Norms for tax ben­e­fit on prop­erty in joint own­er­ship in In­dia

Prop­erty Out­look-v Na­gara­jan

The Gulf Today - Business - - SPECIAL REPORT -

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I took home loan while buy­ing an apart­ment in Ben­galuru and also in­cluded my wife’s name for tax pur­poses. But the as­sess­ing of­fi­cer has de­nied ben­e­fits on the ground that the en­tire amount was trans­ferred by me. Please clar­ify. Pu­ran­dar Shetty, Dubai.

The im­por­tant thing while claim­ing dou­ble de­duc­tion is that the prop­erty should have been pur­chased in the name of both the fam­ily mem­bers. In your case you have just in­cluded your wife’s name with­out con­tri­bu­tion from her side. Both of you should make in­vest­ment in the pro­por­tion to your own­er­ship ra­tio in the prop­erty.

You may make in­vest­ment by loan or by in­vest­ing sav­ings or get­ting a gift from blood rel­a­tives. Only if you put pro­por­tion­ate share in the in­vest­ment, will both of you be able to get de­duc­tion for in­ter­est on hous­ing loan in­di­vid­u­ally upto Rs200,000 per an­num per per­son. Sim­i­larly for de­duc­tion for re­pay­ment of hous­ing loan with other tax de­duc­tions as per sec­tion 80C, which are avail­able upto Rs150,000.

While sell­ing my prop­erty I have made cap­i­tal gains re­cently. I would like to in­vest in bonds to claim cap­i­tal gains ex­emp­tion. Is there any mon­e­tary limit while in­vest­ing in such bonds? Rathish, Shar­jah.

Long-term cap­i­tal gains, if in­vested within a pe­riod of six months af­ter the date of prop­erty trans­fer, is ex­empt from tax if in­vested in spec­i­fied bonds. In­vest­ment in bonds is lim­ited to Rs5 mil­lion. In the event the bonds are trans­ferred or re­deemed within three years then the amount claimed as ex­empt un­der sec­tion 54EC, shall be deemed to be long-term cap­i­tal gain of the pre­vi­ous year. If you take any loan or ad­vance on the se­cu­rity of such bonds, you will be deemed to have con­verted such bonds into money on the date on which such loan or ad­vance is taken. In­ter­est earned on these bonds is tax­able as in­come from other sources.

I own a plot of land and com­mer­cial prop­erty in Pune and plan­ning to raise short-term funds by mort­gag­ing the prop­erty. What is the pro­ce­dure in­volved to mort­gage to a fi­nan­cial in­sti­tu­tion? Please clar­ify. Anoop Ge­orge, Dubai.

You can mort­gage the land and com­mer­cial prop­erty with­out the need to ob­tain per­mis­sion from any quar­ters. NRIS/PIOS can mort­gage to an au­tho­rised dealer/hous­ing fi­nance in­sti­tu­tion in In­dia with­out the ap­proval of Re­serve Bank. How­ever, if you wish to mort­gage the prop­erty to a party abroad then prior ap­proval of the apex bank is re­quired. Notes: Large in­sti­tu­tional and lo­gis­tics de­vel­op­ers are bet­ting big on the grow­ing de­mand for ware­hous­ing in In­dia ei­ther by form­ing joint ven­tures with lo­cal part­ners or by in­vest­ing in the sec­tor. There’s more than $2 bil­lion wait­ing to be in­vested over the next few years in the In­dian ware­hous­ing seg­ment. Large for­eign in­vestors are eye­ing more op­por­tu­ni­ties, ac­cord­ing to As­cen­das Firstspace sources.

The joint fund will de­velop 13-15 mil­lion sq ft of port­fo­lio in the next five years, ac­cord­ing to me­dia sources.

Em­bassy In­dus­trial Parks, a joint ven­ture be­tween Em­bassy Group and pri­vate eq­uity firm War­burg Pin­cus, is also look­ing to in­vest $1 bil­lion over the next five years. In 2015, War­burg Pin­cus and Em­bassy Group had to­gether in­fused $250 mil­lion eq­uity cap­i­tal to build in­dus­trial and ware­hous­ing spa­ces across In­dia.

Amid ris­ing con­cerns on in­ad­e­quate in­fra­struc­ture to ac­com­mo­date the rapid ur­ban­i­sa­tion of In­dian cities, the grow­ing for­eign in­vestor in­ter­ests on in­fra­struc­ture projects is a pos­i­tive sign for the real es­tate sec­tor in In­dia. As per me­dia sources, the in­fra­struc­ture sec­tor has wit­nessed 25 deals worth Rs 21,457 crore ($3.2 bil­lion) YTD in 2018 against 42 con­tracts worth over Rs 30,845 crore ($4.6 bil­lion) in 2017.


In­vestors such as Mac­quarie, Canada Pen­sion Plan In­vest­ment Board (CPPIB), Al­liance Cap­i­tal Part­ners, Fair­fax Hold­ings and Global In­fra­struc­ture Part­ners are show­ing a keen in­ter­est in in­fra­struc­ture projects in In­dia. Be­sides this, the cen­tral gov­ern­ment is also giv­ing in­fra­struc­ture de­vel­op­ment as a top pri­or­ity. In the union bud­get 2018-19, the gov­ern­ment has al­lo­cated a to­tal ex­pen­di­ture of about Rs5.97 lakh crore ($89 bil­lion) for the FY 2018.

Ac­cord­ing to Min­istry of Ur­ban De­vel­op­ment (MOUD), the ur­ban pop­u­la­tion in In­dia, which is nearly 377 mil­lion is poised to grow up to 600 mil­lion by 2030. This rapid ur­ban­i­sa­tion cou­pled with in­creas­ing res­i­den­tial and com­mer­cial de­vel­op­ments has put se­vere pres­sure on ex­ist­ing in­fra­struc­ture that had led to var­i­ous prob­lems such as traf­fic con­ges­tion and in­creased pol­lu­tion, di­lut­ing the hab­it­able quo­tient in the fast ur­ban­is­ing metro cities.

This, in turn, is ad­versely im­pact­ing the over­all pro­duc­tiv­ity of the coun­try.

The in­creas­ing in­fra­struc­ture spend­ing by the gov­ern­ment and ris­ing for­eign in­vest­ments into the sec­tor should help to re­duce the in­fra­struc­ture gaps in ma­jor In­dian cities and cre­ate room for fu­ture pop­u­la­tion growth as well, ac­cord­ing to Col­liers In­ter­na­tional. THE AU­THOR IS A BUSI­NESS AN­A­LYST COV­ER­ING IN­DIAN PROP­ERTY MAR­KET

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