Mentoassociates.com – Legal Articles

There is a huge demand from public for Bangalore Development Authority (BDA) sites, directly allotted or for second purchase. A site allotted by BDA which is a governmental authority inspires confidence and trust in the mind of public. In this article let us see the formalities for obtaining a site from BDA.
The eligibilities for applying for a BDA site are that the applicant should have minimum 15 years domicile in Karnataka and should be more than 18 years old. For officers belonging to All India Services of Karnataka cadre the domicile period required is a minimum of 2 years. Persons whose family members or dependents own a site or house allotted by BDA or a Co-operative Society or KHB or other government agencies are not eligible to apply for allotment of sites.
Abound 50% of the sites are reserved for backward tribes, SC/ST people, defense personnel, State and Central government employees, public sector employees, physically handicapped and for those who have excelled in the field of arts, science or sports. Rest 50% is meant for general public.
Applicants are selected based on seniority, category, number of earlier attempts, age factor etc. The allottes are given 60 days time period to pay the sital value without interest. After 60 days time period, the amount can be paid with interest.  For alottees belonging to SC/ST and defense personnel, 3 years time period is given for payment of sital value.

The Government of Karnataka in its 2007-08 budget has introduced several changes in the stamp duty levied on various instruments .These are effective from 1-04-09.Some of them are discussed below:
1. Stamp duty on sale transaction of all immovable properties has been reduced form 7.5% to 6%.The cess on stamp duty will be 10% and surcharge for properties situated within corporation limits will be 2% and within village Panchayaths will be 3%.
2. Sale agreements not involving possession of property. Presently the stamp duty varies from Rs 10 to Rs 200/-.Now the same is increased to .25% of the value of the agreement.
3.  Joint Development Agreements: 1% of the value involved.
4. GPA for Joint development: 1% of the value involved.
5. Other GPAs: Rs 200/-(Presently Rs 100/-)
5. Lease
a. Up to 5 years: 1% on the value of security deposit and average annual rent
b. Above 5 years and  up to 10 years: 2% on the value of security deposit and average annual rent
c. Above 10 years and up to 30 years: 4% on the value of security deposit and average annual rent
d. For a period above 30 years : 6% of the market value.
5. For duplicate registration: Rs 500/-(Instead of Rs 50/-)
6. Release: 6% instead of present 2.5% and 3.75%

On many occasions, disputes arise between builders and apartment purchasers with regard to the payment of VAT during the purchase process. The agreement for sale of an apartment should specifically mention whether the total sale consideration is inclusive of VAT or not. If the agreement is silent on VAT and the builder states that the total consideration amount is inclusive of the cost of construction, cost of land, various deposits and other incidental expenses etc., then he cannot claim additional VAT from the apartment purchasers at a later date.The material used for the construction of an apartment like bricks, steel, cement etc is liable to be taxed under VAT. It is to be mentioned here that labor charges involved in the construction of an apartment are not liable to be taxed.  While demanding the VAT amount, the builder has to furnish the detailed accounts of the costs of materials used, to the apartment purchaser.It should be noted that the rate of tax in Karnataka for payment of VAT on the costs of materials is only 4% and not 12.5%. This is because materials used for construction are classified as ‘Declared goods’ with a lower rate of 4%. The builder is supposed to obtain a registration number from the commercial taxes department for the tax collected and he must issue a tax invoice to the purchaser.

A transaction in which property is transferred to one person for a consideration paid or provided by another person is called Benami transaction. The Benami Transaction (Prohibition) Act, 1988, prohibits Benami transactions.
The following are not Benami transactions:
a.Purchase of property by any person in the name of his wife or unmarried daughter.
b.The securities held by a depository as a registered owner.
c.The security held by a participant as an agent of depository.

A person who enters into a Benami transaction is liable for imprisonment for a term which may extent to 3 years or with fine or with both. A real owner cannot file a suit for the property against the Benami owner. However, a coparcener in a Hindu undivided family can enforce his rights in the property which is held for the benefit of the coparceners in the family.The government can acquire all properties which are held Benami without any compensation amount being paid.When a trustee or other person in a fiduciary capacity holds property for the benefit of another person, the same cannot be said to be a Benami transaction.

With the Stamp Duty on various instruments in Karnataka being on the higher side, people have a tendency to undervalue the market value of the properties for the sake of saving the stamp duty and registration fee. This is particularly in the case of instruments of conveyance, gift, exchange etc.The Deputy Commissioner of Stamps can on his own call for and examine an instrument to check the correctness of the market value of the property and also the duty payable on the market value. This suo moto power can be exercised by the Deputy Commissioner only within two years, from the date of registration of the instrument. Even if, the market value of the property shown in the instrument is equal to or slightly more than the guidance value,the Deputy commissioner has the power to call for and examine the instruments.The Deputy Commissioner normally issue a notice to the parties concerned  and after hearing them and examining the documents produced by the parties, he may pass an order determining the correct market value of the property, if according to him, the market value of the property was not truly set forth in the instrument. The Deputy Commissioner can also order the difference in the stamp duty to be paid by the person. If the person so directed does not pay the differential stamp duty within 90 days from the date of the order, interest is applicable at the rate of 12% per annum.

