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Actual savings under PMAY and the Budget



Actual savings under PMAY and the Budget


If you buy a house under the ‘Pradhan Mantri Awas Yojana’ scheme, and also avail tax benefits under the provisions of Budget 2017, your total savings could be over Rs 2.40 lakhs on a home loan taken for a tenure of 20 years

If you buy a house, the central government will lend support with over Rs 2.40 lakhs up-front. The Union government has given a range of subsidies on interest payment to home loan borrowers, with a household income of up to Rs 18 lakhs. The subsidy amount will be paid to the housing finance companies upfront. This policy has a dual purpose one, drive up the sale of houses to push the sector and, two, achieve the ambitious programme, ‘Housing for all by 2022’.

At present, subsidy is given to low income households, with a total annual income of Rs 6 lakhs per annum. The new scheme’s outline was announced by the prime minister on December 31 in his address to the nation, whose details have been finalised only now and are likely to be notified soon. The programme will be covered under ‘Pradhan Mantri Awas Yojana’ (PMAY).

A government source said that though the scheme is to be notified now, the benefits under the scheme were already launched from January 1, 2017, itself. Thus, all those who bought houses on and after January 1, 2017, are entitled to the benefit. Apart from this, all the schemes of subsidy will now be available on a 20year home loan, including the one for low income group, which was earlier a 15-year home loan only.

Under these schemes, an interest subsidy at the rate of four percent for loans of up to Rs 9 lakhs will be extended by the government to those whose household’s annual income is up to Rs 12 lakhs. Similarly, an interest subsidy at the rate of three percent for loans of up to Rs 12 lakhs will be given to those having a household income of up to Rs 18 lakhs. At present, the government is already giving a subsidy of 6.50 percent on a loan of up to Rs 6 lakhs to those whose household income is less that Rs 6 lakhs per annum.

This does not mean that the loan amount is capped.If a person with a household income of Rs 10 lakhs borrows Rs 35 lakhs to buy a house, he will still get the mandated four percent interest subsidy on Rs 9 lakhs. Suppose this person borrows the amount at 8.50 percent, he will then pay an EMI at 4.50 percent on Rs 9 lakhs plus an EMI at 8.50 percent on the rest of the amount Rs 26 lakhs in this case.

Owing to the subsidies from the government, the effective EMI will be reduced by Rs 2,117, if the repayment period is 20 years.This subsidy will not be given every month to the lender. Instead, the government will pay around Rs 2,43,894 to the lender upfront, so that the EMI at the contracted rate falls by this amount.

The interest subsidy at the rate of four percent for a 20-year loan of Rs 9 lakhs results in a reduction of EMI by Rs 2,117, when the home loan is taken at 8.50 percent. According to the scheme, there is no restriction on the loan amount that a homebuyer with an annual household income of Rs 12 lakhs can avail, except that the four percent subsidy is available on Rs 9 lakhs alone.

But if the borrower’ s in come is more than Rs 12 lakhs per annum but up to Rs 18 lakhs, he can get three percent subsidy on only an amount of up to Rs 12 lakhs, from his total home loan. In this also, there is no cap on loan amount or the value of the property that such a person can buy. However, the maximum benefit in this leads to a reduction in EMI by Rs 2,159, if borrowed at 8.50 percent, which is equivalent to a reduction in the bor-rowed capital by Rs 2,48,810.

For a low income group household earning up to Rs 6 lakhs per annum, the interest subsidy is 6.50 percent on an amount of up to Rs 6 lakhs from the total loan amount, which reduces the EMI by Rs 2,172, if the loan is borrowed at 8.50 percent. This is equivalent to a reduction in the borrowed amount by Rs 2,50,240.

Even after availing this benefit under PMAY, one can avail income tax benefits on the home loan, which can go up to Rs 61,800 if the person’s income is in the 30 percent tax bracket and up to Rs 41,200 if the income is in 20 percent tax bracket, as the person is allowed to deduct the interest payment of up to Rs 2 lakhs from the taxable income.

If a person is buying the first house at a capital value of less than Rs 50 lakhs by taking a loan of Rs 35 lakhs or lesser, the benefit will increase substantially.In this case, a person having a household income in the 30 percent marginal tax bracket can get a maximum annual tax benefit of Rs 77,250, while those whose income is in the 20 percent tax bracket will be able to save up to Rs 51,500 annually. In this case, too, a deduction of Rs 2.50 lakhs is allowed.

National Housing Bank (NHB) and HUDCO are the nodal agencies to implement the schemes. At present, the scheme for the low income group is being rolled out. Till Decem-ber 31, 2016, the government has given subsidy to around 18,000 housing units with the total subsidy disbursal amounting to around Rs 310 crores.

A senior NHB official said following the revision of the scheme to include middle income group households, the disbursal rate is likely to pick up.

Actual savings under PMAY and the Budget


Under A New Affordable Housing Policy, Assam To Build 83,000 Houses



Assam To Build 83,000 Houses

Under a new Affordable Housing Policy, Assam government said it would build 83,000 houses in urban areas for the financially weaker section of the society.

CM Sarbananda Sonowal directed the Urban Development Department to prepare the policy at the earliest.

According to an official release, “Government of Assam would soon adopt an Affordable Housing Policy in the state taking into consideration the specific needs of the financially weaker section of the society and effecting suitable modification of the existing by laws.”

