership and governance, addressing evolving needs and complexities. 

• The act introduced a more robust legal framework for apartment complex ownership, management, and administration, addressing various issues.

2. Extent and Conditions

The 1963 Maharashtra Apartment-Flat Ownership Act 

• primarily addressed individual flat ownership in multi-storeyed structures.

• The act established regulations for flat ownership, including property division, common areas, and facilities. 

• It also outlined the rights and responsibilities of flat owners and procedures for forming cooperative societies or associations to manage common areas and facilities.

The 1970 Maharashtra Apartment Ownership Act

• The 1970 statute broadened ownership and control of apartment complexes beyond individual flats.

• The act established and regulated apartment owners’ associations or societies to manage common areas, facilities, and services. 

• The act covered apartment ownership and management, including clear title, standard area maintenance, dispute resolution, and ownership rights transfer.

3. Goals and Plan

The 1963 Maharashtra Apartment-Flat Ownership Act

The primary goal of the 1963 act was to legalise and protect flat owners in multi-storeyed buildings. It also regulated the division and use of common areas and facilities to ensure equitable access and maintenance.

The Maharashtra Apartment Ownership Act, 1970 

aimed to modernise and strengthen the legal framework for apartment ownership and governance in Maharashtra. It addressed challenges such as collective decision-making, maintenance, and dispute resolution and promoted orderly development, efficient management, and harmonious living within apartment complexes.

4. Impact, evolution

The 1963 Maharashtra Apartment-Flat Ownership Act 

•The 1963 act was a crucial step towards recognising and regulating apartment ownership in Maharashtra, although its reach was restricted compared to subsequent laws.

The 1970 Maharashtra Apartment Ownership Act

• The 1970 legislation changed the legal framework for apartment ownership and management in Maharashtra, providing new laws to address the complexity of urban apartment complex administration. The statute set the standard for apartment complex construction and regulation in Maharashtra for decades.

In conclusion, the Maharashtra Apartment Flat Ownership Act 1970 regulated apartment ownership in Maharashtra, although they had different scopes, regulations, and goals. The 1963 statute addressed individual flat ownership in multi-story buildings, whereas the 1970 act covered apartment complex government and management. The 1970 statute was more comprehensive and updated, reflecting urban apartment living’s changing requirements and problems. These laws established the legal basis for apartment ownership and administration in Maharashtra, ensuring orderly growth and peaceful living in apartment complexes.

Learn More About Real Estate Laws With NoBroker 

It might be difficult to navigate India’s complicated real estate legal system, but with the correct assistance, it becomes easier. It’s important to emphasise the value of expert advice as we wrap up our examination of the most important real estate regulations, and NoBroker’s legal specialists excel in this regard. It’s a smart move to get in touch with NoBroker’s legal specialists for tailored guidance and support. NoBroker is a source of support for all real estate transactions, whether you’re buying, selling, or renting; it makes the process easier to grasp and available to everybody.

Frequently Asked Questions

Section 194ia: Understanding Your Income Tax Obligations

The real estate sector in India has often had its reputation tarnished due to the amount of money laundering and corruption cases. To check this, one of the steps that the Indian Government took was to introduce Section 194ia of the Income Tax Act which allows the buyer of the property to deduct Tax at Source (TDS) before paying the seller. 

In addition, the 194-is TDS rate is also standardised across all residential properties and lands (excluding agricultural lands). Thus, it cuts off any chance of foul play during the transfer of properties and makes the system more transparent. 

Section 194ia of the Income Tax Act

First, let’s start with the exact legal definition of Section 194-ia. It says that “Any individual legally responsible to pay (other than the person referred to in section 194LA) to a resident transferor any sum as consideration for the transfer of any immovable property (other than agricultural land) shall, at the time of crediting such sum to the transferor’s account or at the time of payment of such sum in cash, by the issue of a cheque or draught, or by any other mode, deduct an amount equal to 1% of the sum.” 

Now let’s look closer at some of the terms here. 

TDS on Rent

Before going into the details, let’s discuss what rented properties are applicable for TDS deduction under Sec 194-ia of the Income Tax Act. The “rent” here equates to any lease/sub-lease/tenancy or other arrangements for the following immovable properties:

• Building (including factory buildings)
• Land
• Land that holds any building
• An industrial/manufacturing unit
• Computer systems, machinery and other types of equipment needed for infrastructure
• Machinery
• Fittings
• Furniture

The applicable rate of TDS on rent of immovable property like land and buildings is 10% of the considered value. Usually, individuals/HUFs are not liable to pay taxes unless more than 50,000 per month. A 5% TDS will be deducted in such cases.

When is the Timeline for the Section 194ia TDS Deduction?

As mandated by the 194-ia TDS section, this TDS is deducted while transfer of property or while paying the rent to the landlord. The TDS thus deducted should be paid to the Government within seven days of the following month, albeit with a few exceptions. For example, if the amount is paid in March, the deadline would be April 30th.

Documents required during 194-ia TDS payment

• A TAN number (Tax Deduction Account Number). However, for the transfer of immovable property, the buyer need not have a TAN.
• PAN cards of both buyers and sellers. The absence of this document might lead to heavy penalties for the buyer.
• Address Proof
• Personal Details such as Name, email address and others (as mentioned in Form 26QB)
• Total consideration value
• Date of payment
• Form 16B (to be furnished by the buyer and submitted to the seller within 15 days)

Section 194ia TDS Rate

The revised TDS rate under Section 194-ia of the Income Tax Act is 1% of the total value of the property. For agricultural lands also, the TDS rate is 1% of the considered value. However, if the seller does not have a PAN, a steep 20% tax is deducted.

TDS Section 194IA on Immovable Property

The TDS on immovable property is 1% of the total considered value. However, for properties purchased before 2019, the TDS deducted is 0.75%. In case of the absence of certain documents like the PAN of the seller, the TDS deducted is 20%, along with hefty penalty fees.

Section 194ia TDS Payment

You can pay 194-ia TDS via both offline and online modes of payment. This process involves two steps. First, the buyer will have to pay the 194-ia TDS through the 26QB challan and then obtain Form 16B for the seller. Here are some steps that you can follow:

1. Log in to tin-nsdl.com with your credentials. After the window appears, click on the “Services” tab and select the “e payment: Pay taxes online” option.

2) A new window with various challan options will appear before you.

3) Scroll down a little. Then, under the “TDS on Property Form 26QB” option, click on “Proceed”.

4) You will be redirected to a new window. First, you have to input all taxpayer information. In the “Tax Applicable” section, choose 0020 if you are paying corporate tax. For others, click on 0021—next, select assessment period, type of payment, and residency status. You also need to provide your details along with your PAN. You also need to input the seller’s PAN here. Then click on “NEXT”. 

5) Fill in all the other necessary details, including the property details. Then, you will finally reach the “Payment” page. Here, one needs to select their preferred mode of payment and click on “Proceed”. Once you successfully pay online, you will be able to download and print a Challan 280 for future reference.

6) In case you are unable to pay online, you will receive a Form 26QB along with a unique acknowledgement number (only valid for ten days from generation). You can take this form to the nearest bank along with a cheque and make your payment. On successful transactions, the bank will generate the challan for you.

After this, you need to visit the TRACES website and register on TRACES as a Taxpayer with your PAN number and challan number. Then, get your Form 16B and download it. Remember, this form is to be mandatorily issued to the seller of the property.

Section 194ia Challan

This is a sample of the 194-ia challan or Form 280. The buyer must have a copy of this form 280 while deducting TDS on property sale. 

For a closer look, visit here.

When is the latest possible date that the TDS can be deposited with the government?

The TDS, which stands for “tax deducted at source,” needs to be sent to the administration by the 7th of the month that follows the one in which it was deducted. This indicates that the tax deductions that were taken out in the month of March need to be turned over to the authorities by the 7th of April.

The repercussions of failing to make a payment toward the TDS

The rules of the legislation provide that it is the responsibility of the buyer to deduct any relevant TDS from the total value of the transaction and file it in the appropriate manner with the government. Because it is not required for purchasers to have a PAN, they are free to utilise the information from their PAN in the paperwork. Those purchasers who do not submit their tax withholding payments to the government within an allotted amount of time face the possibility of being fined in the form of interests or facing a term of imprisonment that may be as long as 7 years. It is important to note that even if the seller may be compelled to make payment, the buyer would be the one to bear the penalty in this scenario.

Things to Keep in Mind: TDS on Immovable Property Section

TDS: Things for the customer to keep in mind 

The total consideration for the sale should have either 1 percent or 0.75 percent TDS on the sale of property deducted from it, depending on the timing of payments. Obtain the seller’s PAN and then check it against the information on the genuine PAN card. In order to make a tax payment, you will also need your PAN. Since there is no online system for the repair of inaccuracies, you must be very careful not to make any mistakes while providing the PAN or any of the other information in the online form. It is necessary for you to get in touch with the Tax Department in order to make the necessary corrections.

TDS: Things for the Seller to Keep in Mind

Give the buyer your Permanent Account Number (PAN). In the Form 26AS Yearly Tax Statement, you need to make sure that the deposit of taxes that were deducted by the buyer is correct.

Things that are essential to keep in mind regarding TDS

If a property’s purchase price is more than Rs. 50 lakhs, the buyer is required to deduct TDS on property purchase & pay it to the government. The buyers, and not the vendor, are the ones who are accountable for deducting and submitting the TDS amount. In the event that any of this property is misappropriated, the buyer would be held accountable before the appropriate authorities. In order to credit the TDS, buyers need to fill out Form 26QB. In the event that the transaction involves more than one buyer or seller, there are separate forms that need to be filled out for each individual party.

Important Terms

1. What is Immovable Property?

During the transfer of properties, an immovable property refers to a flat, building, part of the building, or any other real estate and land other than agricultural land. Land or property that is inherited also comes under the purview of immovable property.

2. What is TDS?

TDS stands for “Tax Deducted at Source.” It’s a tax collection mechanism in which a person or entity responsible for making payments (such as salary, interest, rent, etc.) is required to deduct a certain percentage of the payment as tax before making the payment to the recipient. The deducted tax is then directly deposited to the government on behalf of the recipient. TDS ensures that the government collects tax revenue in advance and prevents tax evasion. The recipient then receives the net amount after the deduction of TDS. Recipients can claim credit for the TDS amount while filing their income tax returns.

As can be seen, section 194-ia TDS of Income Tax Act has successfully minimised the rampant corruption during the transfer of properties. With actual tax rates and liabilities, both buyers and sellers need to be in tandem to participate in real estate transactions, including land successfully. However, if you are still confused, you can always contact the NoBroker legal experts to understand the finer details of the TDS rules. Wish to know more about various taxes related to real estate? Visit our blog section and get knowledge on multiple taxes and their benefits. For any legal issues regarding 194ia TDS just click below.

FAQs

Section 80EEA of the Income Tax Act for Home Loan

Are you looking for an additional deduction under Section 80EEA or are you confused about what section 80EEA of income tax is about and what are the 80EEA exemptions? Don’t worry, we are here to answer all your questions and will make sure the meaning of section 80EEA is clear to you. Learn about the deductions, its eligibility and the conditions for availing the benefits under section 80EEA of the Income Tax act.

Can Taxpayers Claim Deduction Under Section 80EEA in 2023?

As of April 1, 2022, individuals who have been granted housing loans are no longer eligible to claim deductions under Section 80EEA. The benefits provided under this section were discontinued on March 31, 2022. Consequently, any housing loans sanctioned after this date will not qualify for the tax deduction benefits previously available under Section 80EEA. It is important for individuals to be aware of this change in order to make informed decisions regarding their housing loan applications.

What is Section 80EEA of the Income Tax Act?

In 2019, Section 80EEA of the Income Tax Act was introduced by Finance minister Nirmala Sitharaman in the Union Budget which aims to stimulate the ‘Housing for All by 2022’ program of the central government. This program offers additional tax benefits on the purchase of affordable homes. Section 80EEA of income tax was introduced to expand the benefits allowed under Section 80EE for low-cost housing. Deduction under 80EEA can be claimed by an individual until the repayment of the home loan.

It is an additional deduction for an individual who pays interest on home loans. The HUF, AOP, BOI, partnership firm, or any other taxpayer is ineligible for the deduction under Section 80EEA.

Provision of Deduction Under Section 80EEA

Deduction under section 80EEA has a provision that home buyers can save up to Rs 1.50 lakhs per year in favour of the interest paid on home loans. This is in addition to the Rs 2 lakhs that the buyer already saves under section 24 (b) of the Income Tax Act. According to this section, in respect to the self-occupied property, for the interest on housing loan additional deduction sec 80EEA of up to the extent of Rs 2 lakhs. 

Interest that is paid on any housing loan is allowed as a deduction to the extent of Rs 2 lakhs with respect to the self-occupied property. In order to provide further benefit, the section allows an additional deduction of Rs 1.5 lakhs for interest on a housing loan, for purchasing an affordable house up to Rs 45 lakhs in value. 

Therefore, if a person wants to purchase an affordable house, he/ she will get an enhanced interest deduction of up to Rs 3.5 lakhs. All categories of buyers can claim deduction on home loan interest payments under Section 24(b). The rebate of Rs 1.50 lakhs against interest payment under Section 80EEA is over and above this limit.

