How can I claim home loan refund?
S.C. Vasudeva
Q.In February 2007 I took housing loan of Rs 7 lakh from Karnataka Bank @ 9.50 per cent PA on fixed rate of interest for a term of 15 years. Later they charged 3.50 per cent extra rate of interest as RBI charges. The bank had not revealed these charges regarding the difference of fixed/flexible floating rate of interest and I, too, did not have any knowledge in this regard. Therefore I have to pay 13 per cent PA rate of interest. Now I have approached a number of banks to take over this loan, but they have all refused as I am nearing 70 years now. On 01-07-2010 the RBI changed the present BPLR System of loan interest to the base rate of interest , but the bank did not inform me and has been charging 13 per cent PA rate of interest w.e.f form 01-07-2010 onwards. In November 2015 it was learnt that the RBI had already issued the above mentioned guideline to all the banks to migrate the existing rate of interest on base rate rate of interest. Therefore I applied and my rate of interest was reduced to 10.25 per cent PA w.e.f 26-11-2015. How can I claim the benefit of rate of interest w.e. f 01-07-2010 to 26-11-2015 as per the direction of RBI. — Poonam Patwal
A.You can appraoch the Reserve Bank of India requesting them to intervene for the refund of interest charged in excess by the bank. It is also suggested that before going to RBI it will be advisable to write a letter to the Chairman of the bank pointing out the error committed by the branch and request him to direct the branch to refund the excess amount charged by the branch. In case no reply is received from the Chairman, you may approach the RBI. You can also approach the Consumer Court as the bank is providing a service and therefore, this issue should come within the purview of the Consumer Court.
Helping sons buy homes from capital gain
Q.Affected by 1984 anti-Sikh riots, I sold my house in Delhi for Rs 2.5 lakh and purchased another in Mohali worth the same value in 1985. I lived in this house from 1985 to 2015. During these 30 years my two sons got married and have their own families now. I retied from government service in 2001. My younger son separated from us in 2006 and started living with his family; supported by his in-laws who purchased a house for him in Mohali and helped him financially also. In the financial year 2015-16 I sold my house for Rs 80 lakh and this entire amount was utilised as under:
(a) I bought a flat for Rs 50 lakh in the narne of my elder son in Kharar area.
(b) Rs 30 lakh was paid to my younger son's in-laws to clear the outstanding amount of the house bought for him. Since I have sold my house for Rs 80 lakh and spent the amount or purchasing two different houses for my two sons, which can be taken as their share in my property or a gift to each to them from my side. My queries are:
(i) Am I required to show thc above transactions in the income tax return for the Assessment Year 2016-17? If yes, which IT return form do I need to fill up?
(ii) Is the sale and purchase of property carried out by me as above in order?
(iii) Is any income tax or capital gain tax due to be paid by me in view of the above transactions? — Surinder Singh
A.Replies to your query are as under:
a) You are required to show details of the amount of capital gain earned on the sale of the flat. The relevant return form in your case should be Form No. 2.
b) There seems to be nothing wrong with the sale of property provided the registration has been done on prevailing circle rate and stamp duty has been paid accordingly.
c) You will be liable to pay tax on the amount of capital gain as the new flat has been purchased in the name of your son and the balance amount out of Rs 80 lakh i.e. total amount of consideration has been utilised for repayment of loan. The amount of capital gain would be computed with reference to the sale consideration or the amount computed with reference to the prevailing circle rate from which would be deducted the amount of indexed cost of the flat which had been purchased in the year 1985.
Can I contest my father’s Will?
Q.We are five sisters and three brothers. All are married. My late father had made a registered Will in 1995. He died in 2006. Accordingly immovable property (land) was mutated among my three brothers. We (me and my younger sisters) have been living in the UK for the past 30 years. My mother also died four years back. The registered Will, however, was made without our consent. Kindly advise:
1. Can we claim our shares from father's immovable property as it was mutated in our absence and knowledge? If we can, then how?
