Looking For Flats In Kolkata? Are You Ready Financially?

Whatever the reason may be, if you have decided to buy a property of your own, you should make sure you are monetarily prepared. To make the process as stress-free as possible, it is necessary to be prepared prior the search for your dream abode begins. Whether you are relocating or looking for investing in flats in Kolkata, the initial step is to make a plan in advance. And this is exactly where we can be of help.

  1. CIBIL Score:

    While your search for flats in Kolkata hasn’t hit the wall, you can still be ready you’re your CIBIL Score. Knowing your credit score is the first major step that you should take. Check for any miscalculations in the credit report and review it scrupulously to avoid any oversights. It is now easily possible to obtain CIBIL Scores online as well. With a high CIBIL Score you can get home loans at cheaper rates of interest and also easy approvals of loans.

  2. Well-organized Savings:

    Keeping savings in the right amount at the right time helps in paying the down payment easily in future while investing on the interested property. Proper savings can be of great help while making investments in other accessory expenditures while not being worried about the home loan that you have applied for. More than anything it helps to make the financial institutions believe in you and smoothen the loan approval process.

  3. Avoid additional credit:

     Once you have decided to plan for a new home, it is advisable to stop taking additional credit 6 months prior to making an investment or applying for a loan. Swiping your credit card too often may not be a good idea also. It is important to keep in mind that this may have an undesirable effect on your CIBIL Score. Hence, being extra cautious is the mantra.

  4. Check the whims:

    In the process of owning the best of the flats in Kolkata, watch yourself from becoming extravagant in your pursuit. Plan your investments in a manner that you can afford to keep up with what you have invested in. You should be aware of where you need to confine yourself. Maintaining the cash-flow is as necessary as finding solace. It is more important to enjoy your stay than ending up owning an over expensive property which you cannot afford to maintain.

  5. The DRC Fund:

    You may have never even heard of such funds. Well, you are not mistaken. DRC is short for Deposit Reserve and Contingency Fund. Although you are saving for your future investment or you are paying your EMI’s for it, keeping some money aside for your daily requirements is mandatory. The deposit fund should be at least 20% of your total savings. The Reserve Fund, i.e., your daily and monthly expenses, seen or unseen, like repairs, new furniture, etc. must be kept aside. And the last one, Contingency Fund, as the name suggests, for unforeseen expenses such as accessory alteration or renovations.

A range of apartments is available these days in and around Newtown and Rajarhat in Kolkata. Some real estate developers also offer home loan solutions while booking a project with them. They also help you plan your investment to make it easier for you to pay the installments. While you are still searching for the right property, keep an eye on your assets and savings. Let not the search for the perfect home put a hole in your pocket.

Has Real Estate Projects Been Affected By GST?

The year 2017 had seen its ups and downs with the advent of demonetization itself. Before even, we saw the face of stability, sales, and launch of new homes went down because of more focus on under construction projects by the developers. The real estate saw a further downfall when the government introduced a 12% GST on under construction real estate projects along with other goods and services. However, the only ray of hope was seen when the leading developers increased their market share every 3 months and developers and investors from Mumbai and Pune contributed more than 45% on demand and supply of the whole country. The GST has had its impact on all sectors and here we discuss how it can affect your dream of moving into a new home.

Impact of GST on Under Construction and Luxury Real Estate Projects

  • Ongoing residential construction services are subjected to 12% tax with total input tax credit (ITC) and are non-refundable in case of surplus ITC. Developers in Tamil Nadu, Karnataka, and Andhra Pradesh can expect improvement in margins (up to 12% from 10-11%) due to the availability of input cost credits provided there is no price revision in future. The top real estate builders in Kolkata, who do not fall under these regions may increase their property prices by 6% with no input credit available to them.
  • In case the credits are passed on completely by the developers, the base price is expected to come down and the home buyers are the one to gain from this under the GST rule. Although stamp duties will be applicable in case of both under construction and completed projects.
  • Property under the luxury real estate projects are subjected to 12% ITC and is not adequate to bring down the tax liability due to overhead taxes. Only the basic construction cost is supposed to lower by a very thin margin in case of luxury projects.