Eligibility to Claim Deductions Under Section 80EEA

• Only first-time homebuyers are eligible to claim benefits under this law, as this section specifies that the borrower should not own any residential property at the time the home loan is granted. 
• This deduction can be claimed against home loan interest payment, that too with the deduction 80EEA limit of Rs 1.50 lakhs per year for the eligible buyer.
•  To be eligible the borrower’s home loans are to be sanctioned between April 1, 2019, and March 31, 2021, to claim these benefits.
•  Only individual buyers are eligible to claim deductions under this section. The benefits cannot be claimed by companies, Hindu undivided families, and so on. 
• The buyer should apply for a home loan from a financial institution (sources such as banks housing finance companies) and not from any family members or any other relatives or friends.
• To be eligible to get the deduction, the stamp value of the property should not be more than Rs 45 lakhs.
• Buyers of residential house property can claim the benefit of an 80EEA deduction. It is specified in the law that the loan must be borrowed for the purpose of buying the property and not for reconstruction, repair, maintenance, etc.
• If any buyer is claiming any kind of deductions under Section 80EE, then he/ she will not be able to claim the deductions under Section 80EEA.
• It has been interpreted by tax experts that even non-residents (NRIs) can claim 80EEA deductions as there is no law which specifies that whether a first-time buyer has to be a resident Indian to claim the deduction.

Conditions for Claiming Deduction Under Section 80EEA

According to section 80EEA of income tax, the first and most important condition for deduction is that the taxpayer should be a first-time homebuyer and the taxpayer should not own any residential house or property as on the date of the sanction of the loan.

There are some points with regards to conditions based on the carpet area of the house. According to the Finance Bill, if the house is located in any metropolitan city of Bengaluru, Chennai, Delhi National Capital Region (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata, and Mumbai (the whole of Mumbai Metropolitan Region), it’s size should not more than 645 sq. ft or 60 sq. meters. For units in any other city, its size should be limited to 968 sq. ft or 90 sq. meters.

Read: Everything You Need to Know About Income Tax Benefits on Home Loans

The stamp duty value of the house property should not be more than Rs 45 lakhs to get the deduction.

For claiming the deduction under Section 80EEA, the section does not specify that the property must be self-occupied, to seek the tax break. This also allows the buyers who are currently living in any rented accommodations to claim deductions while also claiming the HRA benefits under Section 80GG.

 In the case of the joint owners, they can both claim Rs 1.50 lakh each as deductions under this Section, all the conditions should meet and the conditions must be laid down properly.

Who can claim for Deduction?

The income tax deduction on home loan interest 80EEA is only available to those who are purchasing their first house. One must keep in mind that in order to qualify for a home loan, the applicant cannot currently own any residential real estate.

Can NRI claim Deduction Under Section 80EEA?

Whether or not one must be an Indian resident is not specified in the statute. As a result, non-residents can also claim deductions under Section 80EEA of the Income Tax Act, according to tax experts.

Provisions for First Time Buyers

First-time house purchasers are those who do not currently own any real estate at the time they apply for a loan. Even if the concerned person’s parents own property, every household headed by a working adult can be regarded as a separate one.

Can Co-owners Claim Deduction Under Section 80EEA?

Each co-owner or joint borrower may claim a 80 EEA maximum limit deduction of Rs. 1.5 Lakh under Section 80 EEA in the matter at hand. Each of them must, however, satisfy all the requirements.

Difference between Section 80EEA and Section 24(b)

Homebuyers can claim income tax deductions under both, Section 24(b) and Section 80EEA, and they can enhance their total non-taxable income to Rs 3.50 lakhs if they meet the eligibility criteria. However, the deductions under Section 80EEA can only be claimed after exhausting the Rs 2-lakh limit specified under Section 24(b).

The major differences between both the sections are:

Section 24(b)	Section 80EEA
Possession	Possession of property is required	Possession of property is not required
Loan Source	Banks or any other personal source	Loan source must be from a bank
Deduction	Rs 2 lakhs or entire interest	Rs 1.50 lakhs
Property Value	No specification	Maximum property value should not exceed Rs 45 lakhs
Loan Period	Loan period should start after April 1, 1999	Loan period should be between April 1, 2019, to March 31, 2022
Eligibility	All kinds of home buyers	First-time individual homebuyers

Difference between Section 80EEA and Section 80EE

The first-time buyers claiming the deductions under Section 80EE cannot claim the deductions under Section 80EEA of the income tax act. This point is specifically mentioned in the law. The major differences between both sections are mentioned below.

	Section 80EE	Section 80EEA
Property Value	Maximum of Rs. 50 lakhs	Maximum of Rs. 45 lakhs
Loan Amount	Up to Rs. 35 lakhs	Not specified
Loan Period	April 1, 2016, to March 31, 2017	April 1, 2019, to March 31, 2021
Maximum Rebate	Rs. 50,000	Rs. 1.50 lakhs
Lock-in Period	No specific requirement	No specific requirement

80 EEA Income Tax Act: Key Points to Remember

Although this deduction is technically accessible until March 2022, if you match the qualifying requirements, you may still be able to claim it at any time during the loan’s term.

If you are the only earner in a family, you may be treated as a separate household under the PMAY rules and regulations. Furthermore, if you want to purchase a home on your own and are financially independent but not married, you will be regarded as having a separate household. As a result, you are now qualified to use the section 80EEA income tax act’s deductions for your first home acquisition.

As a result, under Section 80EEA of the Income Tax Act, a first-time house buyer is eligible for a tax break of up to Rs. 1.5 lakh. This new law stimulates the expansion of the real estate market by piquing investors’ first interest in purchasers.

Which Cities would the 80 EEA Income Tax Act be Applicable in?

Bangalore, Delhi, Chennai, Faridabad, Greater Noida, Ghaziabad, Hyderabad, Gurugram, Kolkata, Noida, and Mumbai are among the metropolitan areas that qualify for tax deductions through 80EEA interest on housing loan. Until your house loan is fully paid off, you may claim deductions. You may only claim a deduction once each year.

The Maximum Deduction Under Section 80EEA

If you’re still wondering how much you can save in total with income tax section 80EEA, then here is the answer – Rs 1.5 lakh per year.

This Rs.1.50 lakh is towards the interest paid on home loans, in addition to the 2 lakhs that you will save with the help of Section 24 (b).

According to finance minister Nirmala Sitharaman, those of you who have purchased affordable housing (houses below Rs.45 lakhs) can now save a total of Rs.3.5 lakhs on interest deductions. The breakup is Rs 2 lakhs under 24B (can be claimed by all buyer categories not just affordable homes category) and Rs.1.5 lakh under 80EEA.

Post your questions below and we will try to help you find the right answers. If you’re still looking for a home loan, or need help with the process, let the experts at NoBroker help you.  You also get a hassle-free experience as a dedicated loan manager serving you full time. NoBroker loans are also fast, you can avail of a home loan with quick loan disbursement in about 72 hours! This is the best part of NoBroker loans. Click the link below and get your home loan at the best rates.

FAQ’s

A Comprehensive Guide to Karnataka Rent Control Laws and Tenant Rights

Are you renting a house in Karnataka? Discover the key to understanding the Karnataka rent control laws and tenant rights. Find out why you should read this blog to navigate the legal landscape, learn about your rights, and make informed decisions. Dive in and gain valuable insights!

Karnataka Rent Control Act

The Karnataka Rent Control Act is the cornerstone of tenant-landlord relationships in the state. It lays down regulations and procedures that govern rent, eviction, and dispute resolution. Understanding this act is crucial for both tenants and landlords to ensure compliance and protect their rights.

The act provides guidelines on fair rent, the maintenance of rented premises, and the rights and responsibilities of both tenants and landlords. It also specifies the procedure for eviction and the grounds on which it can be initiated. Familiarize yourself with the provisions of the Karnataka Rent Control Act to navigate the rental landscape with confidence.

Key provisions and regulations of the Karnataka Rent Control Act

The Karnataka Rent Control Act comprises several key provisions and regulations that govern the relationship between landlords and tenants. Some of the important provisions include:

1. Rent Control: The Act regulates the maximum permissible rent that landlords can charge for residential properties based on factors such as the location, amenities, and size of the property.

2. Security Deposits: The Act outlines guidelines for collecting security deposits from tenants, including the maximum limit, conditions for refund, and interest on the deposit.

3. Maintenance of Premises: Landlords are obligated to maintain the rented premises in a habitable condition and provide essential amenities such as water supply, electricity, and sanitation facilities.

4. Eviction Procedures: The Act specifies the grounds on which landlords can initiate eviction proceedings against tenants. It also lays down the process to be followed for eviction, including serving notice periods and seeking legal remedies if necessary.

Procedures for Eviction, Rent Increase and Dispute Resolution

The Karnataka Rent Control Act establishes clear procedures for eviction, rent increase, and dispute resolution. Here are the key aspects of these procedures:

1. Eviction: The Act provides grounds for eviction, such as non-payment of rent, unauthorized use of the premises, or breach of the tenancy agreement. Landlords must follow the prescribed legal process, including serving a notice to the tenant and filing a petition with the Rent Control Board if necessary.

2. Rent Increase: The Act stipulates the permissible limit for rent increases and the frequency at which landlords can revise the rent. Landlords must provide proper notice to tenants before implementing any rent increase.

3. Dispute Resolution: In case of disputes between landlords and tenants, the Act facilitates resolution through the Rent Control Board. Both parties can approach the Board to seek redressal and a fair decision.

How the Act Affects Landlords and Tenants

The Karnataka Rent Control Act has significant implications for landlords and tenants. Here’s how it affects them:

1. Landlords: The Act provides landlords with a legal framework to protect their interests, ensure timely rent payments, and maintain their property’s value. It also outlines their rights to evict tenants for valid reasons and seek remedies in case of non-compliance.

2. Tenants: The Act safeguards tenants’ rights by preventing arbitrary rent increases, ensuring habitable living conditions, and offering legal recourse in case of eviction without proper cause. It establishes a balance of power between landlords and tenants, promoting fair and ethical practices in the rental market.

Cases of Rent Control Act Karnataka Handled by the Rent Control Board

The Rent Control Board in Karnataka handles disputes and adjudicates cases related to the Karnataka Rent Act. Here are a few examples of cases that may go before the Rent Control Board:

1. Rent disputes: Cases involving disagreements between landlords and tenants regarding rent amounts, rent increases, or payment defaults may be brought before the Rent Control Board for resolution.

2. Eviction disputes: If tenants believe they are being unjustly evicted or if landlords claim valid grounds for eviction, such as non-payment of rent or property misuse, the Rent Control Board can mediate and make decisions.

3. Maintenance issues: Complaints related to the maintenance of rented premises, such as lack of repairs or essential services, can be raised before the Rent Control Board for appropriate action.

4. Security deposit disputes: Disagreements over the refund of security deposits, deductions made by landlords, or disputes regarding interest on deposits can be resolved by the Rent Control Board.

Both landlords and tenants need to be aware of the Karnataka Tenancy Act, the Rent Control Board and its role in ensuring a fair resolution of rental disputes in Karnataka.

Karnataka Model Tenancy Act

The Karnataka Model Tenancy Act, introduced to address current rental market dynamics, offers a modernized framework for rental agreements. It brings greater transparency and simplifies processes related to security deposits, rent agreements, and termination of tenancy. By acquainting yourself with the Karnataka Tenancy Act, you can leverage its advantages as a tenant or landlord.

Under the Model Tenancy Act, both tenants and landlords have clearer guidelines on rent increases, property maintenance, and dispute resolution. It aims to foster harmonious relations between parties involved in rental transactions. Explore the nuances of the Karnataka Model Tenancy Act to stay ahead of the curve in the rental market.

Looking for a rented house in Karnataka? Explore NoBroker for verified properties and hassle-free renting.

Rent Control Act and How it Addresses the Current Rental Market

The Karnataka Model Tenancy Act introduces a modernized framework for rental agreements and addresses the evolving needs of the rental market. Here’s a comparison between the Model Tenancy Act and the Rent Control Act:

1. Rental Market Dynamics: The Model Tenancy Act takes into account the current rental market dynamics, including the rise of shared accommodations, co-living spaces, and the growth of the rental market in urban areas.

2. Ease of Rental Agreement: Unlike the Rent Control Act, the Model Tenancy Act emphasizes simpler and more standardized rental agreements, reducing ambiguity and making the process more user-friendly for both landlords and tenants.

3. Security Deposits: The Model Tenancy Act establishes a clear framework for security deposits, including a cap on the deposit amount, prompt refund timelines, and the requirement of interest on the deposit.

Highlights of The Model Tenancy Act: Security Deposit, Rent Agreement, and Termination of Tenancy

The Karnataka Model Tenancy Act brings several highlights that benefit both landlords and tenants. Here are some key aspects:

1. Security Deposit: The Act specifies the maximum limit for security deposits, usually equivalent to two or three months’ rent, and mandates the timely refund of the deposit to the tenant after deducting any legitimate charges.

2. Rent Agreement: The Model Tenancy Act emphasizes the importance of a written rent agreement between landlords and tenants. It provides a standardized format for the agreement, making it easier for both parties to understand and adhere to the terms and conditions.

