Theme: Money & Property

Bearer cheque

If you have a bearer cheque, then you can present it to the bank and get the cash amount written on it. Any person can give the cheque and collect the money written on it.

For Example: If Sanjana presents the bearer cheque at the bank counter for encashment, the amount will be paid in cash to her.

 

Bearer Cheque

For illustration purposes only

Usually the words “or bearer” are printed on the leaf of the cheque. It can be issued to a third party in the third parties name or in the name of the firm. A bank cannot refuse payment of this kind of cheque across the counter.

Since anyone can present it to the bank and collect the cash amount written on it, these are risky in nature. So in a situation where you lose it, there may be a chance of someone else presenting it to the bank and collecting money.

If a cheque is crossed then it automatically is not a bearer cheque.

What is product liability?

Product liability refers to the responsibility of the product manufacturer or seller to compensate for the harm caused to the customer due to a defect in the product or deficiency in service(( Section 2(34), Consumer Protection Act, 2019.)). The harm caused can include issues such as personal injury, mental distress, death, damage to property, breach of contract, etc(( Section 2(22), Consumer Protection Act, 2019.)). For example, if an online food product causes health issues or is highly adulterated, a consumer can file a complaint to bring about a product liability action against the seller(( Section 83, Consumer Protection Act, 2019)). A complaint can be filed against the product manufacturer, the seller and the service provider in such cases.

Instances of product liability (( Section 84, Consumer Protection Act, 2019.))

  • When the product has a manufacturing defect or is not good enough
  • Where the manufacturing of the product did not conform with manufacturing specifications
  • Modification or alteration in the product that has caused the harm(( Section 86(b), Consumer Protection Act, 2019.))
  • The product has a design, testing or packaging defect
  • Inadequate instructions or warnings as to the usage of the product bought1
  • Product that does not conform with the express warranty or guarantees mentioned

 

  1. Section 86(e), Consumer Protection Act, 2019. [↩]

Who can buy and/or receive immovable property?

Any citizen of India aged 18+ is eligible to buy property in the country. However, certain states such as Maharashtra, Gujarat, Himachal Pradesh, Karnataka, North-eastern states like Assam, Nagaland, Sikkim, among a few others, restrict non-farmers from purchasing agricultural land. Under Indian law, an unborn person can also receive immovable property((  Section 13 of the  Transfer of Property Act, 1882.)).

If you’re a Non-Resident Indian (NRI) or Person of Indian Origin (PIO), you cannot purchase agricultural land/plantation property or a farmhouse anywhere in India, but there’s no such restriction when it comes to residential properties. However, you can inherit such land from a resident Indian or other NRIs/PIOs upon receiving special permission from the Reserve Bank of India.(( RBI Master Circular on “Acquisition and Transfer of Immovable Property in India by NRIs/PIOs/Foreign Nationals of Non-Indian Origin”,Accessed at: https://rbidocs.rbi.org.in/rdocs/notification/PDFs/04MCNIP010713.pdf))

Individuals and companies can also acquire immovable property and this is governed by the Foreign Exchange Management Act, 1999 and various circulars notified by the RBI from time to time.

Deductions Reduced from Tax

A deduction is an expense that is subtracted from an individual’s gross total income to reduce the amount which is going to be taxed. Deduction can be less, more than or equal to the amount of income. If the amount deductible is more than the amount of income, then the resulting amount will be taken as a loss while calculating taxes(( Section 80A, Section – 80AA, Section – 80AB, Section – 80AC, Section 80B, Section 80C, Section 80CC, Section 80CCA, Section – 80CCB of the Income Tax Act, 1961)). Some of the deductions for individuals are:

Contribution to LIC and Other Pension Fund 

Individuals can claim all contributions up to Rs. 1,50,000 of a payment under LIC’s annuity plan, or to any other insurer for receiving pension.(( Section 80 CCC, Income Tax Act, 1961)) This does not include any interest or bonuses that are in the individual’s account.(( Section 80 CCC, Income Tax Act, 1961)) If a deduction is claimed for this, later on when the pension is received by the individual or someone that he appoints (nominee), the pension will be taxable.

