Home Buying Guide

Home Buyers Guide

First Time Home Buyers Guide

Important Things to Know before buying a home

Buying Home- Know these Hidden Costs

Buy your home at 25

Buy Your Home Now

Auctioned Properties for a bargain price

A real estate crash is good for you; and India!

5-Things to Look out for in your Home Agreement


Taking House on Rent

Checklist before taking house on rent


Decider: To loan or not

What are the types of home loans?

Home loans: documentation checklist

House Tax:

Own a home joint and get Tax Benefits

Sell your Home and save tax

Useful tax saving tips for home owners

FAQs on Tax


Home Buyers Guide

First Time Home Buyers Guide

By: Shalini Amarnani

SO you've been thinking of moving to your 'own' home. And what's that you say, 'You have no clue where to begin?'. This start-up-kit will do just that – help you begin.

Step 1: Where to buy?
Today, young professionals are more mobile than ever. They move to where they get a job, or where their job requires them to. This does not meant that they should buy a house where they are working – rather, they would want to do so in their hometown or a city of their choice.

“Most young, well-educated professionals are likely to be doing short stints in several cities. The most important parameter when buying the first home should be ‘Is this the city I want to live in?’” advices Devang Shah, MBA (IIM Ahmedabad), CFPR (U.S.A. & India) Right Returns Financial Planning.

Harsh Roongta, CEO, Apna Loan.com comments, “Do not buy a home until you want to live in it. For a young person, the hassles or renting out a home are too many. For investment purposes there are many more attractive avenues”

Step 2: How much to put in?

Once you have decided to join the elite homeowner group, the next step is to decide on what home should own you…oops should you own. Some factors to keep in mind:

How much house can you buy?
Being young means you are (hopefully) not at your peak income-earning level and you have not had much time to save. So, if a dream house is out of the question right now, what is affordable?

“He should be looking at a property in the range of Rs11-15 lakh with a loan component of about Rs10 lakh,” says Pankaj Desai, Head – Retail Assets, Kotak Mahindra Bank.

The three Ls of choosing a home
Location, location, location.
Question is, do you go for a newer and aesthetically pleasing home that may need a longer commute to work, or something smaller close to the metro core?

Gaurav Mashruwala, financial consultant comes through. “Stretch yourself. A home is a long-term purchase and it should fulfil your requirement for the next 7-8 years. So do not scrimp on the money,” he advises.

Avoid the rent v/s buy debate
The comparison between renting and buying is often done on faulty assumptions. If you rent, you do not mind a small cramped apartment. You do not spend on furniture, plus you don’t have to pay stamp duty. If you buy, you want to buy something that at least takes care of your near future needs. But you will choose a specific location, which you will not be able to change as easy as you can when renting. So choose carefully.
Step 3: How much to borrow?

You may think you know quite a lot about financing your home from the dipstick survey you have done but here is what the experts have to say:

Budget before you buy
Developing a household budget is a desirable activity before you buy a house. Doing so gives you a better focus on loan payment goals and how the new house will affect your total expenses.

“When budgeting for your purchase, even if you are taking a loan you will have to consider payments such as your own contribution, the fees charged by all the financial institutions, the amount required to be paid upfront, broker’s fees, new furniture etc.” says Rajiv Sabharwal, COO ICICI home Finance Ltd

Shop for home loans
Most financiers lend upto 85% of the property value for the rest you can beg borrow and save.

“Your budget for buying your home should be based on your household budget and how much money you can afford put in an EMI of the loan. Mashruwala advises, “For a single person, the EMIs should not exceed 60-65% of your net income and for a married person, EMIs should not exceed 35-40% of your joint income”

Some products assume a certain level of salary increases every year and arrive at a higher eligibility. It could be an amount higher by 30%.

Enhance your eligibility …
… to get the maximum loan amount. This will give you leg room to manoeuvre and choose your home from a wider range.

“To increase the loan amount that you can get, take a loan jointly with your spouse so that both the incomes are clubbed to determine the gross repayment capacity. Generally, an HFC will permit up to 35-55% of the gross monthly income to form the monthly repayment amount.

Another option – opt for a longer repayment tenure so that the EMI amount gets reduced.

A step-up loan is a great idea
Here you will make lower repayments in the initial years and higher ones as your income increases. This, of course is available to a professionally qualified person. It gives you the advantage of making lower EMI payment initially and higher ones as your income increases.

Be ready for the unforeseen
Expect added expenses like stamp duties, transfer charges, parking charges, clubhouse membership, interiors, etc. The good news is that banks are now offering to cover at least some of these costs. Check with your bank if they can finance these extra costs too.

Compare loans
Don’t just go to the bank that your best friend took a loan from. Take quotes from several banks, do your maths and narrow it down to the two best quotes and take a sanction from both of them. This way you will have a back up plan if there might be some additional administrative cost thrown up by the financer which could mess up your interest calculation

Now don’t forge the tax breaks
If the principal component on your housing loan is Rs 1 lakh and you make no other investments; you will get the full advantage of it. You may end up getting a double benefit; a deduction of up to Rs 1 lakh on the principal amount and Rs 1.5 lakh on the interest component.

Disclaimer: While we have made efforts to ensure the accuracy of our content (consisting of articles and information), neither this website nor the author shall be held responsible for any losses/ incidents suffered by people accessing, using or is supplied with the content. 

Source: http://wealth.moneycontrol.com/yourstartupkit/buying-home/first-time-home-buyers-guide-/992/0                                                                         Go To Top

Important Things to Know before buying a home



IN Hindu mythology, there is the story of a man who visited a famous astrologer and was granted one question.

The man asked, "Why only one?", and thus lost the chance of a lifetime.

The art of asking the right questions is underrated. Especially when it comes to the biggest decision of your life: your home.

Some might argue the biggest decision is your life partner. But if you are a good boy (or girl), you will go with your parents' choice, no questions asked!

But when it comes to your home, be sure to ask plenty of questions.

Surendra Hiranandani, MD and Founder, Hiranandani Group of Companies, highlights eight pertinent questions most likely to arise during this process, as also how to solve them.

1. How big a house do I need?
It depends on your individual needs. If you are a family of five seeking more room, choose your second home with space and additional rooms.

If you are a young couple buying your first nest, settle for a cosy place for two. That is, if you are not planning a family soon.

Once you have figured out your needs, translate them in terms of built-up, carpet area and the new concept of super built-up areas. Carpet area is simply 75 per cent to 85 per cent of super built-up area. That means if the super built-up area is 1,000 square feet, the carpet area would be around 750 square feet to 850 square feet.

The ratio for built-up can be as low as 15 per cent for an old construction and as high as 28 per cent for new constructions. Super built up is at a phenomenal 40 per cent!

Make a note of the budget you will need for the same.

2. Which is the right area for me?
Ask yourself, do I want to spend half my life commuting? Or live in townships or residential complexes far from the dust, grime and noise of the city?