3. Termination of Tenancy: The Act introduces provisions for the termination of tenancy, including clear notice periods for both landlords and tenants. It aims to balance the interests of both parties and prevent arbitrary eviction.

How the Model Tenancy Act Benefits Landlords and Tenants

The Model Tenancy Act brings several benefits for both landlords and tenants:

1. Transparency and Standardization: The Act promotes transparency and standardization in rental transactions, reducing disputes and fostering trust between landlords and tenants.

2. Streamlined Dispute Resolution: The Model Tenancy Act introduces mechanisms for a speedy resolution of disputes through Rent Authority and Rent Court, ensuring timely justice for both parties.

3. Ease of Renting: The Act simplifies procedures related to rental agreements, security deposits, and termination of tenancy, making the renting process smoother and more efficient for landlords and tenants alike.

Limitations and Challenges in Implementing the Model Tenancy Act

While the Model Tenancy Act brings several advantages, it also faces certain limitations and challenges:

1. Adoption by States: The Act needs to be adopted and implemented by individual states, and the speed and uniformity of its adoption may vary across the country. This can lead to variations in its application and enforcement.

2. Awareness and Compliance: Landlords and tenants need to be aware of the provisions of the Model Tenancy Act and ensure compliance. Lack of awareness and non-compliance can hinder the effective implementation of the Act.

3. Rent Control Mindset: The Act aims to strike a balance between the interests of landlords and tenants, but some stakeholders may resist the changes due to an entrenched rent control mindset. Overcoming this resistance and fostering acceptance of the new framework may pose challenges.

The Model Tenancy Act presents a progressive approach to rental agreements, aiming to create a fair and conducive environment for both landlords and tenants.

Tenant Rights in India

As a tenant, it’s essential to be aware of your rights not just in Karnataka but across India. The Karnataka Rent Act 1999 and the Model Tenancy Act grant various rights to tenants, such as the right to fair treatment, privacy, and a safe living environment. Understanding and asserting these rights is crucial for a stress-free renting experience.

By understanding tenant rights, you can effectively address issues related to eviction, rent hikes, maintenance, and unlawful practices. Familiarize yourself with the legal provisions to protect your interests and ensure a mutually beneficial relationship with your landlord.

Overview of Tenant Rights in India: Right to Fair Treatment, Privacy and Safety

As a tenant in India, individuals have certain fundamental rights that ensure fair treatment, privacy, and safety. Here’s an overview of tenant rights:

1. Right to Fair Treatment: Tenants have the right to be treated fairly and without discrimination by landlords or property managers. They should not face discrimination based on factors such as gender, religion, caste, or disability.

2. Right to Privacy: Tenants have the right to privacy within their rented premises. Landlords cannot intrude on their privacy without valid reasons or prior notice. Tenants have the right to enjoy their rented space without unnecessary interference.

3. Right to Safety: Tenants have the right to live in a safe and habitable environment. Landlords are responsible for ensuring that the rented property meets safety standards, including adequate water supply, electricity, sanitation facilities, and proper maintenance.

Specific Tenant Rights Under The Karnataka Rent Control Act and Model Tenancy Act

The Karnataka Rent Control Act and Model Tenancy Act provide specific rights to tenants to protect their interests. Some key tenant rights under these acts include:

Security of Tenure: Tenants have the right to continue their tenancy as long as they fulfil the terms of the rent agreement and pay rent on time. Landlords cannot evict tenants without valid reasons and following the legal eviction procedures outlined in the acts.

Reasonable Rent and Rent Increases: Tenants have the right to be charged reasonable rent based on the property’s value and prevailing market rates. Rent increases must adhere to the limits specified in the acts and should be implemented with proper notice.

Security Deposit Protection: Both acts provide guidelines for the collection, utilization, and refund of security deposits. Tenants have the right to receive their security deposits back on time, minus any legitimate deductions as per the agreed terms.

How to Assert and Defend Tenant Rights in Case of Disputes or Violations

In case of disputes or violations of tenant rights, tenants can take certain steps to assert and defend their rights:

1. Documentation: Maintain proper documentation of the rent agreement, payment receipts, and any communication with the landlord. This documentation can serve as evidence in case of disputes or violations.

2. Communication: In case of issues or violations, communicate with the landlord or property manager in writing, clearly stating the problem and seeking a resolution. Keep a record of all communication for future reference.

3. Legal Assistance: If the issue remains unresolved, tenants can seek legal assistance. Consult with a lawyer experienced in rental laws to understand your rights and the legal options available to you.

Landlord Obligations and Landlord Rights in India

Under the Karnataka Rent Control Act, landlords are granted certain rights to protect their interests and ensure a fair and mutually beneficial landlord-tenant relationship. These rights empower landlords with a level of control and authority over their rental properties as per the rental laws in India. 

Firstly, landlords have the right to receive rent from tenants promptly and per the agreed terms. They can enforce this right by taking legal action in case of non-payment or violation of rental agreements. 

Secondly, landlords have the right to inspect the property at reasonable intervals to ensure its proper maintenance and upkeep. This includes the right to conduct repairs and renovations as necessary, with the understanding that the tenant must be provided with prior notice.

Thirdly, landlords have the right to initiate eviction proceedings in certain situations, such as non-payment of rent, unauthorized subletting, or breach of rental agreement terms. However, the eviction process must strictly adhere to the legal procedures outlined in the Rent Control Act to protect tenant rights.

Additionally, landlords have the right to increase the rent periodically, subject to the limitations set by the Rent Control Act. They can exercise this right by providing proper notice to the tenant and following the prescribed guidelines.

Landlords need to be aware of their rights under the Karnataka Rent Control Act to ensure a smooth and lawful rental operation. However, it is equally essential to strike a balance between exercising these rights and respecting the rights and well-being of the tenants.

Overview of Landlord Obligations in India: Duty to Maintain the Property, Provide Basic Amenities and Respect Tenant Rights

Landlords in India have certain obligations towards their tenants. Here’s an overview of landlord obligations:

Property Maintenance: Landlords are responsible for maintaining the rented property in a habitable condition. They must ensure that the property is safe, structurally sound, and free from any hazards that could affect the tenant’s well-being.

Provision of Basic Amenities: Landlords must provide basic amenities such as water supply, electricity, sanitation facilities, and adequate ventilation. These amenities are essential for the tenant’s comfort and well-being.

Respect for Tenant Rights: Landlords must respect the rights of their tenants, including the right to privacy, fair treatment, and peaceful enjoyment of the rented premises. They should not interfere with the tenant’s privacy or harass them.

Specific Landlord Obligations Under The Karnataka Rent Control Act and Model Tenancy Act

The Karnataka Rent Control Act and Model Tenancy Act outline specific obligations that landlords must fulfil. Some key obligations include–

Maintenance of the Property: Landlords must maintain the rented property, ensuring that it remains in good condition throughout the tenancy. They should address repair and maintenance issues promptly.

Rent Receipts: Landlords are required to provide rent receipts to tenants for the rent paid. Rent receipts serve as proof of payment and can be used for future reference.

Adherence to Termination Procedures: If landlords wish to terminate a tenancy, they must follow the legally prescribed procedures mentioned in the acts. They should provide proper notice and reasons for termination as per the provisions.

How to Ensure Landlord Compliance with the Law and Prevent Landlord Abuse?

Tenants can take certain measures to ensure landlord compliance with the law and prevent landlord abuse:

Familiarize Yourself with the Law: Understand the rights and obligations of landlords and tenants as prescribed by the applicable rental laws, such as the Karnataka Rent Control Act or the Model Tenancy Act.

Document Communication and Transactions: Maintain records of all communication, rent receipts, and important documents related to the tenancy. This documentation can be helpful in case of disputes or non-compliance.

Seek Legal Advice: If you believe that your landlord is not complying with the law or engaging in abusive behaviour, consult with a lawyer specializing in rental laws. They can guide the legal options available to you and help protect your rights.

The Role of NoBroker in Educating Landlords and Promoting Ethical Renting Practices

NoBroker plays a vital role in educating landlords and promoting ethical renting practices. Here’s how NoBroker contributes:

• Landlord Guidance: NoBroker provides resources and guidance to landlords, educating them about their obligations under the law and promoting fair and ethical renting practices.
• Legal Compliance: NoBroker emphasizes the importance of legal compliance and educates landlords about the legal aspects of renting, including rental agreements, eviction procedures, and tenant rights.
• Ethical Standards: NoBroker encourages landlords to adhere to ethical standards, treating tenants with respect, providing necessary amenities, and maintaining transparent and fair rental processes.

Through its platform and services, NoBroker aims to create a rental ecosystem that fosters trust, transparency, and ethical practices between landlords and tenants.

Are you a landlord or a tenant in Karnataka? Get expert advice and support from NoBroker and create a rental agreement best suited for you online with NoBroker Rental Agreement Services.

Rules for Renting a House and Best Practices

Renting a house involves adhering to certain rules and following best practices to protect your rights and interests. From documentation and payment procedures to property inspections and dispute resolution, understanding these rules and practices can help you make informed decisions and avoid potential pitfalls.

By following established guidelines, you can ensure a smooth renting process, minimize conflicts, and make the most of your tenancy. Stay informed about the rules and best practices, and embark on your rental journey with confidence.

General Rules and Best Practices for Renting a House in India

Renting a house in India comes with certain rules and best practices that both tenants and landlords should follow. Here are some key aspects:

1. Documentation:

• Tenant: Ensure you have a written rental agreement/lease that clearly outlines the terms and conditions of the tenancy.
• Landlord: Prepare a comprehensive rental agreement/lease that covers all essential aspects of the tenancy.

2. Payment:

• Tenant: Pay rent on time and in the agreed-upon manner (cash, check, bank transfer, etc.).
• Landlord: Provide rent receipts to tenants as proof of payment and maintain proper records.

3. Inspection:

• Tenant: Conduct a thorough inspection of the property before moving in and document any existing damages or issues.
• Landlord: Conduct a joint inspection with the tenant and create an inventory of the property’s condition.

Tips for Tenants and Landlords Under The Karnataka Rent Control Act and Model Tenancy Act

Under the Karnataka Rent Control Act and Model Tenancy Act, tenants and landlords can benefit from the following tips:

1. Tenant Tips:

• Understand your rights and obligations under the relevant rental laws.
• Keep a copy of all communication, rent receipts, and important documents related to the tenancy.
• Promptly report any maintenance issues or repairs required to the landlord.
• Seek legal advice or consult with organizations like NoBroker in case of disputes or violations.

2. Landlord Tips:

• Familiarize yourself with the legal provisions and obligations mentioned in the rental laws.
• Ensure your rental agreement complies with the requirements of the Karnataka Rent Control Act or Model Tenancy Act.
• Regularly inspect the property and address any repair or maintenance requests from the tenant promptly.
• Stay updated with any amendments or changes in the rental laws to ensure compliance.

How to Avoid Common Mistakes and Pitfalls in Renting a House?

Renting a house can be a complex process, and it’s important to avoid common mistakes and pitfalls. Here are some tips:

1. Read and understand the rental agreement thoroughly before signing.
2. Conduct a comprehensive background check of the landlord or tenant, including their reputation and financial stability.
3. Ensure proper documentation of all financial transactions and communications.
4. Be aware of your rights and obligations as per the applicable rental laws.
5. Seek professional advice or assistance from platforms like NoBroker to navigate the renting process smoothly and avoid potential pitfalls.

Rent Control Laws and Future Trends in India

Rent control laws in India have been a subject of debate and evolution. This section delves into the historical context, effectiveness, and future trends in rent control laws. It explores alternatives and reforms that can address the changing dynamics of the rental market, promote affordability, and ensure a balanced playing field for both tenants and landlords.

By understanding the broader context and future trends, you can gain insights into the evolving landscape of rental regulations in India and be prepared for potential changes in the future.

Rent Control Laws in India and Their Historical and Economic Context

Rent control laws in India have been enacted to protect tenants from excessive rent increases and provide them with affordable housing options. These laws have evolved and vary across states. Understanding their historical and economic context is crucial for comprehending their impact on the rental market.

Historical Context: Rent control laws were initially introduced during the post-independence period to address housing shortages and protect tenants’ rights.

Economic Context: Rent control laws aim to strike a balance between tenant protection and ensuring landlords receive fair returns on their investments.

Effectiveness and Relevance of Rent Control Laws in Current Times

The effectiveness and relevance of rent control laws in current times remain a subject of debate. Key points in this debate include:

Advocates argue that rent control laws provide affordable housing options, prevent exploitation of tenants, and contribute to social stability.

Critics contend that rent control laws discourage investment in rental properties, limit housing supply, and hinder the maintenance and improvement of existing properties.

Reforms and Alternatives to Rent Control Laws

To address the challenges associated with rent control laws, alternative approaches and reforms have been proposed, including

Supply-Side Measures: Encouraging the construction of more rental housing through incentives, subsidies, and streamlined approval processes.

Market-Based Incentives: Implementing measures such as rental subsidies, rental vouchers, or tax incentives to ensure affordability without distorting the rental market.

How NoBroker is Shaping the Future of Renting in India

NoBroker is at the forefront of shaping the future of renting in India by leveraging technology and innovation. Its contributions include

1. Disintermediation: NoBroker’s platform eliminates the need for traditional brokers, reducing costs and increasing transparency for tenants and landlords.

