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The Income Tax department has issued a crucial clarification regarding the calculation of long-term capital gains (LTCG) tax on real estate properties acquired before April 1, 2001. This update is particularly relevant in light of the changes introduced in the Union Budget for the fiscal year 2024-25. Reduction in LTCG Tax Rate The Union Budget 2024-25 has brought a significant change by reducing the LTCG tax rate on real estate transactions from 20 percent to 12.5 percent. However, this reduction comes with the removal of the indexation benefit for properties purchased after April 2001. This means taxpayers can no longer adjust the cost of acquisition based on inflation for properties bought post-April 2001. Clarification on Acquisition Cost for Properties Purchased Before 2001 For properties purchased before April 1, 2001, the Income Tax department has clarified that the cost of acquisition can be determined by either the fair market value (FMV) as of April 1, 2001, or the actual cost of the property. The FMV used should not exceed the stamp duty value. This clarification helps in calculating the LTCG more accurately for such properties. Understanding Fair Market Value and Indexation The FMV, which should not exceed the stamp duty value, can be utilized to establish the base price for calculating the indexed cost of acquisition. This indexed cost is then subtracted from the sale price to determine the LTCG, which will be taxed at the revised rate of 12.5 percent. Example of LTCG Calculation for Properties Purchased Before 2001 To illustrate, consider a property acquired in 1990 for Rs 5 lakhs. As of April 1, 2001, its FMV was Rs 12 lakhs, and its stamp duty value was Rs 10 lakhs. If this property is sold on or after July 23, 2024, for Rs 1 crore, the acquisition cost would be Rs 10 lakhs (the lower of the FMV and the stamp duty value). Using the cost inflation index (CII) for FY25, which is 363, the indexed cost of acquisition would be Rs 36.3 lakhs (Rs 10 lakhs * 363/100). Calculation of LTCG and Tax Implications The LTCG in this scenario would be Rs 63.7 lakhs (sale price of Rs 1 crore minus the indexed cost of Rs 36.3 lakhs). At a tax rate of 12.5 percent, the LTCG tax payable would be Rs 7.96 lakhs. Impact of Budget Changes on Real Estate Investors The reduction in the LTCG tax rate to 12.5 percent is a welcome relief for real estate investors, providing significant savings on tax liabilities. However, the removal of the indexation benefit for properties purchased after April 2001 means that investors will need to carefully consider the tax implications when planning their investments and sales. Key Takeaways for Taxpayers The LTCG tax rate on real estate has been reduced to 12.5 percent. The indexation benefit has been removed for properties purchased after April 2001. For properties purchased before April 1, 2001, taxpayers can use either the FMV (not exceeding the stamp duty value) as of April 1, 2001, or the actual cost of the property to calculate the acquisition cost. The indexed cost of acquisition will be used to determine the LTCG, which will be taxed at the revised rate. Conclusion The clarification provided by the Income Tax department ensures that taxpayers have a clear understanding of how to calculate the acquisition cost for properties purchased before 2001. This update, combined with the reduced LTCG tax rate, offers a more favorable tax environment for real estate investors, although it necessitates a careful assessment of the implications of the removal of indexation benefits for newer properties. By staying informed about these changes, taxpayers can better manage their real estate investments and optimize their tax liabilities. Telangana Real Estate
  • July 27, 2024