Or are the happening suburbs with their attractions — malls, multiplexes, luxurious homes — more my style?

Keep the investment point of view in mind. Suburbs offer value for money and investment appreciation.

3. What do I look for in a neighbourhood?
Once you have the area, narrow it a step further to a neighbourhood. Your immediate neighbourhood will decide how hassle-free your existence will be.

Look for proximity to doctors and clinics, shopping, transport connectivity, schools and hospitals.

Today, people also check out entertainment and recreational options, which could include bowling alleys, game centres, sports facilities, shopping malls, food courts and restaurants.

4. How much importance do I give amenities?
As dull as they sound, these things can be major reasons of concern if they are absent or insufficient.

Starting with water and power supply, look into access roads, parking space, safety and security and perks such as children's play areas, gardens, etc.

Verify the construction quality carefully. Compare a new construction with other existing projects by the same builder. This way, you can be sure that what you get will be the same as what you see in the sample flats.

5. Does it live up to my lifestyle requirements?
Your house is your refuge from the world and speaks volumes about you. Flooring, tiling, classy fittings and fixtures, fancy lighting, French windows can all make your nest a beautiful place to relax in.

Features offered by your building — jacuzzi, swimming pool, gymnasiums, clubhouses, jogging tracks — will all enhance your lifestyle.

A major element in your lifestyle will be the profile of people living nextdoor. If you have like-minded people in the neighbourhood, it puts your social calendar in place too.

6. What if I want more?
Above and beyond these, if you are looking at the best, most elite complexes, you are likely to be offered wide open spaces with lush, landscaped gardens and tree-lined roads.

This gives the complex an elegant feel, besides keeping the air fresh. Other green ideas that builders incorporate are rainwater harvesting and sewage treatment plants.

But like all good things in life, this comes with a price tag which you should be able to afford.

7. What if all this is there but the flat size is small?
Small flat sizes are a fact in a city like Mumbai. But there are myriad ways to maximise space with clever interior design. Traditional layouts have fast been abandoned in favour of specialty rooms or areas within the home.

Thus, larger rooms can be segregated into various areas of utility with the help of furniture, screens, dividers and so forth. Balconies can provide both leisure and storage space, even a computer room.

8. What about resale value?
The most important aspect in resale is the view. Naturally, all the amenities will be factored in, but houses with a great view normally sell for premium prices.

So if view is what pleases you, it may be worth that extra chunk of cash. Only people who can afford to pay a premium for a view will be your buyers so you may have to wait longer or drop your asking price substantially and match the general rate of the neighbourhood.

Excellent construction quality and good infrastructure in your area could give your property graph an upward slant.

If you ever get a chance to visit that famous astrologer, forget the above eight questions (because you already know the answers!).

Just ask him one question: Which area will witness the biggest property boom? Then go right ahead and invest!

Source: http://wealth.moneycontrol.com/features/buying-home/eight-milliondollar-questions-answered-/5981/2                                                Go To Top   


Buying Home- Know these Hidden Costs



Avinash Singh was interested in buying a flat in Mumbai and had a budget of around 70 L with him, which included furnishing the house as well. He was shown many flats costing Rs 60 lakhs for around 1000 sq. ft. He was very enthusiastic about buying it. But when he sat down to calculate the costs, he found out that even after excluding the interest costs, he would have had to pay another few lakhs.

Why did this happen? The big mistake Avinash made was that he did not contend with other expenses involved in purchasing a home. These costs like stamp duty, insurance, maintenance etc. comprise at least 10-12% of the final purchase price of the home. As they are significant, it is essential you include them while calculating the total cost of ownership of home.

Here are some of the typical hidden costs involved while buying a home.

•    Stamp duty: Stamp duty is the tax that is paid on the documents. Traditionally, you need to affix a physical stamp, a tax stamp on every document to make it valid. It gives you the legal right to the property you are buying. As the price of the property goes up, so does the stamp duty. As Mumbai has one of the highest realty prices in the country, the stamp duty here is the highest than in any other part of India.
•    Maintenance: When you buy a flat, you will be using facilities provided by your building like lift, car park and gym. Your building may also provide you with security, intercom system etc. You will need bear your share of the total costs involved and will be billed to you as maintenance and you end up paying them.

•    Electricity and water charges: You must bear these charges as you definitely will need water and electricity once you move to your new home.

•    Home insurance: Very few people will be able to buy their own home by paying full price of the home in cash upfront. Most of them will end up taking a loan to pay for the price of the home. But when taking a loan, the lender will make it mandatory for you to take a home insurance to protect their money in case if your home is damaged due to any unforeseen events.

•    Cost of furnishing the home: Some builders offer fully furnished flat and will include the cost for the same in the price of the home. If it is not furnished, you will have to bear the cost of furnishings and fittings.

•    Property tax: This tax is charged by your local municipal body on the property that you have purchased. This tax goes towards maintenance of the civic services in your city.

Dealing with these hidden expenses: While certain expenses like property tax and stamp duty cannot be reduced as they are fixed by the government, other expenses can be curtailed to some extent. To reduce maintenance costs, buy a resale home instead of a new home, as flats in old buildings have lower maintenance charges than those in the new buildings. Search for home insurance policy offering the lowest premium rate. You can opt for an unfurnished home and then get it furnished as per your budget and taste. It will let you bargain for the rates and will let you get the best possible deal.

Buying a home is quite an expensive process. It includes the various costs mentioned above like stamp duty, property tax, maintenance, electricity and water expenses, furnishing expenses etc. It is important you take into account all these costs before buying your home as it can make a significant increase in the final price of home. If you are unaware of any costs, or need help, talk to a reputed broker for advice.

Source: http://wealth.moneycontrol.com/columns/buying-home/buying-home-know-these-hidden-costs-/15722/0                                                                         Go to top of page


Buy your home at 25

Shalini Amarnani

THE have-it-all generation has arrived. They want everything from their dream car to the annual jaunt to Europe. And they want it all before they even touch 30!

But by far, the most startling statistic is the growth of homeowners between the 25 and 30 age group. There was a time, not too far back, when buying your own home was the culmination of your lifes' work. It was the ultimate dream, your reward for having spent more than 20 years of your life working hard and saving harder.

Meet reader Rahul, 24, single and earning an annual income of Rs 3.5 lakh (Rs 350,000). He's been working for two years and is planning to buy his own home. But buying a home is a bit more complicated than flying away to Europe. So if you are like Rahul, aspiring for a membership to that special club of homeowners, read this.

We get down to telling you what you need to do!

The location

This generation is extremely mobile.

"Their mantra is show me the money and I'll go anywhere, " says Devang Shah, Indian Institute of Management Ahmedabad Alumnus. "While most young, well-educated professionals are likely to be doing short stints in several cities, the most important parameter when buying the first home should be 'Is this the city I want to live in?'"