The registering officer who has the power to register a document has the power to communicate the esteemed market value of a property to the parties. If the parties are not ready to pay the communicated market value, he has the power to keep pending the process of registration and refer the matter to Deputy Commissioner for determination of the market value and the stamp duty.

 Any person aggrieved by the order of the Deputy Commissioner may prefer an appeal before the District judge within 2 months from the date of communication of the Deputy Commissioner’s order provided; he has deposited 50% of the difference in the amount of duties as determined by the Deputy Commissioner.

    All duties required to be paid by a person under the Karnataka stamp act along with the interest thereon may be recovered by the Deputy commissioner by distress and sale of the movable property of the person from whome the same are due or by any other process for the time being in force for the recovery of arrears of land revenues. 

For a residential complex to be eligible for levy of Service tax, it should have the following three essential features:

 a) Should have more than 12 units

 b) Should have a common area

 c) Should have common facility or services like park, community hall, lift etc.

There are several cases where a person can avail exemption from the imposition of Service tax. Service tax is not applicable, in the following cases.

a) If the residential complex is shaving only 12 or less than 12 units.

b) If the residential complex is constructed by an individual for his personal use.

c) Direct purchase of residential unit from a builder without availing the service of a building contractor.

Post construction services pertaining to residential complex are also treated as construction activity for the purpose of Service tax.

 If the builder constructs a residential complex without engaging the services of a contractor (service provider), then he cannot claim the service tax from the apartment purchasers. Similarly, it is the primary duty of the contractor to pay the service tax, and not the builder or the apartment purchaser. If the condition to pay the service tax is not mentioned in the sale agreement, then the apartment purchasers need not pay the service tax to the builder. 

The Department of Stamps and Registration of the government of Karnataka has revised the valuation of building rates throughout the state. The new rates are applicable from 1-03-08. The increase in the rates has been almost double in some cases. The same rates have to be used as guideline values while registering transactions in buildings and the stamp duty and registration fee has to be paid on the basis of the new revised rates.

The rates range from Rupees 100 to Rupees 950 per square feet. The buildings have been classified as per their locations like those coming under the jurisdiction of BBMP, other corporations in Karnataka, other Municipalities, other TMCs, other Town Panchayaths and other areas of the state. Different rates have been fixed for different areas. Further there is variation in the rates for Ground and Upper Floors. All upper floors within the same area have same rate.

The revisions in the building rates will cause a major setback to genuine home purchasers looking for a shelter. The increase in building rates will set a chain reaction, further increasing the market rates of properties and the registration and stamp duty expenses. This will further burden the overpriced property market in Karnataka.

With the average life span of Indians on the rise and the mortality rate coming down drastically along with the advancement of modern medicine, the number of senior citizens in the population is on rise. Coupled with this, the disintegration of social fabric, the disappearance of joint family system and the fast pace of modern life, have left many senior citizens economically and socially vulnerable during the fag end of their lives.With the idea to provide some social security measure to senior citizens, the Finance Minister of India formally introduced the concept of Reverse Mortgage in India in the last Union Budget. National Housing Bank has issued certain guidelines in this regard. Many banks like State Bank of India have already introduced this concept.

As per this concept, the senior citizens who own a house can mortgage their property to a banker. The banker will make periodic payments (say monthly) to the borrower, during his life time. The borrower need not repay the loan amount during his life time. After the borrower’s death, the house property is sold and the loan amount together with the interest accumulated is recovered by the bank. If the heirs of the borrower can repay the loan together with interest thereon, then they can release the mortgage and inherit the house property.The scheme is available for senior citizens who are above 60 years of age. Married couples can jointly borrow under this scheme. The borrower shall use the property mortgaged as permanent primary residence. The amount of loan that the senior citizens can avail depends on factors like market value of the property, age of the borrower, rate of interest etc.

The loan amount may be periodic (monthly, ½ yearly) or it can be one lump-sum payment. Normally periodic payments are made for monthly maintenance of senior citizens, while lump-sum payments are made for special purposes like medical expenses, home improvement etc. The maximum period of loan is 15 years. Commercial properties are not eligible under this scheme.

The senior citizens are also given a “right of rescission”, ie, they can cancel the scheme availed within 3 business days of finalizing the scheme. In such cases, the entire loan amount will have to be paid by the senior citizens within this 3 days period.

The loan amount will became due and payable when the last surviving borrower dies or intends to sell the home or when the borrower permanently moves out of the home. The borrower has the right to prepay the loan at any time during the loan tenor, which shall not carry any penalty or charge.