2. Digital Solutions: NoBroker offers digital solutions for property search, documentation, rent payment, and maintenance, streamlining the renting process.

3. Data-Driven Insights: NoBroker utilizes data analytics to provide valuable insights on rental trends, pricing, and property preferences, empowering informed decision-making.

By simplifying the renting process, promoting transparency, and offering value-added services, NoBroker aims to revolutionize the rental market and enhance the renting experience for all stakeholders.

The Role of NoBroker in Protecting Tenants and Landlords

NoBroker, as an Indian Proptech company, plays a crucial role in protecting tenant rights. Here’s how NoBroker supports tenants:

1. Verified Listings: NoBroker ensures that the property listings on its platform are verified, reducing the risk of dealing with fraudulent or unscrupulous landlords.

2. Tenant Assistance: NoBroker provides guidance and assistance to tenants, helping them understand their rights, resolve disputes, and navigate the rental process smoothly.

3. Legal Support: NoBroker offers legal support services, including access to legal experts who can provide advice and representation in case of tenant-landlord disputes.

NoBroker aims to empower tenants by providing them with reliable information, resources, and support to assert and defend their rights.

NoBroker also plays a significant role in simplifying the renting process and offering value-added services to tenants and landlords, including–

1. Search and Listing: NoBroker provides an extensive online platform where tenants can search for rental properties and landlords can list their properties without the involvement of brokers, making the process more transparent and cost-effective.

2. Documentation Assistance: NoBroker offers assistance in creating rental agreements/leases that comply with legal requirements and help protect the interests of both parties.

3. Tenant-Landlord Communication: NoBroker facilitates smooth communication between tenants and landlords through its platform, enabling efficient coordination and problem-solving.

4. Value-Added Services: NoBroker provides additional services such as rent payment, property maintenance, and legal assistance, ensuring a hassle-free renting experience for both tenants and landlords.

Understanding the Karnataka Rent Control Act, rental laws and best practices are essential for a smooth renting experience. Know your rights as a tenant, fulfil your obligations as a landlord, and follow rules and best practices. Three common challenges faced by readers are legal complexities, disputes, and lack of transparency. 

NoBroker’s services and expertise can help overcome these challenges. With NoBroker, gain access to reliable legal guidance, dispute resolution support, and a transparent platform for seamless renting. Take control of your rental journey with NoBroker’s user-friendly technology and dedicated team. Explore our resources, consult our experts, and simplify your renting experience. 
Start your hassle-free rental journey with NoBroker today and experience a new level of convenience and peace of mind.

FAQ’s

Demystifying TDS on Commission under Section 194H of the Income Tax Act

Commission or brokerage is a fee a broker or agent charges for their services in facilitating a transaction between two parties. It is a form of compensation for the broker’s time, effort, and expertise in matching buyers and sellers, negotiating the transaction terms, and completing the paperwork.

What is Section 194H of the Income Tax Act, of 1961?

Section 194H of the Income Tax Act, 1961 deals with Tax Deduction at Source (TDS) on commission or brokerage by a resident individual. Under this section, any person (except for an individual or Hindu Undivided Family) paying commission or brokerage to a resident person is liable to deduct TDS at 5%. 

The TDS should be deducted either at the time of payment or credit of the commission or brokerage, whichever is earlier. However, this section does not include commissions earned through insurance sales. If the payable amount exceeds INR 15,000, the TDS is mandatory. The individual who pays the commission or brokerage is liable for TDS under Section 194H since the commission or brokerage is a source of income.

When Does TDS under Section 194H Need to be Deducted?

Under Section 194, entities are authorised to deduct TDS in two situations: 

1. When commission or brokerage amount is credited to the payee’s account
2. When commission or brokerage is paid to the payee’s account through cash, demand draft or cheque. 

Note: TDS is typically deducted between April and February and must be deposited by the 7th of the following month. For instance, if TDS on brokerage is deducted on 15th April, it must be deposited on or before 7th May.

Exemption on TDS on Commission

• TDS is not applicable when the amount of brokerage or commission is less than Rs. 15000 in a fiscal year.
• If employers pay commissions to employees, TDS is deducted under Section 192.
• Commission accrued on insurance income is exempt from TDS, and commission paid to loan underwriters is excluded from TDS on commission.
• Individuals holding lower TDS or NILTDS certificates from an authorized body are exempt from TDS.
• Payments made to the Financial Corporation under the purview of the central finance bill are exempt from TDS.
• Charges for providing warehouse services are also exempt from TDS.
• Interest accrued from the NRE account and payouts made by the Reserve Bank of India to banking institutions are exempt from TDS.
• Income generated from interest accrued on a savings account, recurring deposits, NSC, Kisan Vikas Patra, Indra Vikas Patra, etc., are exempt from TDS.
• Brokerage paid for issuing securities to the public is exempt from TDS.
• The commission charged on debit or credit card transactions between an acquirer bank and a merchant establishment is not included in Section 194H of the Income Tax Act.

What is the Interest Rate under Section 194H [TDS on Commission]?

The current rate of TDS on commission is 5%. However, it is worth noting that the rate was reduced to 3.75% for transactions conducted between May 14, 2020, and March 31, 2021. It is also important to note that if the commission or brokerage paid to a resident person exceeds Rs.15,000 in a year, TDS must be deducted at a rate of 5%. 

If the deductee does not quote PAN, the rate of TDS on commission will be 20% in all cases. Additionally, TDS on commission applies to individuals and organizations that pay commission, including payments, commission, etc., on the sale of lottery tickets. Those who wish to apply for a lower TDS rate on commission may do so by filling out Form 13 and submitting it to the assessing officer under Section 197 of the Income Tax Act.

Note: The exemption of TDS on interest from listed debentures has been removed, meaning that tax has to be deducted on interest on such specified securities 

Under What Circumstances TDS u/s 194H is Not Deductible?

TDS u/s 194H is not deductible in certain circumstances:

• If the amount or aggregate amounts of income to be credited or paid during the financial year are at most INR 15,000, no deduction shall be made under this section.
• Furthermore, if the amount of such income or the aggregate of such income credited or paid or likely to be credited or paid during the financial year to the account of or the payee does not exceed the prescribed limit, then no TDS u/s 194H is deductible. 
• Additionally, TDS deduction under section 194H shall not apply to the payment of insurance commission, as this is covered under section 194D. 

Note: The TDS rate for commission u/s 194H is 5%, with no surcharge or Health & Education Cess, and the rate of TDS will be 20% in all cases if the deductee does not quote PAN.

What is the Time Limit for Depositing TDS?

The time limit for depositing TDS (Tax Deducted at Source) on Commission varies depending on the payment entity. 

• If the payment is made by or on behalf of the government, TDS must be deposited on the same day without using any challan form. 
• For payments made in any other case, TDS must be deposited on or before seven days from the end of the month in which the deduction is made, accompanied by an income tax challan.

Note: 

1. A late filing fee may apply if TDS is not filed within the due date. The amount of the late filing fee varies depending on the delay in filing and the TDS amount due.
2. If TDS is not deposited in whole or in part, interest at a rate of 1.5% per month or part of the month will be charged for the period from the date TDS was deducted to the actual date of deposit. 

When Can Entities Claim NIL Tax or Lower Deduction Under Section 194H?

The TDS under Section 194H of the Income Tax Act applies to commission or brokerage payments. TDS must be deducted under Section 194H when the amount of commission or brokerage is credited to the payee’s account or paid to the payee’s account through cash, demand draft, or cheque.

However, under Section 197 of the Income Tax Act, 1961, entities can apply for a lower or NIL tax TDS certificate from the Income Tax Department. To be eligible for a lower or NIL-tax TDS certification under Section 197, the total income tax liability of the entity should be lower than the amount of TDS deducted in a given fiscal year. This means that if the TDS deducted is more than the total income tax liability, the entity can claim a lower TDS certificate to reduce the amount of TDS deduction.

The required documents include the following:

• Copies of assessment orders of the last three fiscal years
• PAN card
• Financial statement and audit report of the previous three fiscal years
• Income statement for the last 3 fiscal years and projection of earnings for the current fiscal year 
• Income tax returns of the last 3 fiscal years with acknowledgement and enclosures
• TDS account number of paying parties, and e-TDS returns of the last 2 fiscal years

How Can NoBroker Help?

Section 194H of the Income Tax Act of 1961 is of significant importance regarding TDS on commission and brokerage. It mandates the deduction of TDS by the payer on any commission or brokerage exceeding INR 15,000 at a rate of 5%. This section aims to ensure that the government receives a certain percentage of the income generated through such transactions and to prevent tax evasion. 

NoBroker Legal Services can assist with complying with Section 194H of the Income Tax Act, 1961, which pertains to TDS on commission and brokerage payments. Our team of experts can provide guidance on the legal requirements of this section and help ensure compliance by assisting with TDS deductions and filing returns. Additionally, the team can advise on the time of TDS deduction, which should be done at the earlier time of credit of commission or brokerage to the payee’s account or the time of payment in cash or other modes.

FAQ’s

Everything You Need to Know About SARFAESI Act

What is the SARFAESI Act?

The SARFAESI Act is defined as “an act to regulate the securitization and reconstruction of financial assets, as well as the enforcement of security interests, and to establish a central database of security interests created on property rights, as well as for matters connected with or incidental to such regulation and enforcement,” according to the official website.

SARFAESI Full Form 

Under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 banks in India have been granted the authority to take possession of the security provided by the defaulting borrower against the loan and sell it to recover losses, without the need for intervention by a court of law.

This provides banks with a mechanism to significantly reduce their non-performing assets (NPAs). The statute is referred to by its abbreviated title, the SARFAESI Act, or simply SARFAESI.

History of The SARFAESI Act 2002

The SARFAESI Act, 2002, was passed by the government in 2002 to provide financial institutions with a safety net in the event of failure. Among other things, the legislation gives banks the ability to seize ownership of and auction off the security against a loan in the event of a failure by the borrower.

The SARFAESI Act, 2002, is defined as “an act to regulate the securitization and reconstruction of financial assets, as well as the enforcement of security interests, and to establish a central database of security interests created on property rights, as well as matters connected with or incidental thereto.” The SARFAESI Act 2002, which went into effect on June 22, 2002, was later expanded to include the whole nation.

Sarfaesi Act: Applicability

The SARFAESI Act primarily allows for legal redress in the following areas of law:

• Companies engaged in asset reconstruction must be registered.
• A financial asset is acquired via the acquisition of rights or interests.
• Therefore, measures should be taken to rebuild assets.
• Disputes are resolved in a fair and impartial manner.

What is SARFAESI compliant property?

The SARFAESI Act applies to any asset, moveable or immovable, delivered as security through hypothecation, mortgage, or the creation of a security interest in any other manner, with the exception of those excluded under Section 31 of the Act.

What are the assets not covered under SARFAESI Act?

The SARFAESI Act applicability does not apply under the following circumstances-

• NPA loan accounts that amount to under 20% of the principal and interest. 

• Any hire-purchase, sale, lease, or other conditional agreement in which a security interest has not yet been created.

• Any real estate covered by Section 60 of the Code of Civil Procedure from 1908 that is not subject to attachment or sale.

• Any seller’s unpaid-seller rights under Section 47 of the 1930 Sale of Goods Act.

• Security or money issues under the Indian Contract Act or Sale of Goods Act of 1930.

Procedures Under the SARFAESI Act

Banks are required to follow a set of procedures before taking possession of a property and using it to recover their debts. They work under the SARFAESI Act procedure, a federally mandated method.

A borrower who cannot repay their loan (including house loans) for six months has the legal right to request that the bank send them a notice informing them of the need to settle the debt within 60 days for the sarfaesi act procedure. If the borrower cannot satisfy this obligation, the financial institution has the authority to sell the property to collect the outstanding debt.

If a person in default feels that the bank’s order has violated their rights, they may file an appeal with the appellate body established by law within 30 days of the day on which the order was issued.

Once the bank has taken ownership of the property, it can sell it or lease it out to another party. It may also transfer ownership of the property to a third party if it chooses. The earnings from the sale are used to pay down the bank’s existing debts, which are the first to be satisfied. If there is any money left over after all of this, it is given to the defaulting borrower.

What If You Are Buying a Bank Auction Property?

Even though the bank auctions the property, the bank may not be the legal owner of the property. This implies that the buyer will be required to complete a significant amount of paperwork. Furthermore, the bank is not responsible for ensuring that the property is abandoned for sarfaesi act RBI. As a result, even after you have purchased the home, the prior owners may continue occupying the premises.

Notice time under the SARFAESI Act

According to the Supreme Court, if a borrower interferes with a property sale under the SARFAESI Act, a new 30-day notice is not required.

The 25th of September in the year 2021: A new 30-day notice to the owner is not required if the sale of a mortgaged property pursuant to the SARFAESI Act is hampered by the borrower’s actions during the 30-day notice period, the Supreme Court held in its decision in the S Karthik versus N Subhash Chand Jain case, which was heard on March 6, 2018.

While dismissing a special leave petition filed by the borrower for a stay order against sarfaesi act, the Supreme Court held that a litigant could not be granted permission to halt the proceedings under the SARFAESI Act if he was pursuing a variety of legal remedies to thwart the ongoing proceedings and defeat the very purpose of the law in the first instance.