Acquisition Cost of Real Estate Purchased Before 2001 for LTCG Calculations

The Income Tax department has issued a crucial clarification regarding the calculation of long-term capital gains (LTCG) tax on real…
Hyderabad- Pre Launch Booking of Flats and Villas Fraud in Hyderabad Real Estate Introduction Hyderabad, the city of pearls, has witnessed a rapid transformation in its real estate sector. The lure of lucrative investments has drawn both national and international attention. Among the various buying options, pre-launch bookings have become particularly popular. However, this growing trend has also paved the way for numerous frauds, leaving many buyers in distress. This article delves into the pre-launch booking scams in Hyderabad's real estate market, highlighting major cases and providing insights on how to safeguard against such frauds. Understanding Pre-Launch Bookings Pre-launch bookings refer to the sale of properties by developers before the official launch of the project. Buyers are often attracted to these offers due to the promise of lower prices and better deals. For developers, it serves as a way to raise funds early in the project. However, this process is fraught with risks, especially when unscrupulous builders are involved. Rise in Frauds in Hyderabad Real Estate The real estate boom in Hyderabad has seen a parallel rise in fraudulent activities. Builders exploiting legal loopholes and making false promises have led to an increase in the number of fraud cases. This not only impacts the buyers financially but also shakes their trust in the market. Case Studies of Major Frauds Sahiti Infra Sahiti Infra made headlines when it was discovered that the company had cheated customers of approximately Rs 1,119 crore. The fraud involved selling the same property to multiple buyers and providing misleading information about project approvals and timelines. Bharathi Builders, Kompally Bharathi Builders in Kompally duped around 350 people, amounting to Rs 60 crore. The buyers were promised premium flats at attractive rates, but the projects never saw the light of day. Prathista Infra Prathista Infra was involved in a fraud of Rs 15 crore. The company failed to deliver on its promises, leaving buyers without their invested money or the promised properties. NSV Infra NSV Infra's Pragathi Nagar project was abruptly halted, and the company sold it to a new developer. Out of the Rs 18.50 lakh taken from each customer, only Rs 4 lakh was returned, leaving many buyers in financial turmoil. GSR Infra Group Pvt Ltd GSR Infra Group Pvt Ltd, operating in Kollur village, committed a fraud amounting to Rs 60 crore. Buyers were left in the lurch as the promised villas and flats were never constructed. Common Tactics Used in Real Estate Frauds Fraudulent builders often employ a range of tactics to deceive buyers. These include providing misleading information about project approvals, offering false promises of high returns, and exploiting legal loopholes to evade accountability. Legal Recourse for Victims Victims of real estate fraud have several legal options at their disposal. They can file a complaint with the police, approach consumer courts, or take the matter to civil courts. It is crucial to act promptly and gather all relevant documents to strengthen the case. Government and Regulatory Measures The government has implemented various regulations to curb real estate fraud. The Real Estate (Regulation and Development) Act (RERA) is one such measure aimed at protecting buyers and ensuring transparency in real estate transactions. Recent amendments and stricter enforcement are expected to deter fraudulent activities. How to Safeguard Against Real Estate Frauds To protect against real estate frauds, buyers should conduct thorough research and due diligence before making any investments. Verifying the builder’s credentials, checking project approvals, and consulting legal experts are essential steps to avoid falling victim to scams. Role of Media in Highlighting Frauds The media plays a pivotal role in bringing real estate frauds to light. Through investigative journalism and extensive coverage, media outlets raise awareness and hold fraudulent builders accountable. Prominent cases often gain widespread attention, prompting regulatory action. Community and Social Impact Real estate frauds have far-reaching effects on the community. They lead to financial instability for families, loss of trust in the market, and a general sense of insecurity among potential buyers. The social repercussions are significant, impacting the overall well-being of the community. Economic Impact on Hyderabad’s Real Estate Market The spate of frauds in Hyderabad's real estate market has led to a decline in property prices and a slowdown in investment. The long-term economic implications include reduced buyer confidence and potential investors shying away from the market. Future of Pre-Launch Bookings in Hyderabad Despite the current challenges, pre-launch bookings are likely to continue in Hyderabad. However, stricter regulations, increased transparency, and better enforcement are expected to reshape the market. Buyers will become more cautious, and developers will need to build trust to attract investments. Conclusion The pre-launch booking frauds in Hyderabad's real estate market have caused significant financial and emotional distress to many buyers. While the government and regulatory bodies are taking steps to curb these frauds, it is crucial for buyers to stay vigilant and conduct thorough research before making any investments. By being informed and cautious, buyers can safeguard their investments and contribute to a more transparent and trustworthy real estate market in Hyderabad. FAQs 1. What is a pre-launch booking in real estate? Pre-launch booking refers to the sale of properties by developers before the official launch of the project, often at lower prices. 2. How can I verify the authenticity of a real estate project? You can verify the authenticity by checking the builder's credentials, project approvals, and consulting legal experts. 3. What should I do if I become a victim of real estate fraud? If you become a victim, promptly file a complaint with the police, approach consumer courts, and gather all relevant documents to strengthen your case. 4. What measures has the government taken to prevent real estate frauds? The government has implemented regulations like the Real Estate (Regulation and Development) Act (RERA) to protect buyers and ensure transparency in real estate transactions. 5. How can the media help in preventing real estate frauds? The media can help by raising awareness, conducting investigative journalism, and holding fraudulent builders accountable through extensive coverage of fraud cases. Telangana Real Estate
  • July 20, 2024

