Theme: Money & Property

What to do if tenants evicted without giving rent

If you are the landlord and the tenants vacated the house without paying rent, you can file a complaint to the police against your tenant. For this, you will have to go to the police station and file an FIR. You should make sure you give all the information you know about the incident and trouble you have faced with your tenant.

If you are a tenant without a lease agreement and you feel that the landlord is unfairly evicting you for non-payment of rent, please contact a lawyer for further help.

Tenant refusing to vacant house even giving notice

Even after giving notice, if the tenant refuses to vacate the property, this is a breach of contract because the tenant is violating the rent agreement. We would recommend that you contact a lawyer who can assist you based on your specific rent agreement. 

 

If a police officer is refusing to take action on your complaint, then you can: 

  • Write down the complaint and send it to the Superintendent of Police. If the Superintendent feels there is merit in the case, they can appoint a police officer to start an investigation.
  • Take the help of a lawyer while going to the police station. Lawyers can advocate on behalf of a person and reduce the possibility of harassment from police officers.
  • Approach the District/Judicial Magistrate directly to file a ‘private complaint’. Further, if a Magistrate thinks proper investigation is not being done by the officer-in-charge of a police station, the Magistrate can certainly direct the officer to make a proper investigation and can also monitor the investigation. So, you can apply to the concerned Magistrate for monitoring the police investigation, and the Magistrate can then issue appropriate directions for speedy completion of the investigation.

You can also file a complaint against the Investigating Officer for deliberately disobeying any law which regulates the manner of conducting an investigation. Under Section 166A of the Indian Penal Code, 1860, the officer can be punished with imprisonment for six months to two years, along with a fine.

What are the different kinds of disputes with respect to land and immoveable property?

Since land is considered to be one of the most important assets, the range of land-related disputes is huge. However, in this explainer, we will focus on the more common types of disputes, which include:

  • Right of Inheritance Disputes
  • Partition Disputes
  • Land Measurement Disputes
  • Land Encroachment and Boundary Disputes
  • Right of Way Disputes
  • Land Ownership Disputes

What are the laws being discussed?

This explainer deals with the purchase and sale of immovable property in India and various modes of acquisition of property. The same is governed by the Transfer of Property Act, 1882 (“TP Act”); the Foreign Exchange Management Act,1999 (“FEMA”) and FDI Master Circular issued by the Reserve Bank of India on the subject matter. The explainer also aims to discuss foreclosed properties (property, which was kept as collateral for a home loan or mortgage but acquired by the money lender due to non-payment of three or more Equated Monthly Installments (EMIs)), the purchase of which is governed by the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (“SARFAESI Act”).

What is Income Tax?

Income tax is a tax levied by the Government of India on the income of every person. The Income Tax Act, 1961, covers legal provisions regarding the collection of income tax. ​ There are some important points you will need to keep in mind to understand income tax, such as:

Persons filing Tax

It is mandatory for every person to pay income tax. Income tax law defines the term ‘person’(( Section 2(31), Income Tax Act, 1961)) to include individuals, Hindu Undivided Family etc. Read more here.

Calculating Taxable Income

​​The Income Tax Department taxes you based on your income from categories such as income from salaries etc. The total income calculated from these heads is called the gross total income. It is from this amount that deductions are made. Read more here.

Entities and Income exempt from Tax

Certain entities as well as certain kinds of income are exempt from tax. In other words, income tax will not be charged to such entities and incomes. Some examples include agricultural income, income for scholarships for higher education etc. Read more here.

Deductions with respect to 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. Deductions can be less than, 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 include income from a loan taken for house property, income from loans taken for higher education etc. Read more here.

Tax Collection

Taxes are collected by the Government through:

Banks in India

Taxpayers can voluntarily pay income tax by going to designated banks. For example, taxpayers can pay advance tax and self-assessment tax in authorized bank branches such as ICICI Bank, HDFC Bank, Syndicate Bank, Allahabad Bank, State Bank of India, etc.

Taxes deducted at source [TDS]

When tax is collected from the very source of income of the person receiving income, it is known as ‘taxes deducted at source’ or TDS.(( Tax Deducted At Source, Income Tax Department, available at https://www.incometaxindia.gov.in/Pages/Deposit_TDS_TCS.aspx For example, if you are a professional earning a retainership fee in a company, a certain amount may be deducted by your company as tax when it is given to you. The company will deposit the deducted money to the government. The person whose tax has been deducted at source will get a Form 26AS or TDS Certificate. This will be given to the person by the entity or person deducting the tax. For example,  XYZ Company will deduct an amount for tax before giving Aman his monthly salary, and provide Aman with the TDS Certificate.

Taxes collected at source [TCS]

Tax collected at source (TCS)((Section 206C, Income Tax Act, 1961)) TDS is the tax payable by a seller, which he collects from the buyer at the time of sale. For example, in a parking area of a shopping mall, along with the parking fee, the mall will charge a tax amount for a parking lot. Some other instances where sellers collect TCS are for liquor, while selling a motor vehicle, jewellery, etc.

It is mandatory for a taxpayer to have a PAN Card as well as an Aadhar Card while filing taxes.