In the case of S Karthik against N Subhash Chand Jain, the appellants were the guarantors for a loan that the borrower had obtained from a bank, and the court upheld their position. However, when the borrower was unable to pay back the loan, the bank began selling the mortgaged property to reclaim the money owed.

The Chennai Debt Recovery Tribunal, on the other hand, ordered a halt to the proceedings. On the other hand, the bank sold the property after receiving a second notice of sale. The appellants argued in their petition that the notice issued by the bank for sale was in violation of Rules 8 and 9 of the SARFAESI Act and that the notice should not have been issued.

As a refresher, under Rule 9(1) of the SARFAESI Act pdf, the sale of immovable property may not be completed until the expiration of 30 days from the day on which a public notice for sale has been published in the media or a notice of sale has been served on the borrower. According to Rule 8, paragraph (6), the borrower must be issued a notice of 30 days before selling any immovable secured property.

The bank has only provided the borrower ten days’ notice in its selling notice, which is quite short for the sale of the mortgaged property under sarfaesi act. In their appeal to the Madras High Court, the petitioners argued that the transaction was null and invalid and should be thrown out since the second sale notice could not be deemed a new notice but rather a continuation of the original one, and hence should be thrown out. The HC eventually rejected the appeal.

As part of its decision in the case, the Supreme Court stated that “because the first sale notice could not be held due to reasons that could only be attributed to the guarantors, there was no need to repeat the same procedure of providing a 30 days’ clear notice,” as the court explained in its order.

“The sarfaesi act bare act was adopted with the intent of facilitating securitization and permitting banks and financial institutions to take custody of securities and sell them without the need for judicial involvement. “If we examine the circumstances of the instant case, it becomes clear that every effort has been taken to frustrate the aim of the SARFAESI Act,” the Supreme Court said in its decision.

The Punjab and Haryana High Court ruled on August 25, 2021, that banks can recover property under the SARFAESI Act. The Punjab and Haryana High Court has ruled that financial institutions currently facing large-scale loan defaults due to the financial stress caused by the Coronavirus pandemic are permitted to repossess properties under various sections of the SARFAESI Act, according to the court’s ruling.

A stay on the procedures to be conducted by banks/financial institutions under Sections 13 and 14 of the SARFAESI Act has not been granted by this court.” In addition, the court said that “no kind of temporary stay has been given in respect of the procedures to be taken by banks/financial institutions to collect the sum owed on account of auto loans and gold loan,” the court stated.

The High Court had issued an interim ruling on April 28, 2021, which said that ‘no bank or financial institution shall pursue action for auction in respect of any property of any citizen, person, party, or corporate entity until June 30, 2021.’ But the court has now stated that the ‘goal and purpose of issuing the interim injunction was only to pause the auction processes in respect of residential accommodations,’ according to the statement.

“Despite the tough circumstances in which the people and the nation are finding themselves, the inhabitants of the domestic/residential units were not left homeless or subjected to greater hardship.” As previously stated, the demand notice format under sarfaesi act temporary order has a restricted scope of application and activities. In addition, this court, in the interim order itself, has provided the authority to the authorities involved to approach this court with specific cases for any clarifications, if any hardship has been or is being created as a result of the temporary arrangement” the court said.

The sarfaesi act amendment applies to any asset, whether mobile or immovable, that is offered as security by means of hypothecation, mortgage, or the establishment of a security interest in any other manner, except for those assets that are specifically excluded under Section 31 of the Act. If you are seeking expert legal help, you will surely get the best assistance at NoBroker. Please leave a comment below this article, our executive will be in touch with you soon. 

Frequently Asked Questions About SARFAESI Act

Transfer of Property Act: Meaning, Types and Laws

Initiating a home purchase involves a Transfer of Property Act-regulated purchase agreement. This legally binding document, signed by both sellers and buyers, solidifies agreements on closing costs, dates, and clauses. While contract specifics may vary globally, certain provisions remain consistent. These provisions are essential for ensuring seamless property possession. 

Although risk-free transactions aren’t guaranteed in real estate, understanding the potential risks transferred through a sale agreement under the Transfer of Property Act is vital. To shed light on this, let’s delve into the Act’s core components and sections.

What is the Transfer of Property Act?

Immovable Property Under the Transfer of Property Act

Under the law of transfer of property, some items are not included such as standing timber, growing crops, or grass. These three items come under the movable property. Hence the basic understanding of immovable property under the transfer of property act is a property that is not movable. 

Individuals Competent to Transfer Property

Sec 7 of TP act has certain rules for those eligible for transferring their property. It states- “Every person competent to contract and entitled to the transferable property, or authorized to dispose of transferable property on his own, is competent to transfer such property, either wholly or in part and either absolutely or conditionally, in the circumstances, to the extent and in the manner, allowed and prescribed by any law for the time being in force.”

Operation of Transfer

Under Sec 9 of transfer of property, “Unless a different intention is expressed or necessarily implied, a transfer of property passes forthwith to the transferee all the interest which the transferor is then capable of passing in the property and in the legal incidents thereof.” 

Some of the incidents or circumstances covering this clause of property act 1882 include:

• Where the possessions are land, the privilege to take over, the gains and the rents that are obtained during transfer
• Where things are immovable
• Where there is an actionable claim or a debt to the property, but no interest or arrear materialized before the transfer.

Oral Transfer 

Under Sec 9 of the transfer of property act, “A transfer of property may be made without writing in every case in which writing is not expressly required by law.” Under this act, the property transfer may get affected through oral agreement. But if the law passes an order that a written agreement can be prepared to complete the transaction. 

Attempted Alienation

The term alienation under the property act means property transfer. Transferring of the property can be made through gifts, sales, and mortgages. Under Hindu law, no member of a joint family has absolute power to distance the joined property on his own accord without the approval of the coparceners (all the male members of the HUF Karta). Sec 10 of the TP act is all about free will of transfer property and has been specially created to promote free transfer. 

Transfer of Property to an Unborn Child 

Under the provisions of sections 13 and 14 of the transfer of property act 1982, the Favor to an unborn child is not admissible. To make this possible, a person has to apply for a transfer in favour of the individual.  

Sec 13 of the transfer of property act states that “a transfer can be brought into effect between two individuals. It reads as, “Where, on a transfer of property, an interest therein is created for the benefit of a person not in existence at the date of transfer, subject to a prior interest created by the same transfer, the interest created for the benefit of such person shall not take effect unless it extends to the whole of the remaining interest of the transfer in the property.” 

Sec 14 of transfer of property act states that “No transfer of property can operate to create an interest which is to take effect after the lifetime of one or more persons living at the date of such transfer, and the minority of some person who shall be in existence at the expiration of that period, and to whom, if he attains full age, the interest created is to belong.”

Conditional Transfer – Section 25 of Transfer of Property Act

Conditional transfer under section 25 in the TP Act states that any transfer happening on the fulfilment of a condition imposed on the other group after a property transfer. For example, one person agrees to transfer his property to another person after getting a job. This requirement of the first person for the second person to get a job is termed as a condition. 

Restriction of Land 

A third person is entitled to restrain the benefits obtained from the other party’s property. Under sec 40 of the TPA the third person has the right to the benefit of a settlement coming out of contract and taking possession of the immovable property. 

Unauthorized Transfer

When a third party fraudulently presents a statement stating they are authorized to transfer immovable property and to further put it into consideration. This may be a misrepresentation further when they profess to transfer the property, enter into a contract and act on representing. This falls under sec 43 of the transfer of property act. Nothing in this section will impair the right of buyers’ trust without noticing the existence. 

Transfer of Property Pending Suit 

Sec 52 of TP act creates a right to be enforced to prevent a transfer. It states, “During the pendency in any court… of any suit or proceedings which is not collusive and in which any right to immovable property is directly and specifically in question, the property cannot be transferred or otherwise dealt with by any party to the suit or proceeding so as to affect the right of any other party thereto.”

Fraudulent Transfer

If any transfer of the immovable property is made with an intention to delay the process of the party relinquishing the custody, it shall be considered void. Similarly, a transfer of immovable property done without consideration of intent shall be held void. Sec 53 of the TP Act defines the agreement for sale as, “A contract for the sale of immovable property, is a contract that a sale of such property shall take place on the terms settled between the parties.” This means that no transfer can be made without any consideration or deemed to have intended to dupe by any reason. A subsequent transfer will be made after careful consideration. 

Part Performance 

The doctrine of part performance was based upon a principle of equity, introduced in England. This later became a part of the Transfer of Property Act, 1882 through the Amendment Act of 1929. Through the transfer of property act no rights can be passed to any party until the sale is complete. But a person will not be entitled to refunds or performance once they sign the contract. Sec 53a of the transfer of property act states that if one party makes an agreement with another party and allows the other party to act on their behalf such a party will create equity that will not be resisted on formality grounds. Hence, if the settlement is not completed in a timely manner, the transferor will not be able to hold it against the transferee. 

Sale Agreement 

A sale agreement is a contract to sell the property at a later date. Under this agreement, the terms and conditions of the property up for sale will be transferred. Under sec 54 of the transfer of property act, the same right is reserved for the seller for seeking a certain expectation from the buyer. The signed agreement of the property is a crucial step. Not only is this legal proof between the two parties but it is also an agreement on how future steps will be handled in case of disputes against landholdings.

Rights of Buyers and Sellers 

Sec 55a of transfer of property act highlights the responsibility of the buyer and seller. 

Duties of a seller:

• to be transparent to the buyer about any defective materials in the property
• to present all legal documents to the buyer related to property
• to preserve the property and documents well before giving possession to the buyer
• to be free from all public charges and rent acquired till the present date of the sale
• to disburse all encumbrances 

Duties of the buyer:

• to be transparent to the seller about any hidden property facts or interest accrued
• to disburse the full amount to the seller upon sale completion
• to bear all losses occurring from unintentional circumstances  

Mortgage

Under sec 58a of transfer of property act mortgage is defined as, “the transfer of an interest in the specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing, or future debt, or the performance of an engagement which may give rise to a pecuniary liability.”

Charges 

Sec 100 of transfer of property act defines charge as, “where immoveable property of one person is by act of parties or operation of law made security for the payment of money to another, and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property; and all the provisions hereinbefore contained which apply to a simple mortgage shall, so far as may be, apply to such charge.”

Lease Defined 

Sec 105 of the transfer of property act states- “A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.

Duration of Certain Leases in Absence of Written Contract or Local Usage

Sec 106 of tp act states- “In the absence of a contract or local law or usage to the contrary, a lease of immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable, on the part of either lessor or lessee, by six months’ notice; and a lease of immovable property for any other purpose shall be deemed to be a lease from month to month, terminable, on the part of either lessor or lessee, by fifteen days’ notice.”

Exchange 

Under sec 118 of transfer of property, act exchange is defined as, “When two persons mutually transfer the ownership of one thing for the ownership of another, neither thing nor both things being money only, the transaction is called an “exchange. “Although the risks involved during a sale agreement are fewer, it cannot be ruled out. Selling of property comes with a lot of deliberation and is often time-consuming. The risks can be protected to a greater degree if all terms and conditions of the transfer of property act are followed. Both the parties involved should be transparent in their dealings and be free from all arrears until all legal formalities are completed. Do you want to learn more about the risks in property transactions? Browse NoBroker to find all the latest updates and properties for sale in all major cities.

FAQ‘s

What is the Society Registration Act? All You Need to Know

We generally understand the meaning of ‘society’ in the broader sense. It usually denotes the grouping of several individuals who come together for a common cause or interest, from religious, cultural, political, to charitable, scientific, and more. As social creatures, we tend to band together with minds that think alike, share a common belief or some common goals that we would like to achieve. This can be to spread more awareness about eco-friendly practices for the environment, organize regular charitable blood drives for patients who need it, or even a group of bibliophiles who love poetry and want to simply start a free library for the people in the locality. You must have come across such a foundation for public museums, libraries, or charitable trusts. But how does society registration work in India? What is the purpose of society registration? What is the Society Registration Act 1860 which governs the registration process? Let us find out in this blog. 

As Per Law: Defining the Society Registration Act

As per the law, a society is defined as an association of a varied number of individuals coming together for a mutual accord to “deliberate, govern, and act” in a cooperative way, for a communal purpose. You may have come across several societies that are registered for advancing charitable activities such as music, culture, art, religion, sports, education and more. The Society Registration Act 1860 (a.k.a. the Societies Registration Act, 1860) is the applicable Indian legislation that came into force in May 1860 by the British Indian Empire and continues to be incorporated under the Act 21 of 1860, wherein under the Right to Information Act, any citizen has the legal right to ask for any information with respect to any society. A replacement of the 1860 act came into effect in 1960 for Karnataka, referred to as the Society Registration Act 1960, with the purpose of improving the legal conditions established in the prior act. Similarly, a variation of the act called the Societies Registration Act 1961 came into effect in West Bengal as well as other Indian states. According to section 20 of the act, a society can be registered for the following purposes:

• Promoting fine arts, science, and literature
• Diffusing of practical or useful knowledge
• Diffusing political education
• Contributing with charitable assistance
• Creating military orphan funds
• Maintaining or creating a foundation of libraries, galleries, or public museums
• Collecting philosophical and mechanical designs, inventions, or instruments

Registering a Society in India

A society registration certificate can be earned by meeting a minimal criterion of 7 or more individuals in India, companies or even foreigners coming together for any of the purposes mentioned above. In the case of housing society registration, for instance, you need 10 individuals looking to initiate the cooperative society registration process. 