If you've zoned in on the city then figure out whether you want a modern, spacious housing that may require a commute or something smaller close to the metro core.

But don't think about buying a home for investment. Harsh Roongta, CEO, Apna Loan.com warns, "For a young person, the hassles of renting out a home are too many. For investment purposes there are many more attractive avenues."

The cost

You're just 25. You have a long earning years ahead of you and unless you've fantastically disciplined (which a few of us are), your savings are probably limited. Which means your dream house is pretty much out of the question right now. But make a start.

Pankaj Desai, Head – Retail Assets, Kotak Mahindra Bank says, "A property in the range of Rs 11-15 lakh (Rs 110,000 – Rs 150,000) is a good starting point."

But hold on before you start getting hopeful. Rajiv Sabharwal, COO ICICI home Finance Ltd warns, "Budget for your house considering payments such as your own contribution, the fees charged by all the financial institutions, upfront payment, broker's fees, stamp duties, transfer charges, parking charges, clubhouse membership, interiors, etc."

The loan

This is a big one. Loans belong to complicated world. Let's break it up into two parts to make it less intimidating:

a. The Selection

b. The Repayment

A. Selection

i. To start with, you can get a loan for upto 85% of the property value. The rest you can beg, borrow or steal. Well don't steal but try the others. This means for a house of Rs 11- 15 lakh your loan component can be about Rs 10 lakh (Rs 100,000).

ii. Most important are those three little letters- EMI. Gautam Mashruwala advises, "Your budget for buying your home should be based on your household budget and how much money you can afford put in an EMI. For a single person, the EMIs should not exceed 60-65% of your net income and for a married person the maximum is 35-40% of your joint income."

We give you three handy tips for selection

i. To increase the loan amount that you can get, take a loan jointly with your spouse so that both the incomes are clubbed to determine the gross repayment capacity.

ii. While choosing your financier, don't listen to your friend. Do your homework and keep sanctions from at least two ready with you as a back up in case the first one throws up some unpleasant surprises.

iii. Go for a step-up loan where you will make lower repayments in the initial years and higher ones as your income increases. Find out all about variable EMIs

B. The repayment

There are two ways you can choose to repay your loan — conservative or aggressive. The choice depends on your individual financial situation and goals. Here are some pointers:




  • Low burden to repay EMI.


  • Additional disposable income can be used to for part-prepayment with no additional fees.


  • Higher loan amount, hence one can buy a better house.


  • Shorter loan tenure, hence one can repay faster.



  • Lower loan amount so you've
    compromised on your house.


  • Longer loan tenure so you'll
    be tied to EMI's for years to come.


  • A high EMI can be a strain leading to defaults.


  • Poor credit history might affect other bank offerings.


Home loans are not all bad news, there's good news too – home loans are great for tax breaks. If the principal component on your housing loan is Rs 1 lakh (Rs 100,000) and you make no other investments you will get the full advantage of it. You may end up getting a double benefit; a deduction of up to Rs 1 lakh on the principal amount and Rs 1.5 lakh (Rs 150,000) on the interest component.

In closing, you'll probably agree that buying a home is no cakewalk. But at the end of a long days' work when you can sit back and relax in a space you can call your own then it will seem well worth the effort.

Disclaimer: While we have made efforts to ensure the accuracy of our content (consisting of articles and information), neither this website nor the author shall be held responsible for any losses/ incidents suffered by people accessing, using or is supplied with the content.

Source: http://wealth.moneycontrol.com/features/home-loans/buy-your-home-at-25-/32/1                                                                                         Go to top of page


Buy Your Home Now

By: Gayathri Madhavan

EVERYONE harbours the dream of buying a home, but there are many hurdles along the way – availability of funds, home loan interest rate, recession, job stability, location, right property. However, now, a few of these hurdles have been eased, especially home loan interest rates.

Interest rates
It's a war out there. Banks are cutting home loan interest rates aggressively. First State Bank of India (SBI) extended it's special 8% home loan scheme to March 2010. Then, HDFC introduced a special home loan scheme at 8.25 per cent fixed up to March 2012.

Now, Kotak Mahindra Bank has announced its new home loan scheme at 8.49 per cent fixed rate on home loans for 30 months from the date of the payout of the loan.

ICICI Bank also came out with a home-loan scheme under which 8.25 per cent interest rate will be fixed for the first two years. The floating rates will apply after 2 years. These rates will be applicable to loans sanctioned between December 2009 and January 2010. Borrowers will have to make sure that the first disbursement takes place before the end of March 2010.

Basically, all banks are competing with each other to lower the interest rate in order to lure more customers into taking a home loan.

Should you wait for more cuts?
If you are planning to wait in the hope of interest rates dropping further, it’s unlikely to happen. ApnaLoan.com CEO Harsh Roongta says, “If the RBI doesn’t introduce schemes to increase the liquidity into the system, there won’t be any further fall in the interest rates.”

And then there is the dual concern of inflation versus growth. Most economists are expecting the RBI to tighten interest rates early next calendar year. Abheek Baruah, Chief Economist, HDFC Bank expects a 50 basis points CRR hike in January 2010. In an interview to CNBC-TV18, he said, "I think it will be a slow but steady exit from the super-accommodative monetary policy that we have in place. If the signs of recovery sustain and we see some reasonably good prints for industry and the non-government service numbers going forward, then this will possibly be followed by a rate hike. The two policy rates will possibly be increased by about 25 basis points in the April policy."

 Property rates
Anurag Mathur, MD – India, Cushman & Wakefield, said in an interview to CNBC-TV18 recently, "Prices are expected to go up by December. Not sharply, but it will still go up. I anticipate that happening at least in prime projects."

Buying a house to live in?
Roongta believes that now is a great time to buy a house. He says, “It is never a good idea to time the market at any point of time except when the property rates are overpriced, which is not the case now. But if you want buy a home to reside, anytime is a good time to buy but now is a great time.”

Property as investment?
Well, that depends on your portfolio, asset allocation, and the time you can devote to finding the right property. Roongta says, “Commercial properties are still priced low. If your portfolio allows investing in real estate, it makes a fair amount of sense to invest in it, and lease it out. However, remember liquidity is poor in this type of asset.”

DLF Group executive director Rajeev Talwar confirms Roongta’s view point, “If the economy is firmly in the saddle and running, in early 2010/11 you will see a huge revival in commercial real estate. Maybe in the third quarter of the next financial year, you will see a huge revival in retail.”

Source: http://wealth.moneycontrol.com/features/buying-home/buy-your-home-now-/14402/0                                                                                     Go to top of page


Auctioned Properties for a bargain price

Abitha Deepak

HAVE you ever wondered what happens when someone defaults on a home loan?

This is what happens: the creditor will send a default notice to the person who defaulted. The default notice will mention the amount in arrears and gives a deadline within which the defaulter has to repay. If these deadlines are not met, the bank can claim the house, which is pledged as security for the home loan.