The Dark Side of Hyderabad Real Estate Pre-Launch Booking Frauds Exposed

Hyderabad- Pre Launch Booking of Flats and Villas Fraud in Hyderabad Real EstateIntroductionHyderabad, the city of pearls, has witnessed a…
Hyderabad Real Estate Market Soars: Key Factors and Future Outlook Hyderabad’s real estate market is witnessing an unprecedented boom. This surge is evident from the sharp increase in property registrations, building permits, and layout approvals. Let's delve into the factors driving this growth and what the future holds for Hyderabad’s real estate sector. Significant Growth Post-New Government Formation Since the new government took office in December 2023, the Hyderabad Metropolitan Development Authority (HMDA) area has seen a substantial rise in both property registrations and the revenue generated from these activities. The number of building permits granted has also experienced a significant uptick, signaling a thriving real estate market. Major Drivers of Hyderabad's Real Estate Boom Government Initiatives Fueling Growth The ambitious Musi River Front Development Project, the expansion of the Metro Rail, and the construction of elevated corridors are transformative projects that are reshaping the city’s landscape. These initiatives have created a conducive environment for real estate development, attracting both investors and developers. HMDA Expansion and Focus on Regional Ring Road (RRR) The proposed extension of HMDA’s jurisdiction to include the Regional Ring Road (RRR) and the government’s emphasis on RRR development have further bolstered the real estate sector. These strategic expansions are pivotal in accommodating the city’s growing population and fostering economic development. Impressive Statistics Highlighting the Boom Revenue Surge from Registrations Between December 2023 and June 2024, the government earned Rs 4670.52 crore from plot and building registrations. This represents a significant increase compared to the previous seven months, showcasing the robust growth in the sector. Increase in Property Registrations Property registrations have risen by 12.5% from December 2023 to June 2024 compared to the same period in 2022. This growth indicates a heightened interest in real estate investments in Hyderabad. Uptick in Building Permits Building permits granted by the Greater Hyderabad Municipal Corporation (GHMC) and HMDA have increased by 13.17% from December 2023 to June 2024. This surge in permits highlights the rapid pace of development and construction activities in the city. Challenges and Solutions for Hyderabad's Auto-Centric Future Projected Vehicle Growth Recent data indicates that over 1.6 crore vehicles will ply on Hyderabad’s roads in the next decade. This alarming projection paints a picture of increasing traffic congestion and environmental pollution. Current Traffic and Infrastructure Issues Hyderabad’s roads are already struggling to accommodate the current volume of vehicles. Despite ongoing flyover and road widening projects, traffic congestion remains a significant challenge, exacerbated by even brief spells of rain. Expert Recommendations for Mitigating Traffic Issues Experts suggest several measures to mitigate the impending traffic crisis: Increase Lifetime Tax on Cars: Implementing higher lifetime taxes on cars to discourage excessive vehicle purchases. Enhance Public Transport: Adding more AC buses to the RTC fleet and improving last-mile connectivity from bus stops and Metro stations. These changes could reduce the dependency on personal vehicles. Environmental Strategies: The Pollution Control Board should devise new strategies to curb pollution and manage the growing number of vehicles. Conclusion: A Thriving Market with Challenges Ahead Hyderabad’s real estate market is booming, driven by government initiatives and strategic expansions. However, the city faces significant challenges in managing traffic congestion and environmental pollution due to the projected surge in vehicle numbers. By implementing expert recommendations and enhancing public transport, Hyderabad can sustain its growth while addressing these critical issues. Future Outlook As Hyderabad continues to grow and develop, the real estate market is expected to remain vibrant. Continued government support, infrastructure development, and strategic planning will be crucial in sustaining this growth. Investors and developers can look forward to a promising future in Hyderabad’s thriving real estate market. Telangana Real Estate
  • July 13, 2024