Taxable income received under a pension scheme includes:

  • contributions made to receive pension; and
  • contributions to all approved insurers under the Insurance Regulatory and Development Authority.(( Section 23 ABB, Income Tax Act, 1961)) You can find a list of approved insurers here.

This also includes contributions in Equity Linked Savings Scheme (ELSS) which is a mutual fund equity scheme that offers long-term wealth creation along with tax benefits(( Section 80C, Income Tax Act, 1961)), and has a mandatory lock-in period of three years. Investments in ELSS up to a maximum of Rs. 1.5 lakh per annum qualify for deductions. You can deduct the amount you invest in an ELSS from your total income in order to reduce your taxable income, and thus reduce your taxes.

Contribution to National Pension System

National Pension System(( Section 80 CCD, Income Tax Act, 1961)) is a retirement benefit scheme which is compulsory for all Central Government workers who were employed on or after January 1, 2004. Other employees and self-employed persons also have the option of being a member of NPS.(( Section 80 CCD(1), Income Tax Act, 1961))

Deduction for Employer: All employer’s contributions to NPS is taxable as salary income. The employer’s contribution to the NPS is deductible by the employee in the year in which contribution is made. The maximum deduction is 10% of the salary amount of the employee.

Deduction for Employee: The NPS contribution made by an employee is deductible in the year the contribution is made. Here, the deduction amount is 10% of the salary of the employee. If the contribution is made by another person who is not an employee, then the deduction limit is 20% of the gross total income.(( Section 80 CCD(2), Income Tax Act, 1961))

Pension or other payments out of the NPS account will be taxable for the person who receives it. However, if the amount of pension received by NPS  is used to purchase an LIC annuity plan in the previous year, then it will be exempt from tax.

Maintenance, including Medical Treatment of a person with a disability

An individual as well as a member of a Hindu Undivided Family can claim deduction for expenditure related to:

  • Medical treatment including nursing, training and rehabilitation of a person with a disability.(( Section 80DDB, Income Tax Act, 1961))
  • Deposits made under an approved LIC scheme or other insurers.

Deductions can be claimed depending on the disability faced by the individual or a dependent relative, like a member of a family including spouse, children, siblings, parents etc.

  • Persons with disabilities can get a fixed deduction of Rs. 75,000. A person with disability includes those suffering 40% or more of blindness, low vision, hearing impairment, locomotor disability, mental retardation, mental illnesses and cured of leprosy.
  • A higher deduction of Rs. 1,25,000 is available for persons with severe disabilities (80% and higher). To claim such deductions, the individual must have certification issued by the medical authority. The assessing officer may even ask you to get a fresh reassessment to obtain a fresh medical certificate.

Medical Treatment

A resident individual or resident Hindu Undivided Family can claim deductions for medical treatment if they have:

  • Incurred expenditure for the medical treatment of a specified disease or ailment as prescribed. Some examples of such diseases are dementia, Parkinsons disease, malignant cancers, AIDS, chronic renal failure, etc. (( Rule 11DD, Income Tax Rules, 1962))
  • Incurred medical treatment for themselves or for dependants like husband,wife, children, parents, siblings etc.
  • A prescription for such medical treatment can be from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist, etc.(( Proviso to Section 80 DDB, Income Tax Act, 1961))

Either Rs. 60,000 (for senior citizens) or Rs. 40,000 (for any other person) will be taken as the deduction (whichever expenditure on medical treatment is lower). The amount deducted will also be reduced if an individual gets insurance money or is reimbursed by the employer for medical treatment.

Payment of Interest on Loan Taken for Higher Studies

An individual can claim deduction for the payment of interest on a loan taken for high studies(( Section 80E, Income Tax Act, 1961)) for themselves or their relatives like spouse, children etc. If the loan is taken for higher studies is from a bank, financial institution or an approved charity, the interest is deductible in the year the interest is paid. The entire interest is deductible on the year the individual pays interest on the loan, as well as seven years(( Section 80E(2), Income Tax Act, 1961)) after the interest is paid up.