While one can do society registration online as well for convenience, it is important to note that society registration rules and regulations are maintained by state governments. This means the society registration form or application must be aligned to the authority of the state in which it is located. Similar to Cooperative Society Registration where you need at least 10 people to combine for a common purpose, before society registration, the members establishing the society must come to an agreement on the society’s name. During the selection of the name for your society’s registration, it is important to remember that you cannot use an existing name that is already registered under the Society Act. Furthermore, you cannot propose a name that pays homage or patronage to neither the government of India nor the state government. 

Thereafter, they must prepare for the rules and regulations of the Memorandum of Association of societies. The Rules & Regulations of society as well as the Memorandum of Association of the society is a document that must be signed by every founding member. This memorandum must not only have the name and objectives or mission of the society but also must have the details of founding members along with their current addresses, designations, occupations etc. The signing must be in the presence of a witness by a Notary Public, Gazetted Officer, Advocate, Chartered Accountant, Oath Commissioner, or Magistrate first-class, complete with their address and official stamp. Usually, you pay a society registration fee of INR 50 for the process to complete, again, similar to the housing society registration fees and the cooperative society registration fees in India. 

While the process is a bit complex as it requires the cooperation of several members forming the society, there are certain advantages that come with registering a society with the government. For one, the society is considered to be a separate legal entity after the registration is complete. This gives society the rights to sell, lease, buy, rent, or sell any property in its own name. Society can also enter into a contract or borrow money from the bank in its own name. Another benefit is that no single member of the society will be personally responsible for the society’s debt or its obligation. Finally like any other Indian citizen, there are also several tax exemptions that the society can avail it its own name. 

Documents Required for Society Registration

There are different documents that you need to prepare before you can satisfy the society Registrar with your application and he/she deems your society register-worthy. Before registering in the first place, you must be prepared with the following:

• A cover letter signed by all the founding/establishing member that requests society registration
• A duplicate copy of the signed Memorandum of Association 
• A duplicate copy of the Rules & Regulations documents duly signed by all founding members
• Address proof of the society’s registered office as well as a NOC or No Objection Certificate issued by the office landlord
• An Affidavit that has been avowed by the president and secretary of the society declaring the relationship among its member or subscribers
• The minutes of the society registration meeting along with some essential documents

As for the member of the society, the following society registration documents will need to be submitted:

• The PAN card of all the members of the proposed society along with the application.
• The residence proof of all the members such as Bank Statement, Utility Bill, Driving License, Aadhar Card, or Passport.
• The Memorandum of Association that not only contains the work and objectives of the society, but also the detailed address of the members and the address of the registered society address.
• The Rules & Regulation document containing the norms that the society will be governed by in relation to the day-to-day activities, rules for the admission of new members to the society, details of the society meetings and the frequency they will be held in, details about the Auditors, any Forms of Arbitration in case of disputes within society members and the ways for the dissolution of the society (if/when it comes to it). This document will be then signed by the Chairman, President, Vice President, and the Secretary of the society. 
• The cover letter containing the purpose and objectives of the society as mentioned above.
• A declaration by the President of the society mentioning that he/she is both competent and willing to hold the requisite post.

All of the documents mentioned here then need to be presented to the Registrar of Societies along with the required fees. It is best to keep a couple of duplicate copies handy in case it is needed. Keeping an online society registration certificate copy and the necessary audit documents is helpful as stern actions can be taken by the Registrar of Society in case your society gets defaulted for some reason by the auditor. During the registration process itself, the first copy is in fact signed by the registrar at the time of receiving the application as an acknowledgement and returned, while the second copy is taken ahead for approval. After the background verifications and proper vetting of the registration documents, the registrar issues an Incorporation Certificate along with a registration number allotted to the society. Beyond the physical copy, you can also search for the society registration certificate online and even have the society registration certificate downloaded. 

Checking Society Registration Online

If you are wondering how to check society registration online, don’t worry, the process is simple. In fact, similar to a multi-state cooperative society registration or a cooperative housing society registration, you can easily find the registration number of the society, its RERA registration status, and even if the project is as per the approved plan. Just like the laws of cooperative society registration online is different for every state, the official websites for checking the registration number can vary from state to state. In the case of society in Chennai for instance, you can follow the process below:

• Visit the official government website of property records in Tamil Nadu to get the allotted number for the certificate of registration of societies, i.e. https://eservices.tn.gov.in/eservicesnew/land/poramboke.html?lan=en
• On the home page, reach the page’s footer by scrolling down and click on the ‘Society’ tab under the ‘Search’ section
• You will be directed to a new window where you can select the zone and district in which the society is located
• By selecting the right society name, you can view the registration number of the society

Ease Up Your Search with the Right Legal Counsel

If you are buying a property in a certain zone within any state, it is advisable to conduct thorough background research about the property and the society it is within. After all, it is not only your dream home that you are looking for, it is also the neighbourhood you will choose to live in for a long time. If you are managing a society, it is similarly advisable to ensure that the prerequisites of the society are met at all times and the proper legal process is offered to residents in case a dispute arises within society members. When it comes to legal issues and paperwork, you need to be extremely careful, even the slightest mistake could mean a huge loss. The best way to avoid such mistakes is to get a team of professionals to assist you. At NoBroker, our experts will guide you and ensure your paperwork is perfect. 

Click the link below to know more about NoBroker Legal services. You can even drop us a comment below with any questions and we’ll be happy to help.

FAQ‘s

All Information (Exemptions and Deductions) on Section 24 of the Income Tax Act

Being a homeowner has a lot of benefits, but it is not easy to become one. Owning a house gives one a lifelong sense of security, and as the price of a property increases year after year- it acts as a great source of investment. A home loan is a great method of buying a home. To make home loans more lucrative and beneficial, the government offers various tax rebates and deductions on the said loan amount. The 4 sections under the IT Act that deal with tax rebate claims and deductions on home loans are – Section 24 of the Income Tax Act, Section 80C, Section 80EE and Section 80EEA. This article deals in detail with deduction under Section 24 of the Income Tax Act, interest on housing loans under Section 24, pre-construction interest deduction under Section 24, and many other topics. To know in detail about Section 24 of Income-tax, read further.

What are Tax Deductions?

A tax deduction reduces your tax payments and lowers your tax bill. The amount of the tax deduction is deducted from your income, lowering your taxable income. Your tax bill will be lower if your taxable income is low. To help people avail of manageable home loans, the government offers various deductions on home loans as per Section 24. Tax payment comes hand in hand with ownership of any property. This is why, even if the unit is vacant, an individual’s income from house property is taxed based on its ability to earn a certain amount in rent. Tax deductions are also a boost for people to avail of home loans and are a kickstart to one’s dream of having their own property. Interest on home loans now is as low as 6.65% p.a. + Sec 24 of Income Tax offers various deductions = a great deal for your property.

Tax Benefits on Home Loans in 2021

Under some of the provisions of the Income Tax Act 1961, homebuyers receive income tax benefits on both the principal and interest components of their home loan.

Tax deductions permitted on home loans + Stamp duty registration fee
Mentioned Section in the Income Tax law	Section 80C
Tax Rebate (Upper Limit)	Rs 1.50 lakhs per annum
Tax Rebate (Upper Limit) for senior citizens	Rs 2 lakhs per annum

Tax Deductions permitted on home loan Interest
Mentioned Section in the Income Tax law	Section 24, Section 80EE, Section 80EEA
Tax Rebate (Upper Limit)	Up to Rs 3.50 lakhs per annum
Tax Rebate (Upper Limit) for senior citizens	Up to Rs 4.50 lakhs per annum

Deductions Under Section 24

Section 24 of the Income Tax Act deductions are available for property construction and property purchase. Section 24 of the Income Tax Act permits house owners’ deductions of up to Rs 2 lakh for yearly interest on housing loans under section 24. This cap, however, only applies to self-occupied homes. The whole interest amount paid is waived as a deduction if the property was given on rent or is within the category of Section 24 of the Income Tax Act let out property. However, in this instance, taxpayers can only deduct losses up to Rs 2 lakhs per year under Section 24 of the Income Tax Act (Bare Act).

If the loan money is used to build or buy a new home, the borrower can deduct Rs 2 lakhs in pre-EMI interest deduction under section 24. It has to be paid over the course of a year, paid in five equal instalments at the start of the year in which the home is built or acquired.

Section 24 of the Income Tax Act allows you to claim a maximum annual deduction of Rs. 200,000 on the interest component of your house loan. If you meet the following criteria, you may be eligible for this deduction –

• The residential property is where you and your family live.
• While you are staying in rental accommodation in another city, the property is rented out to another party.
• The property is unoccupied or vacant.

Terms And Conditions for House Buyers Who Want to Take Advantage of Section 24 of Income Tax Act 1961

Housing loan interest tax exemption under section 24 is available only under a few conditions, a few are listed below.

• If you have obtained a loan for the construction of a home, the new construction should be completed within 5 years of accepting the home loan.
• The deduction is capped at Rs 30,000 if the house is not constructed within 5 years of receiving the loan. This time period begins at the conclusion of the fiscal year in which the loan is taken out.
• The deduction is available beginning in the year the construction is finished. 
• April 1, 1999, should be the last date to accept the loan.
• To collect the benefit, you’ll need a certificate from the bank detailing the computation of Income from the house property.

Deduction Under Section 24 of Income Tax- For Buyers Who Do Not Avail of Home Loan

Section 24 of the Income Tax Act also allows buyers to take advantage of the tax benefits even if they paid for their home with cash or any other source rather than taking out a loan. If the house is purchased entirely with the buyer’s funds, the owner is eligible for a flat 30% deduction on the net annual value of the property under the section. However, if the property is self-occupied, this interest rebate on housing loans under section 24 will not be accessible because such properties do not have any net annual value under current tax legislation.

Standard Deduction Under Section 24 of Income Tax

According to Section 24 of the Income Tax Act – a standard deduction is a tax break available to all taxpayers. The standard deduction under section 24 in income from house property income is 30% of the net annual value of the property. Even if the taxpayer’s actual expenditure on the property is high or low, the 30% deduction is allowed. The deduction is made regardless of the costs of repairs, insurance, power, and water supply, among other things. There is no annual revenue in the case of self-occupied properties. As a result, the standard deduction under section 24 is nil. As a result, in the case of self-occupied properties, the standard interest deduction under section 24 does not apply.

Maximization of Tax Rebate Under Section 24

Each co-borrower can claim Rs 2 lakh as a tax deduction on their separate incomes if the property is owned jointly. All of the owners must be co-borrowers in this situation as well.

Borrowers should also be aware that if they pay more than Rs 2 lakh in interest in a given year, the rebate under section 24 i.e., the extra expense can be forwarded for another three years to offset their losses. Only those property owners who generate revenue from their dwelling property are eligible for this option.

Section 24 of the Income Tax Act acts as a huge relief for first time home buyers. Buying a house isn’t easy and paying off the instalments of the house isn’t easy either. But with deductions under Section 24, it is easier to achieve your dream house goals. Want to know more about Sec 24 of the IT Act, head to NoBroker Forum. If you are looking for a beautiful home, check out NoBroker and find the house of your dreams – Brokerage free! And, if you have any legal queries or need some legal advice, comment down below and our agents will get back to you shortly or click below.

How to Compute Income from House Property

The Income-tax from your House property is the income that you receive from a property in your ownership. House property can be used to mean any house, building, office or shop. For the income for the house property to be added to your Gross Total Income, ie Total taxable income, it has to fulfil certain preconditions:

1. The Property is Owned by you, the taxpayer.
2.  The house property should not be used by the owner for carrying out his own business or profession.
3. The property should consist of any building or land.

Here’s How you can Calculate Income from House Property:

1. Determine the Gross Annual Value(GAV) of the property

If you are letting out the property, the Gross Annual Value is the total rent collected on the same property. However, If your property is self-occupied, the gross annual value of the property is Zero.

2. Subtract the Municipal Tax(Property Tax)

The Property tax which is paid annually to the municipal authority is deducted from the Gross Annual Value, this gives the Net (Annual ) Value(NAV).

3. Standard deduction of 30% of the Net Annual Value.

The standard deduction of 30% on Property tax prescribed by Section 24 of the Income Tax Act, is subtracted from the  Net Annual Value of the property.

4. Subtract Home Loan Interest

If you have paid interest during the financial year on the home loan, This amount is deducted under the provisions for Income Tax Exemption under Section 24 of the Income Tax Act.

5. Final Income from House Property

This final value is the income from the house property, which is taxable as per the slab rate applicable to your income.

FAQ’s

All About Maharashtra Cooperative Societies Act – From Its Existence (1960) to Its Latest Amends

Maharashtra is the second most populated state in India, and therefore, a Maharashtra Cooperatives Society Act is just the right fit for the state. With its population, it is not a shock that there are over 5 crore members to the existing nearly two lakh cooperative societies. Cooperative housing societies are a part of the cooperative societies and are governed by the Maharashtra Cooperative Societies Act 1960 (latest Maharashtra cooperative Societies Act 2019).  The MCS Act 1960 was brought into action on 26 January 1962. A few amends were made to the Maharashtra Cooperative Housing Society Act (as the centre mandated) on 13 February 2013. The amends of the Maharashtra Cooperative Society rules came into action the very next day i.e., 14 February 2013.