When does foreclosure process begin?
The process begins when a borrower defaults on loan (mortgaged) payments, and the bank files a public default notice called a Notice of Default or Lis Pendens.

Once the notice is sent and no response is received within the stipulated time, the bank decides when to initiate action. At the determined date, the bank begins the foreclosure proceedings against the borrower under "Recovery of debts due to banks and financial institutions Act, 1993" for recovery of their dues.

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (54) of 2002 (SARFAESI Act), gives the banks and financial institutions the right to recover the mortgaged property in case of loan defaults. That is, the banks don’t have to go to the court to get their hands on the property. All right but what are the legal rights in the event of an imminent foreclosure?

* Foreclosures in case of mortgages are governed by the Transfer of Property Act

Rights of the loan borrower
All borrowers have rights under the Fair Debt Collection Practices Act (also known as the Consumer Credit Protection Act) to avoid or stop abusive, repetitive, and unfair debt collection practices.

Banks can only call you at certain hours. Furthermore, you might also be entitled to a loan modification.

Loan modification is a change in the terms of a current loan, which could vary from interest rate reduction to principal amount reduction.

A good bargain, for a new home buyer?
Once the lender takes control of the property, an independent valuation is carried out by a chartered surveyor who fixes two values for the property — market value of what the property is actually worth and distress value, which is around 15 to 20 per cent lower than the market value. The property is almost always quoted with the distress value for the minimum bidding price at the auction.

At the auction, the prices can go up depending on bids and the location of the property. This gives a prospective buyer an opportunity to win an auction for a good deal as opposed to buying a property at the existing market value.

Furthermore, a new buyer needs to do some background checks and remember some pointers:
1. Scan newspapers or call banks for auction dates
The best place to look for such auction events in the city where you live, is to check out the popular newspapers. Several nationalized banks periodically advertise in papers regarding auction dates, venue and the location of properties to be put up for sale.

2. Banks sometimes conduct an e-auction
E-auctions are not a popular choice, yet! But banks sometimes announce online as it has wider target audience and is a transparent medium.

3. Verify and secure legal aspects
A caution fee would be charged for those participating in the auction of the property. Once this fee is collected, you will be allowed to check the property beforehand. Don’t forget to ask your lawyer to accompany you for this visit and help you with all the legal aspects of the transaction.

The banks will only auction a legally safe and registered property. Yet, it is advisable that you with the help of your legal counsel, investigate the title of the documents and do your research with the registry for a track record of the past 30 years of the property to understand who were its past owners, how many hands it changed and whether there was any legal tangle in the past that needs to sorted out before your make your winning bid.

Verify all municipal records, tax records, whether the current owner has sole ownership and if it can be transferred to you in accordance with the rules specified in the Transfer of Property Act.

4. Factor in all possible additional expenses
The properties auctioned are sold in the state they were first taken over by the banks, ie, it might have some costs like outstanding payments due in terms of house tax, electricity, repairs, renovation etc. that you might need to pay when you buy the property. Factor in all these aspects when you make the bid.

5. Is the transaction safe?
All sale transactions happen through the bank, so you need not have worries over the technical aspects of the sale.


Source:  http://wealth.moneycontrol.com/features/buying-home/auctioned-properties-for-a-bargain-price-/13982/0                                                             Go to top of  page

A real estate crash is good for you; and India!

By: Yogesh Chabria

CONVENTIONAL economics says a crash is bad. In reality, however, it’s a boon. A real estate crash is an economic blessing for billions of people and the country.

Two years back, no one would have imagined that real estate prices could crash by 50 per cent. Today, it’s a fact. Compared to peak prices of 2008, you can expect a correction by 70 per cent in the coming years. Despite that a lot of properties will be lying vacant as there is a huge oversupply – in India and all over the world.

Many builders and brokers will probably send me hate mails for saying this but the fact remains that a 70 per cent crash is a good time for them to create much more wealth and to tap a large market. This crash is excellent for home buyers, businesses, and the entire economy.

Reason: A lot more cash is available for more productive activities in the economy such as building roads, electricity, etc.

How is that?
Let us say earlier a property you wanted to buy was being quoted at Rs 1 crore. To get money to buy this, you might have to scour your entire life savings and take additional loans. You and your family might have to slave for at least 20 years to pay off the EMIs to banks. A lot of your savings gets sucked into unproductive assets like real estate.

Today cost of construction per square foot is only around Rs 600. Based on this a 1000 sq. ft apartment should cost not more than Rs 6 lakhs to construct. Just imagine a flat that cost barely 6 lakh to construct is being sold for Rs 1 crore. A few might argue – that we need to consider land costs.
Land cost is artificially inflated across the country – India has an abundance of land all across. Just move out of the major cities and you will see thousands of acres of vacant land.

Now imagine if that same property is available for Rs 20 lakh, which is the fair value for such a property. Now there is an additional Rs 80 lakh available in the economy for more productive uses.

What happens to this surplus of Rs 80 lakh?
Previously, only a small minority of builders enjoyed this surplus of Rs 80 lakh but now it can be invested to boost consumption.

Roads, factories and new service industries can boom if each family uses this Rs 80 lakh more productively. Electricity, roads, water, health care and education will get a huge boost from this money. No amount of interest reduction or artificial stimulus package can have the same effect as this.

When property prices go down, automatically the ‘black cash’ element would disappear. People would not see the need to find the back alleys to pay Rs 20 lakh.

The question, you should ask!
Today, a place like Dubai, which has sunk billions of dollars into unproductive real estate, is on the verge of collapse. Had they utilised this money for better use, the economy would have been much better today.

A lot more of this crash is excellent for the economy. The real estate crash has not yet happened in India and is still to come and will probably surprise a lot of people.

India has a bright future ahead and millions of new jobs are going to be created. A lot of new capital also is going to be used productively thanks to this global economic crash. I’ll once again stress that this is one of the best opportunities in history to create immense wealth for all those who are armed with knowledge and have a little bit of patience.

Source: http://wealth.moneycontrol.com/columns/buying-home/a-real-estate-crash-is-good-for-you59-and-india-/12612/0                                   Go to top of the page

5-Things to Look out for in your Home Agreement

Abitha Deepak

YOU just got news that your home loan has been approved and you are on your way to see an existing model of your future home. Your heart is pounding with excitement, but wait, the tedium of paperwork is not over yet. You need to ensure that your agreement with your builder has no unforeseen loop holes that can plunge you in a legal mess!

Here are five essential steps you need to take to avoid such situations.

Aspect 1: Cost of your dream home
There are various costs attached to the owning your home besides its cost. The cost covers basic utilities like electricity, water, parking space, various taxes and in certain instances the registration charges as well. These may come as part of the deal or may be charged under separate heads. Make sure all these costs are factored into the final price you pay.