Payment of Interest on Loan for buying House Property

To claim a deduction for interest on loan taken for residential house properties, a taxpayer can be a resident or non-resident of India. Further, the following conditions are to be met(( Section 80 EE, Income Tax Act, 1961)):

  • The person has to take a loan.
  • The loan should be for a residential house property.
  • The loan should be taken from a bank or a housing finance company. For example, the loan is sanctioned by the bank or housing finance company during April 1, 2016 to March 31, 2017.
  • The amount of the loan sanctioned should not exceed Rs. 35 lakhs.
  • The value of the house property should not exceed Rs 50 lakhs.
  • The person claiming deduction should not own any residential house property on the day the loan is sanctioned.

The taxpayer can claim deduction under Section 80EE only if the above conditions are satisfied.

Donation to certain funds, trusts and charitable institutions

Deduction is available to a taxpayer if he contributes or gives donations to approved funds and charitable institutions/donations(( Section 80G, Income Tax Act, 1961)). Any taxpayer , company, firm etc. can claim such deductions. 100% deduction is available for donations to National Defence Fund, Prime Minister’s National Relief Fund, Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND) Prime Minister’s Armenia Earthquake Relief Fund, Africa (Public Contributions – India) Fund, National Children’s Fund etc.

Rent Paid(( Section 80GG, Income Tax Act, 1961))

An individual can claim deductions for the rent paid for a residential accommodation by him or for his family. This person can be anyone including a self-employed person or a person who does not get house rent allowance from the employer. However, it should not exceed Rs. 5000 a month or 25% of the person’s income. Only an individual who pays rent for a residential accommodation for himself or his family can avail this deduction through Form No.10BA.

Donations for scientific research and rural development

Any individual, except someone gaining profits out of a business or profession, can claim deductions for donations made towards scientific research or rural development.(( Section 80GGA, Income Tax Act, 1961)) Such donations must be given to research associations, universities or other institutions which work in this area. A contribution can also be made for projects (approved by the Income Tax Department)(( Section 35AC, Income Tax Act, 1961)) or for the National Fund for Rural Development or National Urban Poverty Eradication Fund. The entire amount donated i.e., 100% can be deducted. The donation can be given in cash, cheque or draft. However, no deduction is allowed for cash contributions exceeding Rs. 10,000.

The points given above are some examples of major deductions applicable to individuals. Read here for more.

Paying Rent

While paying rent, there are certain things you should keep in mind:

Depositing Rent

  • In case of lease deeds, the law requires you to pay the rent by the 15th of the month. However, this is not necessary for a leave and license agreement.
  • You usually pay rent for the coming month. For example, if you are paying rent on 15th June, you are paying for the period of 15th June to 15th July.
  • The date of the rent payment will be specified in your written agreement for both rent/lease and leave and license agreements.
  • Rent can be paid to the landlord/licensor through cheque or online transfer so that there is a record of payments.
  • Always ask for a rent receipt from the landlord/licensor, especially if you have paid your rent in cash. The proof of transaction you get from the bank in cases of online or cheque transfers is not the same as rent receipts. Receipts from banks or online account statements are not the same as the receipt you get from your landlord/licensor acknowledging that you sent the rent. This is so that you have a proof of payment in the form of a receipt which you can use for tax purposes, evidence in Court etc.

Increasing Rent

  • Your written agreement will mention the percentage of increase of rent after the expiry of the term of the written agreement. Try to find out the practice in your city so that the raise percentage is not unreasonable.
  • If your landlord does decide to increase the rent, he can only do it after the term of your written agreement is over

Order Cheque

An order cheque is a cheque where only the person or party in whose name the cheque has been drawn, can withdraw the cash. The person collecting the cheque has to give an identity proof to encash the cheque. In such cheques, you have to strike out the words “or Bearer” and specify the person to whom the cheque is written for. Only then will it become an order cheque.

