Property Dictionary

Encroachment

Encroachment occurs when a individual that is not the property owner intrudes on or interferes with the property, e.g. trespassing by way of building something that lays partially on the adjoining property or even by planting a tree with branches that hang over onto the adjoining property. An encroachment creates an encumbrance on both properties until the issue is resolved.

Title by Adverse Possession

Adverse possession is a term used in the Indian legal system to describe a situation wherein an individual or group of individuals acquire a right to ownership of an immovable property by virtue of continuous use of it. The Limitation Act of 1963, functions on the principle that ‘limitation extinguishes the remedy, but not the right’, meaning that in the case of an adverse possession the original owner may continue to have the title over the property but he loses the right to claim such a right in a court of law.

Encumbrance

An encumbrance is a claim made against a property by someone other than the current title holder. The term encumbrance covers a wide variety of financial and non-financial claims that may or may not affect the value of the property. It is important, from a buyer’s perspective, to be aware of any encumbrances on a property, as these will often transfer to them along with the ownership of the property.

Legal Title Report

A legal title report is a written analysis of the status of the title of the property, including a description of the said property, names of titleholders and how the title is held (e.g. joint tenancy). It also includes applicable taxes and encumbrances for the same.

Legal Title of Land

Title is a legal term that refers to the ownership right to a property. Every property has a title which is created in accordance with the laws relating to immovable property such as Transfer of Properties Act, India Registration Act and Indian Stamp Act. Titles can depict ownership of both personal and real property. Personal Property is anything that does not include real estate such as appliances, furniture, antiques, artwork, etc whereas Real Property includes the physical property of real estate as well as bundle of ownership and usage rights.

Agricultural Land

Agricultural land is land that is used for the purpose of agriculture which includes the cultivation of crops, fruits, vegetables, grass, trees, horticulture, poultry farming, breeding of livestock, breeding of fish, bee keeping, etc. It also includes land used for any purpose which is ancillary to its cultivation, e.g. land used for grazing cattle.

Leasehold Land

Leasehold refers to the legal right given to an individual or entity, by the owner, to live in or use a building or piece of land for an agreed period of time. In India, leasehold land most commonly have tenures ranging between 30 to 99 years.

Collector's Land

Collector’s Land refers to land belonging to the government that falls under the control of the revenue department and is therefore owned by the City Collector. Collector’s Land is leased out to individuals and / or entities for the purpose of development. Prior permission must be sought from the state to rent, gift, transfer and / or sell properties built on Collector’s Land.

Free hold land

Free Hold land is one which is “free from hold” of any entity besides the owner. The owner owns the building and the land upon which it has been built in perpetuity.

Land

Land constitutes of all things permanently attached to the surface of the earth such as ground, trees, wells, rivers. etc. It is a natural resource that is the centre of all economic activities. Therefore, land is classified on the basis of its economic use, i.e., agricultural land, non-agricultural land and forest land.

Parquet Flooring

Parquet flooring refers to a particular type of wooden flooring that consists of a geometric pattern formed by placing tiny wooden slats together. It’s texture and durability is similar to hardwood floor as the strips are made of hardwood. This form of flooring was first introduced in the 17th century in France as a cheaper substitute to marble. Today it is a popular choice due to its aesthetic appeal.

Junction Box (J-Box)

A junction box, also known as a J-box is a wall-mounted unit that contains all the electrical connections in a house. It serves as the communal meeting spot for electrical wires, where they connect before moving on throughout the house. These boxes protect the electrical connections from external forces and inhabitants of the house from accidental electric shocks. A J-box is usually made up of plastic or metal, wall mounted and concealed behind an access panel.

Modular Kitchens

Modular kitchens are kitchens that can be assembled using individual units. Each unit can be personalised to suit your needs, appliances and incorporate the latest technology. These units are then fitted to form the skeleton of the new kitchen. The biggest advantage of modular kitchens are that they can be assembled and reassembled, making it easier to move into different homes. In contrast, civil kitchens have cabinets that are permanently built into the space, making it impossible to dismantle later.

Real Estate Regulatory Authority and Appellate Tribunal

Under the RERA Act 2016, the appropriate Government must establish a Real Estate Regulatory Authority for the regulation and promotion of the real estate sector in the State / Union Territories (UTs). The Authority shall strive to facilitate the growth and promotion of a healthy, transparent, efficient, and competitive real estate sector while protecting the interest of homebuyers/ allottees, promoters and real estate agents. The authority shall also establish an adjudicating mechanism for speedy dispute redressal regarding registered real estate projects.

Real Estate (Regulation and Development) Act 2016

The Government of India introduced the Real Estate (Regulation and Development) Act in the year 2016 in a bid to regulate the real estate industry. All the sections of the Act came into force with effect from 1st May, 2017. The key objective of the Act was to bring greater transparency, accountability, financial discipline and speedy dispute redressal for homebuyer and allotees. According to a press release published by the Ministry of Housing & Urban Affairs, a total of 30 states and 28 Union Territories have implemented the Act in India.

GST on home loans

In India, GST does not apply to home loans. However, a bank provides a host of additional services along with the home loan which are applicable to a charge of 18% GST. Further, processing fees and other charges levied on disbursing home loans fall within the category of financial and related services, as identified by the HSN code 9971, and are therefore subjected to 18% GST. Input tax credit (ITC) can be availed only on properties used for business purposes. Home loans are typically taken for personal home purchase or construction and not for business use, hence ITC cannot be claimed.

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GST on commercial rentals

A GST-registered landlord is liable to pay 18% GST on commercial rental income if it exceeds 20 lac rupees per annum. The landlord can claim input tax credit (ITC) against GST paid if he meets the eligibility criteria and has maintained adequate documentation to substantiate his claim. GST is not applicable on properties leased out for charitable or religious purposes provided the rental charges are below a specific threshold.