1) Anekal: Mini Vidhana Soudha, Taluk office compound, Bangalore-562 106

2) Sarjapura: No. 964/1015,Vidhya Nagar, 60th cross, Sarjapura, Anekal, Bangalore-562 125

3) Attibele: No.430, Anna Building, Hennagara Gate, Bommasandra Industrial Area, Hosur Main Road, Bangalore- 560 099

4) Jigani: House No. 459/39/2, Bannerghatta Village, Opp. police Station, Bannergatta, Bangalore-560 083

5) Basavanagudi: 3^rd Main road, Sri Rameshwara Swami Commercial Complex, Chamarajpet, Bangalore-560 018

6) Gandhinagar: 32, Jamuna Complex, 5th main road, Gandhinagar, Bangalore-560 009

7) Jayanagar: 26, House No.2722, 12th main road, 4th block, Jayanagar, Bangalore-560 011

8)Rajajinagar: 1034,5^th block, Rajajinagar, WOC Road, Bangalore-560 010

9) Shivajinagar: BDA Complex, Domlur, Bangalore-560 001

10) Srirampuram: Srirampura Venkateshwara Complex, Vidhyapeeta, Vijayanagar, Bangalore-560 040

11) Kacharakanahalli: No.111, 9th main, 3rd stage, Pillanna Garden, Kacharakanahalli, Bangalore.

12) Hebbal: No.69, Cholanayakana Halli, RT Nagar Post, Bangalore-560 032

13) Peenya: No.488, 2^nd floor, P Block, KIADB Building, 14^th cross, 4th phase, Peenya 2^nd stage, Bangalore-560 058

14) Laggare: No.13, Anandappa building, Laggere Main Road, Parvathinagar Bus stand, Bangalore-560 058

15) Nagarbhavi: No.40, 2^nd stage, 1^st block, Nagarbhavi, Behind BDA Complex, Bangalore

16) Madanayakanahalli: No.1, Madanayakanahalli, Daasanapura Hobli, Bangalore

17) Dasanapura: No.4, Survey No.33/4A, BH Road(NH 4), Devannapalya, Dasanapura, Bangalore North Taluk, Bangalore

 18) Varthur: 1^st floor, BM Complex, Opp. Dharmarayaswamy Temple, Muthsandra Road, Varthur, Blore-560 087

19) Beguru:   No.1105-9C, Begur Village, Bangalore-560 016

20) Bommanahalli:  2^nd floor, 7th cross, 3rd block, Koramangala, BDA Complex, Bangalore

21) KR Puram:  Near Santhemaiden, KR puram, Bangalore-560 066

22) Mahadevapura: No.4, Jatar Circle Road, Whitefield, Bangalore-560 066

23) Banasawadi: No.740/2, BMP Khata No.25, 1st floor, 9th B Main, HRBR Layout, 1st block, Kalyannagar, Bangalore-560 043

24)Bidarahalli: Manjusree Chambers, National Highway, KR Puram, Bangalore-560 036

 25) Kengeri: SLN Complex, Near BTS Bus stand, Mysore Road, Kengeri, Bangalore.

26) Rajarajeshwarinagar: No.25, DM Chambers, Jawaharlal Nehru Road, BMEL Road, 3^rd stage, Rajarajeshwari nagar, Bangalore-560 098

27) JP Nagar: No.8, AmeetArcade, Amruthanagara Main Road, Konankunta, Bangalore-560 062

28) Banashankari: Bangalore South Taluk Agriculture Produce Co-op Marketing Society Pvt.Ltd., Kanakapura Road, Banashankari, Bangalore 560 070

29)Tavarekere: No.1943, Anugraha, Tavarekere-Kengeri Road, Tavarekere, Bangalore-562 130

30) Yelahanka: No.15, 1st Main, Sree Rudhreshwar Chambers, Yelahanka New Town, Bangalore-560 064

31) Byatarayanapura: No.15, 1^st Main, Sree Rudhreshwar Chambers, Yelahanka New Town, Bangalore-560 064

32) Hesarughatta :  HC Puttaswamy Layout, Near Bus stop and Nada kacheri office, adjacent to KEB Office, Hessarughatta, Bangalore North Taluk,Bangalore-560 088

33) Jala: Sericulture Cum Farmers Service Co- operative Bank Ltd, Opp. Chikkajala Police Station, NH 7,Bellary Road, Bangalore North Taluk, Bangakore-562 157

The Revenue secretariat, Government Of Karnataka has issued a notification dated 9^th March 2007.Accordingly the Government of Karnataka has formed 27 sub registrar offices in and around Bangalore with effect from 1-04-07.It has also directed the Inspector General of Registration and Commissioner for Stamps for identifying suitable office space with necessary infrastructure for the new offices. The following is the list of new sub registrar offices.

1. Kacharakanahalli                         15.Tavarekere

2.Hebbala                                         16. Mahadevapura

3.Peenya                                           17.Bidarahalli

4. Leggere                                         18.K R Puram

5.Nagarbhavi                                    19.Banaswadi

6.Madanayakanahalli                        20.Yelahanka

7.Dasanapura                                     21.Yelahanka rural

8.Varthur                                           22.Hesarughatta

9.Begur                                              23.Jala

10.Bommanahalli                              24.Anekal

11.Kengeri                                        25.Sarjapura

12.Rajarajeswari Nagar                     26.Attibele

13.J P Nagar                                      27.Jigani

14.Banashankari