The decision was taken at a meeting in which proposed projects of the Assam State Housing Board were discussed.

During the meeting the CM said, “Our government is committed to ensure housing for all and we would construct 83,000 houses at urban areas for the Lower Income Group (LIG) and Economically Weaker Section (EWS).”

The Assam State Housing Board was asked to to complete survey of its assets and conduct their valuation in a time bound manner so that bigger projects could be taken up by the CM.

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Jaypee Group Sets Target Of 24000 Flats By 2020



Jaypee Group

2020 is targeted by the debt-ridden Jaypee group for the completion of pending 24,000 flats in Noida. The construction has been started with a cost of about Rs 8000 crore. Out of this amount, Rs 6000 crore would come from the home buyers and the rest would have to be infused, says the Jaypee advisor Ajit Kumar. Jaypee group started the construction of 32,000 flats in its township at Noida in 2007, out of which 8,000 units have been delivered so far.

These 28,000 units from the total flats were taken up by the Jaypee Infratech, which has already gone into insolvency, while the remaining 4,000 units were with Jaypee group’s flagship firm Jaiprakash Associates. Now under the orders of Supreme Court and National Company Law Tribunal (NCLT), Jaypee group intends to complete and deliver all 32,000 units by 2020.

6,300 flats and 1,500 plots have already been delivered by the group, aiming for a target of 5000 units by the June. Applications for 1,500 occupational certificates have been submitted, whereas additional certificates for 3,500 units are in the process.

Jaypee group is in the hold of enough assets, including vacant land parcels, if in case they have to pay all bank dues and a heavy compensation to home buyers for the delays in possession of flats. As the group is investing about Rs 20-30 crore a month on construction by the funds coming from toll collection of Yamuna Expressway and home buyers.

An IDBI Bank-led consortium application was submitted to the National Company Law Tribunal, seeking resolution for Jaypee Infratech under the Insolvency and Bankruptcy Code, later getting a successful admission.

A few months later, an NCLT-appointed Insolvency Resolution Professional (IRP) took over Jaypee Infratech, for the recovery of bad loans. As Jaypee Infratech faced huge protest from home buyers, due to a major delay in the deliveries of the real estate projects.

While handing over the management of Jaypee Infratech to IPR, the court placed a restraining order on its real estate promoters, directors and managing director, barring them from any kind of international travel, without court’s prior permission. Solely concerned about the home buyers, the court assumed a non-lenient behavior in this matter.

On September 11, the Supreme Court appointed senior advocate Shekhar Naphade as an external supervisor to assist the proceedings of the IRP, which will submit a resolution plan indicating how to safeguard the interests of home buyers and secured creditors.

On October 27, a public notice was issued by IRP Anuj Jain, seeking applications from entities with regard to the resolution of Jaypee Infratech Limited. Several expression of interest (EOIs) got submitted under it, as the resolution plan needed to be approved by the creditors and the NCLT.

The Yamuna Expressway, connecting Delhi and Agra, is one of the major constructions done by the Jaypee Infratech in the field of road construction and real estate business.

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Drafting A Rental Agreement



Rental Agreement

The rent agreement is a document that seals the arrangement between a landlord and the tenant, it is to help them, forming a good healthy relationship. However, all the provisions and necessary laws should be mentioned clearly in the document as it can be a potent instrument that can be used and misused. With an aim to create a mutually beneficial relationship, these agreements are made to avoid any kind of disputes between the tenant and the landlord.

The basic necessity for an agreement is the background check, a crucial element for tenants as well as landlords, which must be completed before entering into a rental agreement. As the sole purpose of a background check is not only security but it is also important for a perspective of evaluating the advantages and disadvantages of renting.

For the tenant, applying for a rental agreement is like a job interview. As there is need to become presentable in a mature, trustworthy and financially responsible manner. Similarly, the landlord should make sure that the tenant presents the right credentials. Therefore, the agreement calls for a thorough background check. From the tenant’s employment history, contact information and the proof of income, everything has to be taken care of.  

Almost all of the rental agreements are made on notarised stamp papers. There exist some chances of violation from either the parties, despite the document being a legal contract. Therefore, to avoid these violations, the agreement must be registered at the local sub-registrar’s office. Sound clauses and provisions in a lease agreement, only add to the integrity of the document, protecting the interests of both the parties.  

With a proper definition of the roles and responsibilities of the tenant and the landlord. A proper format for the provisions, emphasizes on the mentioning of the tenancy period, the renewal time of the lease, the clause of repair and responsibilities, the frequency and the date of rent payments. All the repairs and maintenance should be completed before taking up a property on rent. All the electrical wiring and plumbing must be checked before occupying, as it will safeguard the tenant from unnecessary expenses that may crop up in future. Pending dues such as electricity and development charges must be checked beforehand.

During the signing of the rent or lease agreement, the presence of two known witnesses is a must. Due to the deterioration of the law stature and the order situation in major cities, the authorities are pressing for the verification of the tenants. The landlords are also asking for the copy of employment letters from the tenant’s employer. A Landlord must insist on a police verification for a tenant, who is a non-native of the city.  

In general, there are ready templates being used by most of the lawyers, who assist in framing the rent agreement. But it is not necessary that these provisions can’t be changed. All the needs can be tailored in the agreement, according to the requirement, with clauses that are mutually acceptable to the tenant and the landlord.

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