GST on residential rentals

Under the present GST regime, landlords are not liable to pay GST against their real estate rental income, provided the premises is let out for residential purposes. Rent arising out of a residential property being used for business is however applicable for GST as services are being supplied. In addition, if the rental proceeds of a residential property exceed 20 lac rupees per annum, GST is applicable at the rate of 18%.

GST on plotted development projects

In the case of plotted developments, the developer, landowner, or authority undertaking the project must pay GST charges on the sale of developed land within the project. The GST is to be charged on super built-up basis and not the actual measure of the developed plot. Also, any lease, tenancy or right to occupy created for a plot of land is considered to be a provision of services and therefore liable for GST.

GST on land purchase

Generally speaking, the sale of land is outside the purview of GST as it does not involve the transfer of any good or services. However, in the case of plotted development projects where in addition to the land, basic amenities are provided, GST becomes applicable. This is because the amenities of a plotted development may include the construction of roads, sewerage lines, landscaped gardens, drainage systems, overhead tanks, water harvesting systems, etc. which are construed to be services offered.

GST on society maintenance charges

Flat owners that pay upwards of INR 7,500 per month in maintenance fees are liable to pay GST at the rate of 18% on the full sum paid. An individual who owns multiple apartments in the same housing society, will be taxed separately for each unit. Housing societies and Residents’ Welfare Associations that collect more than INR 7,500 per unit per month and have an annual turnover exceeding 20 lac rupees must pay 18% GST. These entities are entitled to claim ITC on tax paid by them on capital goods, maintenance and repair services.

GST on under-construction flats

GST is applicable on the purchase of under-construction flats, apartments, bungalows, villas, etc in India. As of 1 April 2019, the GST applicable for such properties varies between 1% to 5%, depending upon the size and category of housing. Government led housing projects attract only 1% GST. GST is not applicable on ready-to-move flats that have received an OC certificate or on land deals where not further service is provided.

Input Tax Credit (ITC)

Input tax credit (ITC) refers to a mechanism wherein credit can be claimed on account of GST paid on the purchase of goods and services used for the furtherance of business. This mechanism is available to businesses registered under the GST Act, including manufacturers, suppliers, e-commerce operations and others specified in the legislation. It aims to assist businesses in effectively reducing their tax liability while encouraging compliance and preventing double taxation.

GST in Real Estate

GST stands for Goods and Services Tax. It is an indirect tax levied on the supply of certain goods and services and is applicable across India. In real estate, GST is applicable on the procurement of construction material and the service of construction. Therefore, a buyer of an under-construction flat must pay GST, as the builder continues to provide a service until the flat is ready. GST is not applicable on ready flats which have received an OC certificate or land transactions as there is no additional service provided by the builder or seller post the transaction.

Multi-Modal Logistics Park

Multi-Modal Logistics Park (MMLP) refers to a freight-handling facility encompassing a minimum area of 100 acres (40.5 hectares), with various modes of transport access. It comprises mechanized warehouses, specialized storage solutions such as cold storage, facilities for mechanized material handling and inter-modal transfer container terminals, and bulk and break-bulk cargo terminals. It is a type of Logistics Park where various value-added services are rendered in addition to rail/road-based transportation. The purpose of MMLP is to reduce coordination among different parties during transfer of cargo from one mode to another.

Faucet

A faucet is a device used for controlling the flow of water from a tank, such as a drum or pipe. Faucets are usually made of brass, as it is a practically strong metal that does not corrode. The external surface of the faucet can be anything from chrome, gold plate, to a baked enamel or powder coat finish.

Logistics Park

A logistics park is an industrial area specifically designed for storage, management, distribution and transportation of various goods. These parks are designed to be well connected to major roads and railway stations thereby reducing the cost of goods transport. They are also equipped to host facilities to execute all logistics tasks at significantly lower costs.

Plywood

Plywood is a form of engineered wood that is manufactured by binding or fixing resin and wood fibre sheets together. Thin layers or “plies” of wood veneer that are glued together with adjacent layers having their wood grain rotated up to 90 degrees to one another. Different tree species and glues are used to create different final products, and in all cases, they are finished with a bonding process that involves heat and pressure. Plywood has low moisture content, making it easy to use outdoors. It is also economic to procure, making it a popular material to use for interiors in India.

Finishing stage in Construction

The finishing stage in the construction cycle is the process of completing the construction project. This includes painting, installing flooring, and completing any final touches. The finishing stage is critical as it ensures that the building is ready for occupancy. Finishing is a very labour intensive process which requires detailed project planning to ensure all activities are done in the right sequence to avoid any quality issues in the future.

Gypsum Board

Gypsum board, commonly known as drywall, prefers to a building material used for walls, ceilings and partition systems in residential and commercial units. It is a panel made of calcium sulphate dihydrate (gypsum), typically extruded between thick sheets of facer and backer paper. Gypsum boards are light weight, fire resistant, economic, offer sound insulation and can be used to create a monolithic surface for interiors.

Double Glazed Unit or Window

A double glazed unit refers to a sealed unit consisting of two panes of glass, a metal spacer that runs between the two panes on the periphery, and an inert gas or nitrogen-filled cavity between the two panes of glass. These units are most commonly used for windows. The cavity in the unit should filled with a gas that is completely moisture-free, as otherwise it can condense into droplets and obscure the view. The gap serves to provide both heat and sound insulation.

Grading

Grading is the process of reshaping land at a construction site. This can include raising or lowering ground levels, adding or removing slopes or levelling the ground surface. Grading is a critical step in the construction cycle, as it can impact the stability of the foundation as well as the overall appearance of the finished project.

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