 

Order Cheque

For illustration purposes only

For Example: If Sumeysh’s name is written on the cheque, only he can present the cheque for payment and get it encashed. No one else will be allowed to withdraw the amount.

The payee can transfer an order cheque to someone else by signing their name on the back of it. This is known as endorsing of a cheque.

What are services?

Service means any activity made available to people, and it can include facilities related to banking, financing, insurance, transport, processing, provision of electrical or other energy, telecom, boarding or lodging, housing construction, entertainment, amusement or the relay of news or other information(( Section 2(42), Consumer Protection Act, 2019.)).

‘Services’ include any activities carried out by one person for another, in return for some payment or other benefits such as gift vouchers, as part of an offer, etc. For instance, activities like haircuts, medical check-ups, packing-and-moving services, flour mills, massages, watch-repairs, etc. for payment would be considered as services. Broadly, it can be said that services include:

  • Business services: Business services are services that support the daily functioning and activity of any business, such as technological setup, website hosting, call centers, banking, transport service, telecom etc.
  • Personal services: Personal services are usually more individualistic in nature, such as catering, hotel accommodation, medicine, painting, sculpting etc.
  • Social services: Social services are usually funded by the Government, and include services such as housing, medical care to the underprivileged, primary education etc.

Services that are free of charge

Further, services that are free of charge(( Section 2(42), Consumer Protection Act, 2019.)),  are usually not covered under consumer protection laws(( Joint Labour Commissioner and Registering Officer and Another v. Kesar Lal, AIR 2020 SC 2596.)). In other words, unpaid services which are provided informally, rather than with an expectation of a fee, are not covered under consumer protection law. For example, if someone goes to a doctor for a medical check-up, but being an acquaintance, the doctor does not charge any fee, the patient cannot later sue the doctor for any deficiency of service, as it had been provided free of charge. However, a traveller buying a ticket for a train is a consumer, and can sue the railways for any deficiency of service including bad food service, bad hygiene standards etc((Commentary on Consumer Protection Act, National Consumer Disputes Redressal Commission, accessed at, http://ncdrc.nic.in/bare_acts/1_1_2.html.

 

How can I find the circle rates for a property?

To find the circle rates for a property, you can go to the respective state government’s website (usually the Department of Registration and Stamps). For example, in order to find circle rates in Delhi, you can visit https://eval.delhigovt.nic.in/ where you must select the area where your property is located, the type of deed, the type of property, built-up area and then  calculate the circle rates.

To find out the market value of a property, one approach could be to contact a government registered property valuer or a chartered property valuer. Property rates tend to vary greatly due to the changing nature of the real estate market. Parameters like circle rates and fair market value can be a reliable way to determine fair price for a property.

Right to Information – Tax

The Right to Information Act 2005 (RTI Act 2005) states that all Indian citizens can access information which is under the control of public authorities.(( Section 4, Right to Information Act, 2005)) For example, if you want to know why your tax returns are delayed, then you can file an RTI application.

If you require any information which is tax related, you can approach the Central Public Information Officer (CPIO) or Central Assistant Public Information Officer (CAPIO) as the case may be, and specify the particulars of the information you require.((RTI, Income Tax Department, available at https://www.incometaxindia.gov.in/Pages/right-to-information.aspx The request has to be:

  • Made in writing or submitted online
  • Written in English, Hindi or official language of the state you are living in
  • Accompanied by fees requested during the application

The Public Information Officer will also help you write down the application if you require assistance. Other than the personal details, you will not have to give any reason for asking the information.

The CPIO has to provide the information within 30 days of the receipt of the request. If he does not do this, he may be punished with a penalty of Rs. 25,000. For details of CPIO, please click here​​ and visit the respective Field Offices/Directorate Generals Pages​​ or call Aaykar Sampark Kendra at 0124-2438000.

If you require any assistance on filing an FIR, then you can check out the Right to Information topic for any further clarification.

Stamp Duty

Either the landlord or you or both of you will have to pay the “stamp duty” which is a tax levied on the agreement that you enter into when you are renting a house or a flat. You have to give your stamp duty during the process of registration.