Safety points

  • Scan the agreement with great care for all these charges
  • Get the agreement ratified with a real estate lawyer to see if there are any hidden or missed out charges. So, you can have an upfront discussion with the builder and have the document corrected.
  • If the extra charges are for alterations made to the original plan, ask the builder for the sanction letter provided by government authorities for such alterations.

Aspect 2: Size of the house
Look for the specifications in the agreement that defines the size of the house. This should be clear and specific. Also, look for a clause that says ‘…the plans, designs, and specifications are tentative and the developer reserves the right to make variations and modifications….’ This might mean that you may agree for a certain size, but the builder can give a different size.

Safety points

  • Do a thorough check on the builder to determine his track record in project delivery. The way the builder has handled the past projects should serve as a measure to how your project is going to turn out.
  • Discuss with your lawyer and think about including another clause that provides a definite range to the maximum and minimum size beyond or below which the builder cannot venture.

Aspect 3: Carpet area
Carpet area is the space where it’s possible to lay the carpet. It does not take into account the area of the walls and balcony. When you include these areas as well to the carpet area you obtain the total built up area of the house or apartment. Additionally, if you include common spaces like lobby, lifts, stairs, garden, swimming pool etc., then its termed as the super built up area. The actual carpet area is bound to be around 20 to 30 per cent lesser than the super built up area.

Safety points

  • Always base your purchase decision on the carpet area of the flat.
  • Double check if this area is specified in the agreement.
  • Discuss with your builder and the lawyer to make sure it’s possible to include a termination clause if the final construction of the house has a carpet area lesser than what is specified in the agreement.

Aspect 4: Completion of construction and date of possession
During the realty crash that occurred in the recent past, there have been several instances where projects have not been completed on time. Though agreements have a tentative date of possession it is important to for you to check this aspect of the deal.

Safety points

  • Monitor the progress of the construction and keep a regular tab on it.
  • Follow up with the builder if you find the progress painfully slow and request him to step it up. Keep in touch with the builder as the work progresses.
  • Establishing a society with other buyers in the case of an apartment complex, will ensure that things happen at a decent pace from the builder's side.

Aspect 5: Completion certificate
When the project is completed and the house is delivered to you ensure that the builder provides you with a completion certificate. This certificate provided by the municipal authorities authenticates that the building complies with the approved plan and obeys all government norms and specifications. This certificate is critical for the registration of the house and to complete other legal formalities.

Safety points

  • Make sure the agreement has a clause that indicates the certificate will be handed over to you on completion and hand over of the house/apartment.
  • Again a society could help move things faster if the builder is laid back about this aspect.

Apart from the above mentioned aspects an overall quality check on the construction, society management etc. are important. Ensure these aspects are also covered in the agreement. Be aware and clued on about what you are getting into before you sign the dotted line.


Source: http://wealth.moneycontrol.com/features/buying-home/5-things-to-look-out-for-in-your-home-agreement-/13942/0                                                           Go to top of page

Checklist before taking house on rent

Abitha Deepak

IF you live in a rented house, where your landlord organises maintenance and plumbing, fixes electrical hassles, count yourself lucky. But, let's get real – it's never that easy.

To make your renting experience as hassle-free as possible, we have laid down some house credentials that you need to verify:

1. Title documents
This is proof that the person renting out the premises is the actual owner of the place.
2. Share certificates
If the place rented out is part of a co-operative society or colony, share certificates also need to checked.
3. Electricity bills
It is generally in the owner’s name.
4. Verification of built up area of the dwelling place
This is done by a qualified architect.
5. No-objection certificate
This is a certificate that specifies conditions for rent/lease, some do not allow bachelors and may have other forms of conditions that are defined in the document.

This said, there are some aspects in the lease agreement you need to be careful about:
1. The licence period, the consistency of the license fee paid through the entire license period, payment of costs associated with the house such as municipal taxes, society fees and charges etc. The owner is expected to bear such costs.

2. There should be definitive clause regarding any deposits given initially prior to renting the house.
The legal agreement should clearly state the refund of such deposits when the lease is terminated. Clauses defining what happens if this expectation is not met also needs to be in place. Usually, security deposits that are not refunded within seven days of the expiry of the lease are liable to be refunded with interest for each day’s delay.

3. Care needs to be taken to ensure the landlord does not indiscriminately retain funds from the deposit for supposed damage to the premises etc.

*Rental laws differ from state-to-state and hence these guidelines are restricted to some general laws.

Source: http://wealth.moneycontrol.com/yourstartupkit/financial-planning/home-for-rent-heres-a-checklist-/13892/0                                                Go to top of page

Decider: To loan or not

Sandeep Shanbhag

IF you want to buy a house, you have two options to fund it – Either use your own funds or take a loan. Most of us obviously would not be able to afford an outright purchase (without availing of any loan whatsoever). However, even if you are one of those fortunate few who have the wherewithal to buy a house off the shelf, you should avail yourself of a loan. The following explanation will tell you why.

Well, for starters, interest outgo on the loan up to Rs 1,50,000 is tax deductible. Moreover, the capital repayments are eligible for Sec 80C deduction up to Rs 1,00,000. Now, if one were to use one’s own funds, these benefits are forgone. There are absolutely no tax benefits available for someone who wants to buy his property outright without taking a loan! This does seem a bit unfair, but that’s the way the law is.

Now taking a step further. How much loan should you opt for? If you take a loan, you pay a higher rate of interest than what you earn on your own funds. So should you use your funds for buying the house? In that case, you lose the tax advantage.

Therefore, you have to weigh the benefit of the tax advantage of taking a loan against the loss due to higher interest outflow. Obviously, there is a break-even point, which can help you in arriving at the optimal mix. The answer would of course depend upon variable parameters like the interest rate on the loan and what your own funds earn outside.

The greatest advantage of taking a loan emanates out of the tax breaks. It is in the interest of the investor to maximize these tax breaks. Using own funds results in foregoing the tax advantage.

Also note that the ceiling of Rs 1,50,000 on interest is only in the case of self-occupied property. In the case of let out property, there is no ceiling on the interest deduction i.e. full interest paid is deductible. In this case, obviously, taking a loan would be advantageous. There is no question of using one’s own funds.

Source: http://wealth.moneycontrol.com/yourstartupkit/home-loans/decider-to-loan-or-not-/1002/0                                                                             Go to top of page


What are the types of home loans?

Team Wealth

WHO doesn't have a home loan these days? With all the tax sops and attractive schemes, it's difficult to find a 'me' answer to that. And to add to that, banks are making sure everyone around takes a loan. The result: Loans for every occasion. Here is a quick listing of loans you can get for your home:

Home loan
As the name suggests, this is a loan given to purchase a home. You can get a loan of up to 85% of the property cost. You can choose from a fixed rate loan or a floating rate loan.