Hyderabad Real Estate Market Soars & Auto-Centric Future

Hyderabad Real Estate Market Soars: Key Factors and Future OutlookHyderabad’s real estate market is witnessing an unprecedented boom. This surge…
Real Estate in Hyderabad: High-Value Properties Above 1 Crore Becoming the Norm Hyderabad's real estate market is witnessing a significant transformation, with an increasing number of high-value property transactions. Properties priced above Rs 1 crore are now the new normal, reflecting the strong momentum in India's housing sector. Surge in High-Value Property Transactions in Hyderabad A recent report titled “Real Insight Residential – January-March 2024” by PropTiger.com reveals a notable shift in Hyderabad's real estate market. Between January and March 2024, approximately 14,290 housing units were sold in Hyderabad, and 61 percent of these were priced over Rs 1 crore. Breakdown of Housing Units Sold in Hyderabad (January-March 2024) Over Rs 1 crore: 61% Rs 75 lakh – 1 crore: 17% Rs 45 lakh – 75 lakh: 18% Rs 25 lakh – 45 lakh: 4% This trend highlights the growing demand for premium properties in Hyderabad, indicating a shift towards luxury housing options. Strong Momentum in India's Housing Market The report also underscores the robust growth in India's overall housing market. In the first quarter of 2024, residential sales across the top eight cities increased by 30 percent, showcasing a remarkable 41 percent year-on-year growth in residential sales. This upward trend is a testament to the resilience and dynamism of India's real estate sector. Rising Demand for Premium Properties In an interview with The Pioneer, Vikas Wadhawan, the group CFO of PropTiger.com, emphasized the escalating demand for premium properties in the first quarter of 2024. He noted that the rising costs of land, construction, and inputs have made the once-luxurious threshold of Rs 1 crore more common in major cities. Homebuyers are increasingly seeking residences with modern amenities and spacious layouts, driving the demand for high-value properties. Evolving Preferences of Homebuyers The shift towards larger, amenity-rich homes is a key factor contributing to the uptrend in property prices. Today's homebuyers are more discerning, looking for homes that offer not just space but also a range of modern conveniences. This evolving preference is reshaping the real estate landscape, making high-value properties more desirable. Telangana Real Estate
  • June 19, 2024

61 % Properties priced above 1 cr Housing Units Sold in Hyderabad

Hyderabad’s real estate market is witnessing a significant transformation, with an increasing number of high-value property transactions. Properties priced above…
Hyderabad Regional Ring Road (RRR) project, Chief Minister A. Revanth Reddy has issued a compelling directive to officials. The focal point of this directive is the swift completion of land acquisition for the RRR within a stringent three-month timeframe. This proactive approach aims to expedite the overall development of the region, addressing both urban and rural needs. Urban Telangana Cluster: Revamping Infrastructure Inside the Outer Ring Road (ORR) Telangana Real Estate
  • January 16, 2024

Land Acquisition for Telangana RRR Development Revanth Reddy

In a bid to propel the progress of the Hyderabad Regional Ring Road (RRR) project Land Acquisition for Telangana RRR…
Telangana assembly elections, the BJP's financial strategies and the shadow team's role take center stage. The intricacies of fund allocation, grassroots empowerment, and the aftermath of the elections form a complex narrative. The unfolding events may not only shape the BJP's state dynamics but could also have wider implications on the national political landscape. Telangana Real Estate
  • January 16, 2024

BJP New Strategy for Telangana MP election 2024

Telangana BJP Elections Expenditure: An In-depth AnalysisIn the vibrant landscape of Telangana politics BJP New Strategy for Telangana MP election…
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