In a bid to make Indian real estate sector more bankable and transparent government had meanwhile opted for breakthrough policy reforms and strategies over the last financial year. Staring from the currency ban with to arrival of revolutionary RERA and unified Tax regime GST market is on the way of inelastic recovery. The ascending market curve proves that the market’s come back with these reforms. Government is doing its every bit to transform real estate industry to be an essential contributor of country’s GDP.
Where noticeable impact has been regarded in primary and secondary real estate market, the rental market has also received co-operative treatment. Incumbent governmental measurements are likely to grip the sector of real estate substantially.
• April 2017: No false rent receipts- Under IT Act section 10(13A) employees can avail tax benefit under House Rent Allowance (HRA). Attending employees are now on asked to submit rent receipts along with landlord’s PAN details (in case the rent amount is beyond 1 lac). This measurement will definitely take into account buying second home on home loan and seeking tax exemption. Recent tribunal law says that the assessing officer can demand proof such as- the leave and license agreement, and a letter to the housing co-operative society informing about the tenancy, electricity bill, water bill, etc.
• June 2017: withholding tax- The new section (194IB) mandates that people paying monthly rents over 50,000 can withhold taxes at 5% on rental payments, and they have to deposit this amount within a mentioned time period. This newly inserted section will extend the range of TDS (tax deducted at source). Now landlords too with higher rental income will come under IT scanner. To claim the TDS benefit amount landlords have to submit full rental income report. Linking of PAN and Aadhar will also narrow the scope of unseen violation. Post demonetization cash transaction gets limited, even between the tenants and the landlords. Both of them now after maintaining clean transaction. Tenants have become more cautious than ever regarding rental agreements and rent receipts.
• July 2017: Introduction of Model Tenancy Act- Replacement of the five-decade-old-buildings is where the big idea derived from. State Cabinet of
Tamil Nadu declared its purpose to insert a law based on Model Tenancy Act circulated by Central Govt. This newly enforced law aims to balance the rights and responsibilities of both tenants and the landlords. At a glance the law says-
1. Compulsory registration of all rental agreements over 11 months.
2. Restriction of security deposit amount to three months’ worth rent.
3. Limiting of tenants’ right to continue residing after the lease period of six months.
Clarity in rental process will influence more owners to rent out their apartments for better income.
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