Do I need to pay transfer fee to housing society?

Q.I have purchased the house of my brother. Do I have to pay a transfer fees to my building society. They are not offering my NOC for registration purpose. Please suggest under the Society ACT any references to avoid my Transfer Fees. They are charging Rs 25,000 for the same. Please provide me the Section and Sub section Clause to avoid the same. —Rakesh Shelar

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A.The Societies Registration Act 1860, deals with broad provisions regarding the registration of a Society. The provisions of the said Act empower the Managing Committee to make its own bylaws for day-to-day management of the Society. The provisions regarding transfer fee for the purpose of recording transfer of a flat from one person to another must have been a part of such Bye-laws framed by the society for the purpose of its day-to-day operations. I suggest that you should make the payment of transfer fee to avoid any litigation on this account. In case the aforesaid bylaws / rules or the resolution of the general body of the society provide for payment of a transfer fee it may not be possible for you to avoid the payment of such transfer fee.

Do I have to pay advance tax?

Q. I am a senior citizen and a government pensioner drawing nearly Rs50,000 per month. I have bank interest nearly Rs20,000 per month. I had purchased a flat and am getting house property income of Rs18,000 per month as a rent from November 1, 2015. My query is

• Whether I have to pay advance tax or not, if it is, how much because previously I was not paying any advance tax.
• I have an ancestral house which had been built in 1940. Now I am going to sell that for Rs29,00,000. Please let me know how much I have to pay the long -term capital gain. If I have to save this LTCG what should do. — Anshul Jairath

A.On the basis of the facts given in the query it is evident that you are not having any income under head ‘Business or Profession’ and therefore, you are not liable to pay advance tax.

• It is not possible to compute the amount of capital gain and the tax liability thereon in the absence of fair market value of the house as on 1.4.81. The house having been constructed in 1940, its fair market value as on 1.4.81 would be sufficiently higher than the cost of the plot and construction cost incurred in the year 1940. It would, therefore, be advisable to get the fair market value ascertained as on 1.4.81from an approved valuer so as to work out the correct amount of capital gain and tax liability thereon.

Can I claim stamp duty?

Q. Can I claim registration fee/stamp duty fee paid for the house that I purchased recently? — Balkrishan

A.Section 80C of the Act provides that in computation of the total income of an assessee payment made by way of stamp duty/registration fee, and other expenses will be deducted, the income of which is chargeable to tax under the head “Income from House Property” (or which would, if it had not been used for assessee’s own residence), in his favour. Therefore, in case you have paid the registration fee and stamp duty for the transfer of the house in your name, the deduction will be allowed of the sum so paid under Section 80C of Act within the overall limit of Rs1,50,000.

Children are legal heirs in joint property

Q.I have a residential unit of Housing Board Chandigarh in Manimajra. This house is in joint name with my wife. My wife expired two years back. How can I get the house transferred in my name only in the housing board records? I have three children and all of them are married. — Baldev Raj

A.You have not indicated in the query as to whether the funds for the purchase of the residential house in Manimajra had been provided by you or by your wife had also contributed any amount towards the purchase of such a house. Since she was a joint owner it is presumed that she did contribute her share towards the purchase of the house. The reply to your query is based on the said presumption.

According to the provisions of the Hindu Succession Act 1956, your children and you are the legal heirs in respect of the share of your wife in the house. You will have to, therefore, seek no objection letters or relinquishment deeds from your children and file the same with the housing board so that the house can be mutated in your name. You may also check up with the housing board if any other document is also required from the other legal heirs for mutating the house in your name.

Tax liability on capital gain

Q. I am a government employee with gross income of Rs6,75,000 per annum. I had purchased a flat of 890 sq ft in 2004 at Pune for Rs7,15,000 (with Rs6,00,000 loan and Rs1,15,000 own contribution). This flat had been purchased with my wife as co-owner, however, funding was entirely done by me. Now I am selling said flat for Rs36,00,000. My wife is a housewife who earns Rs2,00,000 from tuitions. My queries are:

• If I want to keep the whole amount of sale proceeds as FD in a nationalised bank what will be my tax liabilities.
• If I want to buy a plot from the said sale proceeds what will be my tax liabilities
• If I buy a flat again from the sale proceeds what will be my tax liabilities.
• Where can I invest the sale proceeds to save tax and get good return too? — Shantaram Bhatkere

A.Your queries are replied hereunder:

• The indexed cost for the flat purchased in 2004 would work out at Rs16,10,240 on the basis of the index applicable for financial year 2015-16. After taking into account the said indexed cost, the amount of capital gain would work out at Rs19,89,760. You will be liable to pay a tax of Rs4,09,891 in case the entire amount of sale proceeds is invested in a fixed deposit with a bank and the amount of capital gain arising on the sale of the flat is not utilised for purchase/construction of a residential house within the specified period or the amount of capital gain is not utilised for purchase of tax-saving bonds within six months of the date of sale of the flat.
• In case you buy the housing site i.e. a plot for construction of the house but you do not complete the construction of house within three years after the sale of the flat, you will be liable to pay the amount of tax as specified in (a) above.
• In case you buy a flat by utilising the entire amount of capital gain within one year before or two years after the date of sale of the old flat, you will not liable to pay tax on the amount of capital gain of Rs19,89,760.
• You can save tax on the amount of capital gain only if the amount of capital gain is utilised for purchase/ construction of a residential house within the period specified hereinabove or the amount of capital gain is utilised for purchasing the tax-saving bonds within the period as aforesaid. There is no other avenue available for saving tax on the amount of capital gain. You should consult an investment advisor for the purpose of ascertaining the avenues available whereby you can get the maximum return on the amount invested by you.

It may be added that the flat in Pune was purchased in joint names (yourself and your wife). However, the amount of capital gain would be taxable in your hands as the amount for the purchase of the flat was entirely funded by you

Is Service Tax payable to maintenance agency in township?

Q.I want to know if Service Tax is applicable on Capital Replacement Fund charged by maintenance agency in township of a builder? —Y.K. Jain

A.Service Tax is payable in case service has been rendered by a person to another person. Service means any activity carried out by a person for another for consideration and includes a declared service, but shall not include-

(a) An activity which constitutes merely

• a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or
• such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of article 366 of the Constitution; or
• a transaction in money or actionable claim;

(b) A provision of service by an employee to the employer in the course of or in relation to his employment;

(c) Fees taken in any Court or Tribunal established under any law for the time being in force.

Capital replacement fund charged by a maintenance agency in township of a builder is not in the nature of the service provided by a person for another for consideration and in my opinion should not be chargeable to service tax.