Key Features of the MCS Act

The Maharashtra Cooperative Societies Act or the Maharashtra Housing Society Act 1960 states its key features based on better housing plans for its people. It provides an inclusive and easy registration system, membership perks and includes the privileges and duties offered all over Maharashtra. The Maharashtra Cooperative Act aims to provide a fair system and solutions in Maharashtra for cooperative societies.

What Is a Cooperative Housing Society?

Under the Maharashtra Cooperative Housing Society Act 1960, the main purpose is to offer/provide its members with better housing opportunities such as open flats, apartments, and plots. In addition to this, it also aims at providing its members with the luxury of basic amenities.

Sections That Apply to Housing Societies Under the Maharashtra Cooperative Societies Act (1960)

It is important to understand that the Maharashtra State Cooperative Societies Act is not just meant for housing societies and covers a lot of various other factors. Listed below are the sections that apply to the Maharashtra Housing Society Act-

• Section 1, clauses (5), (6), (7), (8), (10), (10-ai), (10-aii), (10-aiii), (13), (14), (16), (17), (18), (20-A), (21), (24), (26), (27), (28), (29), (29A) and (31)
• Section 2
• Sections 3, 3A, 4, 5, 7, 9, 10, 12, 13, 14, 15, 17, 18, 19, 20, 20A, 21, 21A, 22, 23, 25, 25A, 31, 33, 34, 35, 36, 37, 38, 40, 41 and 42
• Section 50
• Section 62
• Sections 64, 65, 66, 67, 68, 69, 70, 71, 71A, 72, 73, 73ID, 73C, 73CB, 73CC, 73F, 73I, 75, 76, 77, 77A and 78A
• Section 79, 79A and 79AA
• Section 80 to 89A
• Section 91 to 100
• Section 102 to 110
• Section 145 to 148A
• Section 149 to 154
• Section 154A
• Section 155 to 168

Types Of Housing Societies Under the Maharashtra Cooperative Societies Act

The Maharashtra cooperative societies act 1960 has set clear criteria for the housing societies that enjoy the membership perks. The three types are listed below:

• Tenant Ownership Housing Societies: According to the Maharashtra co-op Society Act these are housing societies whose aim is to allot plots or flats on a parcel of land that the society owns either on a leasehold or freehold basis, while the members own the houses.
• Tenant Co-partnership Housing Society: Maharashtra cooperative housing society rules that the objective of these housing societies is to provide flats to their members where the society owns both the land and the building, either freehold or leasehold.
• Other Housing Societies: House mortgage cooperative societies, house construction cooperative housing societies and foundations cooperative societies with all units being offices or commercial establishments are examples of these.

Section 22 of the Maharashtra cooperative societies act makes it clear that if a person meets all eligibility criteria, then the person cannot be denied membership.  Section 79 of the Maharashtra cooperative societies act states that all transactions – money exchange, receipts and expenditure have to be legally documented and stored for verification. While Section 91 of the Maharashtra cooperative societies act takes care of any dispute that might occur in the authorship of the property. The Indian law system makes the membership of the MCS a safe and fair process.

Different Terms Used in Maharashtra Cooperative Societies Act

The Maharashtra co-op housing society act uses its own set of terms for smooth functioning and aims to provide better services to its members. Below are a few terms along with their definitions that the Maharashtra co-op society act uses.

• Central Bank: Any cooperative bank established with the goal of creating capital to be loaned to other societies is referred to as a central bank.
• Bonus: As per the Maharashtra cooperative act 1960, the term “bonus” refers to any payment made in cash or kind from the society’s revenues to a member or non-member. This does not, however, include any amount paid to any society employee under the 1965 Bonus Act.
• Cooperative Bank: Cooperative banks are defined as a company conducting banking business under the guidelines of the Banking Supervision Act of 1949.
• Cooperative Appellate Court: The Cooperative Court of Appeal is defined as the Maharashtra Cooperative Appeal Court established under the Companies Act 1960 Maharashtra State Cooperatives. 

• Member: Anyone who joins the cooperative following the bylaws and submits an application for registration will become a member upon acceptance. 
• Dividend: Dividends refer to any amount paid to its members with the profits of a corporation, and the amount is proportional to the shares it owns.
• Officer: A person appointed or elected to public office by any society per the bylaws is termed as officer. The president, vice president, president and general secretary of the society are all subordinate to the cadres.
• Committee: A committee is defined as a board of directors or any management committee that manages the daily affairs of the company by the law drawn up in article 73 of the law. 
• Working Capital: Any socially available fund, including paid-in capital, earnings, and 
• other funds raised or borrowed, are included in the definition of working capital. 
• Bye laws: The Maharashtra cooperative housing society bye laws states that all social laws registered under the Maharashtra Cooperatives Societies Act 1960, including amendments thereto, fall within the scope of the constitution.

Rules for Registration of Cooperative Housing Societies as per Maharashtra Housing Societies Act

It is not possible to register a housing society under the Maharashtra Cooperative Societies Act unless at least five members of different families or at least half of the total number of flats that qualify for membership under this Act agree to the housing society’s registration proposal.

Transfer of Share, Right, Title and Interest in Cooperative Housing Societies as per Maharashtra Housing Societies Act

Cooperative housing society members in Maharashtra are allowed to transfer their ownership stake in their property by using registered documents.

Amendment of Maharashtra Co-operative Societies Act, 1960

The changes became effective on February 14th, 2013. The Maharashtra assembly later introduced and approved amending legislation to the Maharashtra Cooperative Societies Act, 1960.  Cooperative housing society act (Maharashtra) was revised to include the following provisions:

• A co-operative housing society’s members must attend at least one General Body Meeting every five years and use the services specified in the society’s By-laws. If a member fails to do so, he or she will be marked as inactive and will be unable to vote. If the non-active member passes the eligibility requirements, they may be reclassified as an active member.
• Members of the Management Committee and its Office Bearers will be elected for a five-year term.
• There will be no more than 21 members on the Management Committee, with two seats reserved for women, one for tribes and Vimukta Jati, one for SC, and one for other backward groups.
• The State Cooperative Election Authority should be established by the State Government to oversee, elect, and manage the electoral rolls and its preparation for all society elections.
• After the fiscal year’s conclusion, the General Body meeting must convene its functioning within 6 months.

Limit of Memberships in Cooperative Housing Societies as per Maharashtra Housing Societies Act

A housing society should not allow more members than there are flats or plots available. However, if the plot owner built and sold apartments in accordance with the laws at the time, they might replace the original plot owner member and allow an organisation of flat buyers to join the cooperative housing society.

Maharashtra Cooperative Societies Act, 1960: Latest News

Cooperative organisations cannot bar entry to single women, members of specific communities, or anyone who consumes a particular diet: 

Nov. 20, 2021: According to the Supreme Court, cooperative societies cannot bar entry to unmarried women, members of particular communities, or those who consume particular types of food. The supreme court made this comment in its ruling on a distinct dispute involving the validity of the Maharashtra Co-Operative Societies Act.

According to the Apartment Act, maintenance fees will be based on a flat area 

July 15, 2021: Under the Maharashtra Apartment Owners Act, maintenance fees are based on the size of a flat. The deputy registrar of cooperative societies, Pune city zone, has decided that the same restriction does not apply to housing society flats that are registered under the Maharashtra Cooperative Societies Act.

Maharashtra Cooperative Societies Act 1960 modification approved by cabinet

May 6, 2021: A proposal to alter the Maharashtra Cooperative Societies Act, 1960, has been approved by the Maharashtra government in order to prevent cooperative society members from losing their ability to vote in the upcoming elections. A member is required by law to attend at least one cooperative society meeting every five years; otherwise, he is deemed “inactive” and loses his voting privileges. 

This is so that all members, regardless of the size of their apartments, share equally in the maintenance costs in cooperative housing organisations, since the land and the building are under the society’s ownership.

Members of cooperative housing societies are “jointly and severally” liable for any MC decisions.

January 2021: In January 2021, the Maharashtra government issued a notice requiring all elected managing committee (MC) members of cooperative housing societies created under the Maharashtra Co-operative Societies Act, 1960, to sign a bond holding them “jointly and severally” accountable for all decisions the committee makes. A new form, M-20, has been added to the MCS (Amendment) Rules, 2002, requiring elected members of the managing committee to declare that they are jointly and severally liable for all acts and omissions that are harmful to the interests of the society.

The housing society cannot be ordered by the registrar to grant NOCs to its members: HC Bombay

July 2019: In July 2019, the Bombay High Court declared that a deputy registrar of cooperative societies does not have the authority to order a cooperative housing society to provide one of its members a no-objection certificate (NOC) for improvements to and a change in the use of his premises. On July 9, 2019, in response to a member’s complaint, the deputy registrar ordered a Mumbai housing society to provide the member with the requisite NOCs for merging four tenements and changing the use of the property from residential to commercial. The HC stated that the disagreement “obviously involves a member and the society and would require resolution before any other forum.”

The Maharashtra Cooperative Societies Act has been critical to the state’s social and economic growth, especially in rural areas. Although this movement began with an emphasis on agricultural loans, it quickly expanded to include agro-processing, agro-marketing, rural industries, consumer stores, social services, and other areas. Are you looking for a house and are confused about how to get about it? Head to NoBroker to find the house of your dreams at a minimal cost. Click on the link below.

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Land Acquisition Act 2013: Balancing Demand and Compensation

With the growing population in India, the demand for land acquisition also grows. Hence, to ensure a proper balance between demand and supply, and facilitate infrastructure development of the country, without hindrances, the Government of India has formulated certain rules and regulations. The Land Acquisition Act 2013 is an essential pillar of this system. 

Since land is a scarce resource in India, granting fair compensation to each citizen involved in any kind of land transaction is imperative. To serve this purpose the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 was introduced over the redundant Land Acquisition Act, 1894. The Land Acquisition Act, 2013 mandates fair resolutions to legal disputes and makes way for smooth land acquisition.

The original land acquisition act first came into existence in British India, in the 1870s. However, there were still many essential provisions missing from the law regarding any settlement grant to the original owners of the land. This resulted in a lot of grievances among the citizens of the country. After several changes, the new, improved land acquisition act was finally passed and approved in 2013. This act is also known as the right to fair compensation and transparency in the land acquisition Act or the rfctlarr act 2013.

Now, it’s an important tool in determining the rights of landowners. Read on to know more.

What is Land Acquisition?

This is a process through which any government union or state, acquires private land for infrastructure development and industrialisation. In return for this, the government pays compensation to the landowner. This compensation amount is based on the market value. The LARR (Land Acquisition, Rehabilitation and Resettlement) Act 2013 helps in rehabilitating and resettling the original landowners.

Provisions and Purpose of Land Acquisition

This Act mandates that the state government or the Central Government can acquire any land for its use, for private companies or for public purposes. This includes:

• Any establishment catering to the state or national defence/security services. This typically includes naval, military or armed force bases/centres. 
• For building public infrastructure. However, this excludes private hospitals and clinics, educational institutions and hotels.
• For any agriculture-related services. This is also applicable for allied industries such as dairy or fisheries that are owned by farmers cooperatives or the government.
• For industrial corridors, manufacturing zones or other projects listed in the National Manufacturing Policy. This can also include mining activities.
• Water conservation projects or for planned development of villages.
• For setting up Education and research bodies funded by the Government 
• For government housing development schemes. This is important for planned developments for the rehabilitation of the poor.
• For developing residential projects for the poor or landless, or people affected by natural calamities.

What is the Land Acquisition Act?

The Land Acquisition Act is also known as the RFCTLARR act 2013 gives both parties (government/private entity and the original landowner) the right to fair compensation and transparency in land acquisition rehabilitation and resettlement. It also helps regulate this whole land transaction with transparency and obligates the Government to properly compensate the original landowners. This Act stresses the importance of properly compensating the poor people whose land has been taken away.

Land Acquisition Act Timeline

The 2013 land acquisition act has gone through multiple changes since its inception in British India in the 1870s. There were no provisions for any kind of compensation to the poor landowners. This resulted in grievance and anarchy.  Even after the Indian Independence (1947), this act saw several revisions. Here is a proper timeline of this land acquisition act. 

1. September 7, 2011: First introduction of the Land Acquisition, Rehabilitation and Resettlement Bill, 2011 in Lok Sabha.

2. August 29, 2013: Lok Sabha passed the Bill

3. September 4, 2013: Rajya Sabha passed the Bill. 

4. September 27, 2013: President approves the Bill.

5. January 1, 2014: Land Acquisition Act comes into force.

6. May 30, 2015: President promulgates the amended Act.

• He must be either qualified to be a District Judge or must have seven years of experience practicing law. 
• Social Impact Assessment- The government carries out an assessment of the area and the population along with local committees like the Gram panchayat. They prepare a report and submit it to the concerned authorities. After due consideration, the assessment can be overruled too.
• SC/ST Provisions- Land from SC/STs can be acquired only under special circumstances with the prior consent of the Gram Sabha committee. Development must start within 5 years to ensure no harm to their livelihood. They must be paid a part of the compensation before the start of the Land Acquisition Act, 2013

Under the new larr act 2013, landowners are given more power. Private/Government entities have to get the consent of the original landowners before acquiring any land in the village or the city. 