Home improvement and extension loan
These are loans given out to carry out either partial repair work in your home or to extend the home by adding extra space.

Short term bridging loan
This is a short-term loan to help loan customers through the interim period between the sale of the old home and the purchase of a new home. It is given for a maximum of two years. A first mortgage of the new property to be financed serves as security for the loan. This is normally by way of deposit of title deeds and/or such other collateral security as may be necessary.

Land purchase loan
This loan funds the purchase of land for up to 85% of cost of land.

Home equity loans
A smart way to raise money for personal use, home equity loans are given to fill up the gap between the capital price appreciation of your property and the repayment that you have made till date. Let us look at an example:

Suppose you have purchased a property for Rs 20 lakh in 2000 by taking a loan of Rs 15 lakh. Your property was mortgaged to the bank as a security. In the year 2006, your property value has gone up to Rs 30 lakh while your loan outstanding has reduced to say Rs 11 lakh. As a result, while you owe the banker only Rs 11 lakh, you have mortgaged property worth Rs 30 lakh to him. So the banker has a healthy margin on his side and can afford to lend you more money with the same security. This loan is called a home equity loan.

It makes a far cheaper option should you need money for say some marriage expenses or medical expenses, as compared with a personal loan or a credit card debt.

Source: http://wealth.moneycontrol.com/showstory.php?id=1262                                                                                                                                 Go to top of page


Home loans: documentation checklist

Gurjap Singh Kohli

HOME loans are easy to come by these days. So, don't fret over it. Focus on the documents you need to furnish while applying for a home loan.

Documents required:
We give you a standard list of documents your bank will ask for. Besides this you need to submit details of the property or home you are obtaining the loan for.

Tip: Check with your Bank or Non-Banking Financial Companies to figure out which of the following documents you need to submit, as the requirements differ from bank to bank.

1. Identity proof
— Driving license
— Voters ID
— Passport
— PAN card
— Ration card
— Employee ID
— Bank passbook
— Letter from a recognised public authority or public servant verifying your photograph
— Confirmation letter from your employer or another bank verifying your photograph

2. Address proof
— Driving license
— Voters ID
— Passport
— Ration card
— Bank passbook or Bank account statement
— LIC policy/ receipt
— Utility bill – telephone, electricity, water, gas (less than 2 months old)
— Letter from any recognized public authority verifying residence address of the customer
— Letter from your employer

3. Age proof
— Driving license
— Passport
— Bank passbook
— PAN card
— Birth certificate
— 10th standard mark sheet

4. Income proof
Income proof and property proof vary for a salaried individual and a self-employed individual.

a. Self Employed/Businessmen
— A brief introduction of Business/Profession
Balance Sheet, profit and loss account statement of income, proof of income tax returns for the last 3 years certified by a CA
— Photographs
— Receipts of advance tax payments if any made
— A photocopy of Registration Certificate of establishment under Shops and Establishments Act/Factories Act
— Registration Certificate for deduction of Profession Tax
— Certificate of Practice
— Receipts of Bank loans
— Proof of investments (FD Certificates, Shares, any other fixed asset)

b. Salaried individuals
— Income Proof (any one of the following):
Latest Pay slip
Form 16
Increment/Promotion letters
Appointment letter
Pay slip (Last 2 months) with salary account bank statement
Certified letter from Employer
IT returns ( for three years )
Investment proof (FD certificates, shares, any fixed asset etc.)
— Documents supporting the financial background of the borrower (liabilities and assets if any)
— Photographs

 5. Property documents

If a flat is purchased from a builder, you need the following property documents:
— Original copy of your agreement with the builder
— 7/12 extract – This is issued by the concerned land authorities giving details such as the survey numbers, area, date from which current owner is registered as owner etc.
— Property register card, which is obtained from the City Survey Department
— N.A. permission for the land from the collector, if its agricultural – If the land is agricultural and is being utilised for residential/ commercial/industrial use, then such agricultural land has to be converted to non-agricultural land and a Non-Agriculture Order has to be obtained from the Collector of the district where the property is located.
Search Report and Title Certificate – A search report and title certificate can be obtained from an advocate who will conduct a survey of the title of the property by visiting the office of registrar. A legal opinion can avoid any legal hassles later and is mandatory to be filed with the agreement for sale.
— Development agreement between the owner of land and the builder
— Copy of order
under the Urban land Ceiling Act
— Copy of building plans sanctioned by the competent authority
— Commencement certificate granted by the Corporation
— Building completion certificate
— Latest receipts for taxes paid towards the land or property or flat to be purchased
— Partnership deed or memorandum of association of the builders firm

If a flat is purchased from a Cooperative Society, you need the following property documents
— Original share certificate of the Society
— Allotment letter from the Society in your name
— Copy of the lease deed, if executed
— Certificate of the registration of the society
— Copy of the byelaw's of the Society
— No objection certificate from the Society
— 7/12 extract or property register card in the Society's name
— Copy of N.A permission for the land from the collector
— Search Report and Title Certificate
— Copy of order under the Urban Land Ceiling Act
— Copy of the building plans sanctioned by a competent authority
— Commencement certificate granted by Corporation
— The latest receipts of taxes paid for the property
— Original Agreement to assign / Deed of assignment

If you are constructing on your own land, then you will need the following property documents.
— Original sale deed of land and extract of Index II
— 7/12 extract or property register card in your name
— Copy of N.A. permission for land from the collector
— Search and title report
— Copy of tax paid under Urban Land Ceiling Act (obtained from Commissionerate of Urban Land Ceiling and Urban Land Tax)
— Copy of the building plans sanctioned by a competent authority
— Building permission granted by the Corporation
— The latest receipts of taxes paid for your land
— Estimate of the cost of construction certified by the architect


Source: http://wealth.moneycontrol.com/columns/home-loans/home-loans-documentation-checklist-/11221/2                                    Go to top of page


Own a home joint and get Tax Benefits

Abitha Deepak

I HAD taken a home renovation loan last year for Rs 12.75 lakh at a floating rate of 9.25 per cent (It is 10.75 per cent now), and I pay an Equated Monthly Installment (EMI) of Rs 14,656.

The property is in my father's name. However, he's only a co-borrower for the loan since he is above 60 years of age and was not eligible for the loan. I am paying the EMI, and I would like to know if I can claim any tax benefits on it?
— Dr  Chopra

Since you are paying the EMI it may seem natural for you to claim tax benefits; but the income tax law says you need to own the property in order to claim the benefits. This means you will not get tax benefits unless you have the ownership in the property.

Solution – part ownership of the property!
Instead of entire ownership, if your father decides to share the ownership of his property with you then this scenario could change. If he does that, you would be eligible for tax rebates. The repayment of principal and interest amount will fetch you tax benefit under Section 80C and Section 24 respectively. These tax deductions are capped at Rs 1 lakh for the principal repaid and Rs 1.5 lakh for the interest repaid.