2. If my brothers deny my 1/8 share in the property then can I go to court?
— Charanjit Kaur
A.It seems from the facts given in the query that the Will made by your father contained a clause that the immovable property owned by your father shall be inherited by his three sons. This is evident from the fact that the mutation in respect thereof was done in favour of your brothers. The authorities must have relied on the said Will made by your father. You will have to contest that the Will was made by your father under coercion or on account of undue influence. This involves litigation and you will have to file the case in the Court in this regard. It may be added that the authority which mutated the immovable property in the name of your three brothers should have obtained a no objection certificate from both the sisters. It seems it was not done and you can therefore, take up the matter in the Court against the authority which mutated the plot in the name of your brothers on the basis that the action taken by them was not valid as they did not obtain a no objection certificate from both of you.
It would, however, be advisable to contest the Will instead of taking up the matter of mutation in the Court. You should consult a lawyer before taking any step in this regard.
Should rental income be divided among owners?
Q. I , my wife and my son have purchased a shop for Rs 35 lakh. Out of the total amount a sum of Rs 30 lakh has been paid from my wife’s savings and rest Rs 5 lakh by me. My son has not made any monetary contribution in this deal. Now we are receiving rent from this shop. Will it be right to divide rent income equally amongst us for tax purpose? We have not mentioned about share of anyone in registery papers. — Vinay Sharma
A. It has not been indicated in your query whether the amount of Rs 30 lakh withdrawn from bank account of your wife was her streedhan or it represented the amount gifted to her by you. Reply to your query is based on the presumption that the amount of Rs 30 lakh contributed by your wife represented her streedhan. You have stated in the query that the registry papers do not mention the share of the three co-owners. In absence thereof, it can be presumed that each one of you had 1/3 share in the ownership of the shop. However, the amount of rent attributable to your share shall be divided into two parts - amount attributable to your share of investment i.e. Rs 5 lakh and the balance amount will be treated as gift to you by your wife which shall be considered as part of your wife's income in accordance with the provisions of Section 64 of the Income Tax Act 1961 (the Act). As far as the share of your son is concerned, the amount paid by your wife will be treated as a gift to him and therefore 1/3 of rental will be included in his income.
Gift deed needs to be registered
Q.My mother wants to gift one flat in Orissa to her sons. Do we need to make only a gift deed or register the same also? In case of getting a registry in the name of each son will we need to pay stamp duty also? — Ashok Kumar
A.A gift deed will have to be registered and stamp duty leviable on the basis of the market value of the flat which will be chargeable at the time of registration of such gift deed. An immovable property valued at more than Rs 100 cannot be transferred without document purporting to transfer the property is registered with the Sub-Registrar. This is in accordance with the provisions of Transfer of Property Act 1882 read with Registration Act 1908.
Do I need to pay Service Tax to builder?
Q.I bought a 2 BHK flat from GMADA worth Rs 50 lakh (tentative price). Earnest money amounting to 10 per cent of the total cost was deposited in January 2012. The Letter of Intent was issued to me in June 2012 and according to their plan of payment, I paid 95 per cent amount of flat in August 2012. They started construction in 2013 and now possession letter has been issued along with a demand for the remaining 5 per cent amount. My
queries are:
(a) Is Service tax is applicable on Rs 55 lakh. The GMADA has written in possession letter that service tax to be paid as per prescribed rate.
(b) There is a Delhi High Court judgement regarding no service tax is applicable on under-construction property. Is it applicable in my case?
— Rajinder Singh
A.According to the provisions of the Finance Act 1994, Service Tax is leviable on the construction of a residential complex having more than 12 residential units which has common area and one or more facilities or services such as park, lift, parking space, community hall, common water supply, effluent treatment system. It is presumed that the flat purchased by you is covered within the above category and accordingly, the Service Tax would be leviable on the service element covered within the total amount payable by you. The constitutional authority of service tax on construction service in its present form was upheld by Maharashtra Chamber of Housing Industry vs.Union of India (2012) 17 taxman.com 272 (Bombay) and also in the case of G.S. Promoters vs. Union of India (2010) 8 taxman.com 271 (Punjab & Haryana). In view thereof, any Delhi High Court Judgment may not be of any help to you.