Impact of GST on Ready Properties

Ready properties for sale can wave off the GST only if the OC for the project has been established. According to a report from CRISIL, excise duty and VAT paid by a developer was different for every state. This disparity has been sorted out by imposing 28% and 18% GST on cement and steel and 28% on paint and other white goods. This has led to 12% tax on the final product. The tax amount applicable to the land and the entire cost is 12% which makes it easier for the developers to avail the input credit. The home buyers are thus relieved of the GST liability.

However, the developer has to pay the GST on the complete project and the input credit is only claimed on the construction cost. This causes a gap of 30% which the builder in order to bridge will raise the price of the property whether or not you choose to buy a ready-to-move-in or an under construction property.

What to expect?

  • After the demonetization in India last year, many potential buyers were expecting a drop in real estate prices which wasn’t happening.
  • With 2018 budget, buyers can expect reduced stamp duty rates and home loan rates. If the Government looks deeper into the matter and realigns the stamp duty rates with the GST rates or waives off stamp duty rates, the price of property an witness a subtle fall which is beneficial for home buyers in 2018.
  • Presently under the GST regime, real estate is applicable for 18% tax along with only 1/3rd abatement for land. Since the share of land in metro cities is more than half of the total project cost, it is not wrong to vouch for increment on abatement of land to 50%.

Government Plans for Real Estate Projects-2022

The ‘Housing For All By 2022’ venture by the Government targets at delivering 10 million houses out of which 95% is to be constructed for Economically Weaker Sections (EWS) and Lower Income Groups (LIG). People are expecting lowered tax rates from 18% to 12% GST on property purchase with abatement for land raised to 50% hence bringing down the tax rates to further 6% GST. This program can prove of huge advantage to the actual cause of the project by the year 2022. For those looking forward to purchasing new residential projects in Kolkata, can hope for a better scope in the coming 2 years.

Can NRIs Purchase A Property In Kolkata Too?

You had the wings to fly, and now your roots are pulling you back? Every individual feels the urge to come home once in their lifetime so strong that they try all ways and means to fulfill that wish. Bengalis residing abroad are always looking forward to investing in a property in Kolkata for future use. However, countries and continents apart, old age and religion may not keep you from getting what you want, but the law can. Property acquisition for non-residential Indians has certain constraints.

Do the RBI guidelines allow an NRI to own a real estate property in Kolkata?

The RBI does not prohibit any NRI from purchasing or owning a residential or commercial property in India. Although the NRIs are free to purchase or inherit a property in India, they cannot buy any agricultural land or plantation property without special permissions.

The Foreign Exchange Management Act (FEMA) has laid down few rules and regulations for the NRIs and Persons of India Origins (PIOs) interested in acquiring property in India. Every NRI or PIO shall be treated at par for investing in real estate property.

  • Being an NRI, you will not require any permission from the RBI to purchase any residential or commercial property in India.
  • There is no need of sending any communication or intimation to the RBI regarding property purchase.
  • The income tax laws also do not prohibit NRIs from procurement of one or more real estate property in Kolkata or anywhere else in India.
  • The investor can apply for a loan to any bank by online or offline methods too.
  • NRIs are not eligible to buy or own any farmhouses or plantation in India. They shall require special permission from the RBI for such kind of land acquisition.
  • All transactions done in Indian currency maintained in a non-resident account by the FEMA and RBI regulations.
  • The NRI interested in purchasing a real estate property has to give Power of Attorney (PoA) to one of their friends or relatives for compliance with processes in India.
  • The PoA can be customized to give full or restricted rights to the representative.

Co-owning a property isn’t a trouble too

So you are looking forward to jointly owning your property in Kolkata with someone? As an NRI you can do that too. The Government of India allows an NRI or a PIO to jointly own a property in India. Your second holder has to fulfill the following criteria:

  • He or she has to be an NRI or PIO
  • One should be eligible to invest in any property in India
  • The second owner should contribute to the property acquisition

What if a person who owns properties in India, subsequently, becomes an NRI?

It may happen that an individual, who is a resident of India has invested in a real estate property and has later attained citizenship of another country where he or she has started residing becoming an NRI in the process. In such situations too, one shall continue to be the owner of the property irrespective of his or her duration of stay in the country. In this case, a person owning an agricultural land or a farmhouse shall also remain the owner of the same. They are also free to rent, sell, transfer or gift their property to an Indian or an NRI post all taxes have been paid on time.

Certain real estate builders in Kolkata can also give proper guidance regarding the legal aspects and tax issues too before purchasing any property in Kolkata. For more details, contact Realtech Nirman.