In order to avail the tax benefits, your father has to make you the co-owner of his property. He would need to transfer the rights of co-ownership to you in accordance with the regulations of the Transfer of Property Act. He can transfer the ownership by registering the property documents at the Registrar's Office through the Sub-Registrar.

Note: The certificate/documentation work should be processed from the respective Taluk office of the district where your property is located.

At the time of registration of documents, an application form duly signed by you and your father for sharing the property ownership needs to be furnished. The form will then be processed at the respective Sub-Registrar's office and sent across to the Thasildhar of the relevant Taluk for updating the changes in the Taluk Registry.

Source: http://wealth.moneycontrol.com/features/home-loans/own-a-house-jointly-get-tax-benefits-/12132/0                                                            Go to top of page


Sell your Home and save tax

Abitha Deepak


THIS reader bought two houses and is paying Equated Monthly Installments (EMI) for both. She wants to know how to get maximum tax rebate on it.

My husband and I are working professionals.

Two years ago, I had purchased an apartment for Rs 10 lakh. For convenience sake, let's call it apartment 'A'. I took a home loan of Rs 6.5 lakh to fund this house purchase. So far, I have repaid an interest of Rs 50,000 and a principal amount of Rs 50,000.

Later, I purchased another apartment, lets call it 'B', and took another home loan of Rs 36 lakh. Again, I repaid an interest of Rs 3.3 lakh and a principal amount of Rs 30,000 on this apartment.

Now, My husband an I need to decide which house to rent out so that we can save some money and also avail maximum tax benefits at the same time.

Currently, I'm paying the monthly installments for both the apartments.


Calculations reveal that Nisha needs to rent out her apartment 'A'. Let's decode this.

Section 80C offers tax rebate on home loans upto a limit of Rs 1 lakh and Section 24 on interest upto a limit of Rs 1.5 lakh.

It is clear from the loan repayments made by Nisha that though she avails a tax rebate of 50,000 on apartment A compared to apartment B, her tax rebate for apartment B would be more significant, as she can avail a rebate of Rs 1.5 lakh for the interest of Rs 3.3 lakh repaid so far.

So, Nisha could do two things:
– Declare apartment A as rental property
– Her husband, Narain could pay rent to Nisha and take benefit of house rent allowance or HRA benefit on his salary

However, Nisha would then have to pay tax on the rental income since the rent received will be treated as income.

Let's assume the rental income for the apartment is Rs 100. As part of deductions before tax, 30 per cent of the income is deductible towards maintenance. This then leaves Rs 70 as the taxable income.

Ideally, in a situation like this, it is best to opt for a joint home loan. Narain and Nisha could have done the same. Since they both are salaried employees, they can club both their incomes and avail of a higher loan. The obvious advantage is the increase in loan eligibility. Banks often insist that co-owners of the property, should be co-borrowers as well. Being co-owners and repaying a joint home loan would entitle both Narain and Nisha for higher tax benefits jointly. They can avail these benefits according to the proportion of their individual shares of the loan.

Source: http://wealth.moneycontrol.com/features/home-loans/useful-tax-saving-tips-for-home-owners-/11891/0                                              Go to top of page


Useful tax saving tips for home owners

Lovaii Navlakhi August 27, 2008

 YOU bought a property purely as an investment. Now, you want to sell. But don't forget about the tax you need to pay on capital gains.

Don't fret, yet. There are several ways to tackle capital gains and the tax payable. First, let's break down the jargon and understand what these basic terms mean.

Short-term capital gain: If you are selling a property that you have owned for less than three years, it will be treated as short-term and added to the income of that year. You will then pay tax depending on your tax slab.

Long-term capital gain: If you have owned the property for three years or more, the property can be classified as a long-term capital asset and the tax rate would be 20 per cent, after indexation. There are tax exemptions available on the long-term capital gains you make. In this case, your options to save tax would be:

  • You are eligible for tax relief if you buy another house within two years of the sale, and the capital gains made to the extent of the amount invested in the new property, is exempt from tax. The remainder, if any will be taxed at the long-term capital gains tax rate (view box, below).
  • Invest in capital gains bonds issued by the Rural Electrification Corporation or National Highways Authority of India within six months from the date of capital gains.

Note: There's a ceiling of Rs 50 lakh per person within a financial year for such investments. There's also, an overall limit on the institutions issuing these bonds, which are available only on a first-come, first-serve basis.

More tax-saving gyaan

1. If you reinvest in a plot, you need to purchase it within two years of sale of the original property. You have another year for construction of the house on the plot purchased, but the construction has to be completed within three years of the sale.

2. If you want to buy an apartment, the time limit is two years from the date of original property sale.

3. Park the gains in a capital gains bank account with a nationalised bank within the date of filing returns in which the capital gains have accrued. This amount along with the accumulated interest needs to be utilised for purchase of a property within two years of the sale date.

Take this example: Raghu sold his house on January 1, 2006 for Rs 80 lakh (Rs 80,00,000). He bought it on December 31, 2002 for Rs 35 lakh (Rs 35,00,000). The capital gain is subject to tax as follows:

Sale price: Rs 80 lakh (A)

Indexed cost of acquisition: Rs 38,91,499 (35,00,000×497/447)* (B)

Amount liable for long-term capital gains tax in Financial Year 2005-06: A – B = Rs 41,08,501

* Cost of inflation index is 447 for financial year 2002-2003. And 497 for financial year 2005-2006 ie the cost of purchase is multiplied by the inflation index of the year of sale and divided by the inflation index figure of the year of purchase to get the Indexed Cost of Acquisition.

Basically, you can invest the above gains in Capital Gains Bonds or in another house property to avail of tax benefits. Raghu identified another house, which requires a staggered investment of Rs 30 lakh, which was completed on January 21, 2007.

That amount of Rs 30 lakh has to be deposited in the Capital Gains Saving Account before the date of filing return of the financial year in which it was incurred.

The uninvested portion of the amount liable to capital gains tax is Rs 11,08,501, and the taxes on this should have been paid when he filed returns for Financial Year 2005-2006.

Quick tips

  • In Raghu's case, exemption was available because he owned the house for more than three years.
  • The maximum exemption allowed is equal to capital gains incurred on sale.
  • The new house must be purchased within two years from the date of sale of the house.

Once the new house is bought, ideally you should own it for a minimum of three years or else, the capital gains earlier exempt, will be taxed and you will also have to pay interest and penalties.

 Source: http://wealth.moneycontrol.com/yourstartupkit/tax-planning/sell-your-home-save-tax-/10441/0                                                                         Go to top of page


FAQs on Tax

Elda Christy July 31, 2008

THE very mention of the word tax, may leave you feeling a tad depressed.

But here's a snippet from an old Morgan Stanley advertisement to cheer you up: You must pay taxes. But there's no law that says you gotta leave a tip!