No consent is needed from the landowner if the government acquires the land directly for developing public infrastructure. However, if the land is meant for setting up private companies, then the consent of 80% of affected families is needed. In the case of a public-private partnership project, at least 70% of affected families should give their consent.

Main Features of the 2013 Land Acquisition Act

Salient features of The Land Acquisition Act, 2013 include the following-

• Public purpose in land acquisition act 2013- Section 2(1) defines “public purpose” as national security/defence purpose. Other strategic purposes for which land can be acquired are housing development projects for the poor or rehabilitation projects for people affected by natural calamities.
• Consent clause- As mentioned above, there are certain factors of landowner consent during any land acquisition process.
• Emergency Acquisition- Under the salient features of the land acquisition rehabilitation and resettlement act 2013, land can be acquired faster in case of national security services and for rehabilitation of the population affected by natural disasters.
• Limits on Land Acquisition- The right to fair compensation and transparency in the land acquisition act 2013 mandates that multi-cropped areas cannot be acquired. In case of acquisition for emergency purposes, the concerned authority should set up a cultivable wasteland of equivalent area.
• Compensation- The landowners are compensated in amounts twice the market value in urban areas and four times the market value in rural areas. 
• Land Acquisition, Rehabilitation and Resettlement Authority– It will be established by the state government as a “One Person” Land Acquisition, Rehabilitation and Resettlement Authority with powers of civil court development projects.
• Unused Land after acquisition- Land acquired for one purpose cannot be used for another purpose. If it is considered unfit for the intended purpose, then the government can use the land for a different purpose. The original landowner will get back his land if there is no activity on the land for 5 years.

Consent Under the Land Acquisition Act 2013 and its Importance

The cooperation or consent of the landowners is not required when the government buys land for public use and directly manages the land bank. However, the approval of at least 80% of the affected families is required when the land is bought for the creation of private businesses. Seventy per cent of the impacted families must approve the land acquisition procedure if the project is carried out through a public-private partnership.

The act stipulates that if the acquired land or any piece of it is sold, 20% of the proceeds must be paid to the original landowner who it was purchased from or their legal successors in an effort to prevent profiteering.

How is Land Acquired under The Land Acquisition Act of 2013?

The Land Acquisition Act 2013 notes the following steps which are followed during the process of acquisition-

1. Social Impact Assessments (SIA) are carried out after consulting with the relevant local government.
2. State government accesses the SIA.
3. Following approval, a public notice is printed in two local newspapers and the official gazette.
4. People have 60 days to voice their objections.
5. Land surveys are completed together with assessments of relief and rehabilitation.
6. The use of measured, demarcated, and planned land.
7. Acquisition, relief, and rehabilitation claims are addressed.

Compensation under The Land Acquisition Act 2013

Section 26 of the Act establishes the framework for determining compensation for original landowners. This compensation is calculated based on multiples of the market value, whether the land is situated in rural or urban areas.

Market value, in this context, typically ranges from one to two times the highest minimum land value as specified in the Indian Stamp Act, of 1899. This value serves as the baseline for calculating compensation.

Compensation can take the form of a settlement amount, especially when land is acquired for private companies or public-private partnership projects. Under this Act, it’s crucial to ensure that original landowners receive fair and just compensation for their land, which is integral to maintaining transparency and fairness in the land acquisition process.

It’s important to note that the multiplication factor for market value in rural areas is typically set at 2 (two), or as specified by the appropriate Government in compliance with the RFCTLARR Act, 2013, whichever is lower, starting from January 1, 2015. This regulation ensures that landowners are adequately compensated for their valuable land assets while balancing the needs of infrastructure development and public interest.

Why Social Activists filed a Petition against State Amendments to the Law

The LARRAct 2013 mandates compensation for land acquisition for national highways, industrial corridors and expressways. The essence of this Act is public consultation while acquiring lands. However, a lot of social activists like Medha Patkar have complained that the amendments made by some states completely ignored this aspect. Unethical land acquisition procedures harmed the livelihood of lots of farmers and landowners.

Section 24 of The Land Acquisition Act 2013

Section 24 of the LARRAct 2013 outlines the situations in which land acquisition proceedings will be considered lapsed. According to this provision, if no compensation has been announced in land acquisition cases till January 1, 2014, then compensation will be determined based on the 2013 rfctlarr act. In case some compensation has already been awarded before this date, then acquisition proceedings will continue under the British 1894 Act.

Section 28 Of Land Acquisition Act, 2013

Section 28 deals with the compensation amount to be awarded for land that has been acquired under this Act. This involves determining the market value and assessing the overall position of the landowners who are involved.

Recent Case Studies in Land Acquisition

1. Balakrishnan v. UOI (2017)

In this case, the Kerala State Government acquired approximately 27 acres of agricultural land to expand a technopark in South Kerala. The landowner, initially dissatisfied with the compensation offered, eventually sold the land to the state to avoid litigation. However, the state revenue agency imposed capital gains tax, considering it a “voluntary sale.” The dispute reached the Supreme Court, which ruled in favor of the landowner. The Court held that the transaction was a “compulsory acquisition” due to government pressure, exempting it from capital gains tax.

2. Guru Nanak Vidya Bhandar Trust Vs. Union of India and Ors (2017)

In this case, the petitioner’s land was encroached upon illegally by the NDMC (New Delhi Municipal Council). The petitioner filed for possession, which was granted by the court. Later, the NDMC initiated land acquisition processes. The issue revolved around whether the proviso in Section 24 of the 2013 Act could be applied. The Court ruled in favour of the petitioner, stating that compensation must be provided according to the amended Land Acquisition Act of 2013. Compensation previously released to the petitioner would be deducted from the total amount determined under the 2013 Act.

3. Indore Development Authority v. Manohar Lal (2020)

In this significant case, landowners argued that acquisitions made under the Land Acquisition Act of 1894 had lapsed and needed to be restarted under the Land Acquisition Act of 2013. The Supreme Court clarified that new procedures under the 2013 Act were only required if two conditions were met: possession of land had not occurred, and landowners had not received compensation. The Court also ruled that landowners couldn’t seek compensation under Section 24(2) of the 2013 Act if they declined the offered compensation. However, if compensation was not made as of the 2013 Act’s commencement date, proceedings would not be deemed lapsed, and compensation must be awarded under the 2013 Act.

These case studies underscore the importance of fair compensation and adherence to land acquisition laws, ensuring that landowners’ rights are upheld while balancing the needs of development and public interest.

Land acquisition Act 2013 is certainly a complex legal matter. Not everyone has the time to sit down and understand all the nuances of the land act. But, if you’re losing land due to the land acquisition act 2013, and you need to find another home to stay in, then start your search on NoBroker! Click the link below to find homes for any budget, without brokerage! 

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The Tenancy Act in India – A 10 Crore House being Rented for Rs.40?

Yes, this happens in India. The old Rent Act, set by the British Raj when they were in rule, froze rents and made it very hard to evict tenants! This means that property worth crores still had to be let out for the insanely low amount that it was given out at all those years back.

This act also made tenancy inheritable, so a tenant’s children could continue to live here and pay the same rent their forefathers paid. Landlords could not do anything about this, as long as there was a record of tenants paying their rent on time, they could not be evicted. The tenant and his heirs could claim legal rights and protection under the provisions of the Rent Act.

This system led to many owners just giving up on their buildings and letting them fall apart. This also led to the pagdi system where an incoming tenant would pay the landlord a huge chunk of money, the landlord would give this to the old tenant to kick them out. But the new tenant would also pay very low rent.

Time for a change – The Model Tenancy Act 2019

Knight Frank India and Khaitan & Co in October 2019 shared the details of a study they conducted. The main finding was – ” The total vacant houses incorporate approximately 12% of the entire share of the urban housing stock, which aggregates to around 1.11 crore homes in 2011. This stat showed a 71% hike with respect to vacant houses when compared to the year 2001.”

This means that houses are going vacant and this is bad news for both tenants and landlords and very bad for the ‘Housing for All by 2022’ goal.

So, it’s no surprise why the Ministry of Housing and Urban Affairs (MHUA) introduced the Model Tenancy Act in 2019.

What is the Model Tenancy Act?

This act is a model for all states and union territories (UTs) as land is state subject. This means each state and Union Territory has the option to adopt the act or reject it. This act, as stated by Finance Minister Nirmala Sitharaman is much needed. The old acts that we follow don’t as she said, “address the relationship between the lessor and the lessee realistically and fairly”.

The act aims it making rental law fair and safe. There is no favouritism shown to either landlord or tenant.

 

What you should know about the Model Tenancy Act & Tenants Rights in India

There are a few important takeaways from this Act, such as –

• There should be a formation of a Rent Authority department in each state to manage any rental issue.
• Security deposit for residential property is capped at two months’ rent and one month for commercial tenancy.
• If a tenant overstays, they will have to pay a penalty for not vacating. They have to pay 2x the rent for the first 2 months and 4x for each month after this. This will begin if they don’t vacate after the tenancy agreement expires or is mutually terminated.
• The landlord must provide access to basic essentials and utilities. If they need to increase the rent, then a written notice needs to be given 3 months in advance.
• If a landlord does not pay for basic repairs that are required, a tenant can pay for it and deduct it from their monthly rent. Read more about Model Tenancy Act & Tenants Rights in India from here.

• All tenancy agreements have to be reported to the Rent Authority within two months. A unique identification number will be issued to each agreement by the authority.
• Tenants cannot sublet all or a portion of the property without permission from the landlord.
• A landlord will have to respect the privacy of the tenant, they will have to provide 24-hour notice before entering any rental property, even if it is to carry out repairs.
• If there are any disputes, the landlord can’t take matters into his own hands by cutting off power or water.

Do you think the Model Tenancy act is a good move by the government? Drop us a comment below and let us know what you like or dislike about the act.

If you’re still looking for a home, you can choose from thousands of options on NoBroker, start your house search today by clicking below.

Maharashtra Rent Control Act for Houses, Flats & Apartments

Did you ever wonder how people afford housing in Mumbai? When the rich and the middle class pay high rents, how do the lower middle class and the poor manage? In a city like Mumbai where the house rents are known to be very high, the government had to step in. They formulated the Bombay Rents, Hotel and Lodging House Rates Control Act aka the Maharashtra Rent Control Act.

What does Rent Control mean?

Rent Control is a means in which there is a limit set on the amount of rent a landlord can demand, even when the rental agreement has to be renewed. This amount is carefully arrived at by the local executive, legislative or judicial government, as the case may be.

Read: Know Your Renting Rights with the Model Tenancy Act

Why was the Maharashtra Rent Control Act Enforced?

Back in the day, during the first World War, there was a massive influx of people into the city, this included military personnel and migrants. To add to this, there were also dock workers and factory workers who were very handsomely paid for their key contributions.

The growing demand for homes, and the growing supply of money lead to landlords hiking the price of rent to capitalize on the situation. In order to ensure that rental prices were not going out of hand, a standard rent was fixed in 1915.

The Maharashtra Rent Control Act 1999

There have been many changes made to the Rent Control act since 1915, the one that is currently enforced in the state of Maharashtra is The Maharashtra Rent Control Act of 1999.

In this act-

• The landlord has the right to decide and increase rent at the rate of 4% every year. This can be increased to 15% if improvements are needed and 70% if the tenant’s consent.
• The rent can be increased further to 25% if there are structural repairs needed. Also, if there is a hike in taxes, you can expect your landlord to increase the rent charged.
• To rebuild, the landlord needs to meet strict conditions set forth by the Act. This will include – raising funds, getting the building plans approved by municipal authorities, etc.
• Landlords must maintain their property. If the tenant feels it is not maintained and unfit to live in, he can serve the landlord with a notice of 15 days.
• If the tenant does the repairs, after serving the notice, they can deduct the repair expenses from the rent they pay.
• A tenant can relinquish or transfer his tenancy, this is normally done when someone offers to buy out the rest of their tenancy.
• To transfer tenancy they usually pay about 33% of the amount to the landlord to effect the transfer of tenancy.

There are plenty of other details that go into the Rent Control act, you can read about it in detail here – https://housing.maharashtra.gov.in/Sitemap/housing/pdf/actsrules/THE_MAHARASHTRA_RENT_CONTROL_ACT.pdf.

The Impact Of The New Model Tenancy Act 2021 On The Maharashtra Rent Control Act 

The Model Tenancy Act was approved as well as guidelines for the same were issued to states in 2021. The new Act’s aim is to enforce an ecosystem that is not only transparent between the landlord and the tenant, but also that the disputes and litigations are minimized. The state of Maharashtra ranks among the top states with the highest number of tenants. However, this will not impact properties that are currently being rented out based on the pagdi system. 

Read: Know Your Renting Rights with the Model Tenancy Act

If you have any questions, or thoughts on the Maharashtra Rent Control Act, drop us a comment and we will be happy to help you. If you are looking for affordable housing options in Mumbai, To Rent, or To buy, or sell, NoBroker is here to help, save on brokerage and get the home you deserve by clicking below.

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