So, even though tax is a fact of life, why pay more than what's due?

Some of you may even be wondering why you need to pay tax at all and what happens if you don't pay it.

Let's play '22 Questions' and get tax-savvy.

What is income tax?

It is a tax that you pay on the income earned by you.

What is considered as income?

If you are a salaried person, your salary from your employer will be treated as income. On the other hand for a businessman, the net profit will be considered as income.

In all there are five heads for income as follows:

  • Salary
  • Property rental income
  • Income from business/profession: This applies for entrepreneurs and small business people who don't get a regular salary income. Some examples are doctors, lawyers, etc
  • Capital gains such as profit from sale of house, land, gold, etc
  • Income from other sources such as interest received on bank deposits, winnings from lotteries or game shows, etc.

Why should I pay income tax?
When your income exceeds the limit set by the income tax department (scroll down for more details), you will have to pay tax on the excess income you earn. It is calculated for the period from April 1 to March 31. This period is referred to as a financial or previous year. The tax money garnered is used for the country's development.

Why should I file income tax returns?
If you have earned income, which is more than the minimum exempt slab during the year then you must pay tax. For men the minimum exempt slab is Rs 150,000 and Rs 180,000 for women.

What is the period for which my income is calculated?
Income earned during the financial year i.e. from April 1 to March 31 is taken into account while calculating tax. Financial year is known as previous year under Income Tax Act.

What is assessment year? What is the difference between assessment and previous year?
In simple terms, assessment year means the current year and previous year means the last or financial year. For example, if you are filing your tax now, year 2007-08 will be considered as previous year and 2008-09 will be considered as assessment year.

What is the last date for filing your income tax returns?
The last date is July 31.

My total income is Rs 100,000. How much tax will be deducted?
There is no tax for men earning an income up to Rs 150,000, women earning up to Rs 180,000 and Senior citizens get an exemption limit of Rs 225,000.

Slabs for 2007-08

New slabs for 2008-09

Up to Rs 110,000: nil

Up to Rs 150,000: nil

110,000 – 150,000: 10%

150,000 – 300,000: 10%

150,000 – 250,000: 20%

300,000 – 500,000: 20%

250,000, upwards: 30%

500,000, upwards: 30%

What documents do I need to file my income tax return?

  • Form 16: Your employer will give you this form. It has information about the income earned and the tax deducted from your salary during the year.
  • Form 16A: This form is also called a TDS certificate and is for tax deducted at source on other income such as interest on bank deposit. It is given to you by financial institutions such as banks or companies, which deduct tax at source every month or year.
  • Summary of all bank accounts or passbooks: You need a summary of all bank transactions carried out during the financial year, which include income earned, investments made, expenses etc.
  • Property details: If you have purchased or sold any property during the year, you will need the details. If the property bought is on loans, do keep a copy of the home loan details with you. If you sold your property then you may be eligible for capital gain tax.
  • Interest certificate: You need this certificate if you have taken a loan from a bank or financial institution, to buy a house.
  • Broker contract notes: Bills for sale and purchase of shares and dividends.
  • Investment details that have not been disclosed in form 16. For example if you have invested in tax-saving tools such as life insurance, Public Provident Fund and it is not mentioned in form 16 issued by your employer, you need the proof of investment.
  • Tax payment challan, if any: If you have paid advance tax, you need to attach the proof.
  • Which ITR Form is applicable to me?
  • There are four forms listed below. Choose your category, accordingly.



If your income is from salary, pension, family pension and interest


Individuals and HUFs* with income from any source other than business or profession


Individuals and HUFs who are partners in a partnership firm and do not have any proprietary business or profession


Individuals and HUFs who have a proprietary business or profession


  • *HUF: Hindu Undivided Families
  • Click here to download the forms.

    What are the charges if I

    file income tax returns after the due date?
    You may have to pay a penalty up to Rs 5,000.

    What should I keep in mind while

    filing my returns?

  • • Avoid overwriting and correction on the form.
    • The form must be properly signed.
    • The document should be filled in block letters.
    • Enter the correct PAN number.
    • Proof of investment to be attached.
    • Original TDS certificates and challans for payments of advance tax and self assessment tax.
    • Mention the date, correctly.
  • Can anyone else sign the form on my behalf?
    Yes, in certain situations. For instance, if you have been away from India and want to file your tax returns, somebody else can sign on your behalf provided you have authorised him (or her) to do so.

    What happens if the form is not signed properly?
    Your form will be treated as invalid.

  • Where do I file my income tax returns?
    Normally, there are separate wards (sub offices of the regional income tax office) assigned for filing your tax returns. Within these wards are circles or divisions (sub offices of wards) for separate classes of people. For instance, if you are a salaried person, you will have to file your returns in a separate ward or circle, which will be different from a government or a private employee filing his returns. Similarly, if your income is less than Rs 10 lakh, a separate ward will be assigned to you and if it's more than Rs 10 lakh it will again be different ward. (Click here to know where you can file your returns.)
  • Is the income tax act applicable only to residents?
    It is applicable to both residents and non-residents. If you earn income in India then you would have to pay more taxes even if you are a non-resident of the country.
  • Who is a resident of India?
    If you have spent more than 182 days in India then you are considered as a resident irrespective of your citizenship.
  • What are receipts? Are all receipts considered as income?
    A receipt is your entire income before tax deductions. Not all receipts are considered as income. Basically, they are of two kinds:

    1. Capital receipt: This is the income earned by selling the source or asset. For example, income earned from selling a property, gold, etc.

    2. Revenue receipt: Income from source such as salary, interest accrued on deposits, rent from property is termed as revenue receipt.

  • Do I need to pay tax on gifts received?

    Gift received in cash, which exceed Rs 50,000, are taxable. However, gift tax is not applicable in the following situations:

    • Cash received from a relative
    • Cash received on the occasion of marriage
    • Cash received through a will or inheritance

  • Who are my relatives?
  • • Your wife or husband
    • Your brother or sister
    • Your wife or husband's brother or sister
    • Your parents
    • Your wife or husband's parents
    • Your parents' brothers and sisters
    • Your wife or husband's parents' brothers and sisters
    • Legal heir, if any
  • What are the benefits of filing my income tax returns?
    One, it's your obligation to file your income tax returns. There may be legal consequences for not doing so.
  • Two, tax paid is utilised for the development of the nation. Last but not the least, it will help you to be in the good books of the financial institutions such as banks. It's useful when you apply for a loan since you need to submit a copy of your income tax returns when applying for a loans.
  • If I have paid more tax when filing my returns, will it be refunded?
    Yes, the excess amount will be refunded by cheque or direct credit into your bank account.

    Disclaimer: While we have made efforts to ensure the accuracy of our content (consisting of articles and information), neither this website nor the author shall be held responsible for any losses/ incidents suffered by people accessing, using or is supplied with the content.