Searching for a House

Contact a Broker

When you decide to search for a house or a flat, you may need to contact a broker for the area in which you want to stay in. Brokers are usually paid only after you finalize a house and you sign the contract.

Inspect

Depending on the kind of house (furnished/unfurnished) that you want, you should physically inspect the house to see if all your requirements are fulfilled.

Some basic requirements of a house such as permanent fixtures of water supply, electrical fittings like bulbs, fan etc. should ideally be there in any kind of house you take. Try and negotiate with the landlord/licensor regarding any requirements that you have.

Token Money

If you want some time to think about whether you want to take the house, you can block it by paying token money to the landlord. Paying token money is optional and its purpose is to make sure that the landlord does not show the flat to any other possible tenants/licensee. If you have paid token money, ask for a receipt for the same.

Token money payments are a practice that is not regulated by law.

Be careful when you give the money since taking action against a landlord to get your token money back may be difficult.

Making a Will

You can make a will at any point during your lifetime if you are a

  • Person of sound mind, and
  • Over the age of 18.

The person making the will should be aware of what they are doing.

Illustratively, a person with mental disabilities can also make a will when they are aware of what they are doing. If a person is under the influence of alcohol and does not know what they are doing, then they cannot make a will.

How do cheques work?

Let’s understand how cheques work. A cheque is a promise made in writing by one person to another to unconditionally pay a specified amount of money. However, you can also write a cheque to yourself.

For example, if Amit owes Asha Rs. 10,000, he can give Asha a cheque of Rs. 10,000. When Asha presents this cheque to the bank, she will receive Rs. 10,000 as cash or in her bank account. Rs. 10,000 will be deducted from Amit’s account.

In technical terms, as used by bankers and lawyers, a cheque is also referred to as and is a type of a ‘Negotiable Instrument’.

The different parties involved in dealing with a cheque are:

  • The issuer of the cheque (Drawer)
  • The payee/holder of the cheque and
  • The bank (Drawee)

Who is a consumer?

Consumers are people who(( Section 2(7), Consumer Protection Act, 2019.)) buy and use goods or services.  Consumers have a right to file a complaint for any of the services or goods used by them:

Person buying and using goods and services

A consumer includes any person who buys goods and services, as well as anyone who uses them. For instance, a person who watches a movie after buying a movie ticket is a consumer and similarly, a person who uses a gift voucher gifted from someone else  is also a consumer.

Person using goods for self-employment, and not for commercial purposes

The consumer protection law does not apply to people who use goods and services for commercial purposes. However, there are some exceptions to this. For example, a person who buys large machines for using it in their business, is not a ‘consumer’. However, people who use goods for self-employment are considered as consumers(( Section 2(7)(i), Consumer Protection Act, 2019.)).  For example, artists who buy art supplies for their work or beauticians who buy beauty products are consumers.

Person using online facilities

A consumer also includes any person who buys or hires goods or services online. For example, if you order from an online clothes website, you are a consumer.(( Explanation (b), Section 2(7), Consumer Protection Act, 2019.))

People facing issues related to food

Consumers also include people who may be facing issues related to food items, such as adulteration, poor quality, lack of service, etc.(( Section 2(21), Consumer Protection Act, 2019.)) For instance, issues related to food can cover problems across a wide range of products, starting from water that goes into the production of items like  juices as well as the sale of animals like chicken, mutton etc. that are expressly intended for human consumption(( Section 3(j), Food Safety and Standards Act, 2006.))

 

What are inheritance rights?

When it comes to immovable property, inheritance refers to the transfer of a property’s ownership after the death of an individual. The ideal way to ensure smooth transfer of property ownership following someone’s death is through a will(( To know more about wills, read our explainer – https://nyaaya.redstart.dev/topic/will/)).

However, if there is no will, i.e., an intestacy, law of inheritance applies to decide distribution of the property. In India, personal laws, customary laws and legislative laws govern the law of inheritance of property e . The broad laws are the Hindu Succession Act 1956 and Islamic personal laws.

Under the Hindu law of inheritance, a person/owner can deal with their self-acquired property as they like, but there are restrictions about transfer of ancestral property. The law gives certain family members a birthright to ancestral properties. Brothers and sisters are entitled to equal shares in the property of their mother or father under the Hindu law of inheritance. Here, the terms ‘son’ and ‘daughter’ include adopted sons and daughters, but not stepchildren.

If the survivors have a dispute over immovable property, and the owner of the property does not have a will, they can file a suit before court.

In the case of Muslim law of inheritance, the personal laws that apply depend on which sub-sect one belongs to, i.e., Sunni or Shia. The laws are not codified, which means that there is no act setting them down. For Sunnis following Hanafi Law, personal law restricts legacies to a maximum of one-third of the estate remaining after taking care of funeral expenses, outstanding wages of domestic servants and debts.

What are the different types of immovable property?

Under Indian laws, immovable property includes land, buildings, hereditary allowances, rights to ways, lights, ferries, fisheries or any other benefit to arise out of land, and things attached to the earth, or permanently fastened to anything which is attached to the earth, but not standing timber, growing crops nor grass.(( Section 2 (6) of the Registration Act, 1908)) Due to the fact that land is a state subject under Schedule VII of the Indian constitution, the laws governing immovable property vary from state to state.

Land and Property belonging to SC/ST

It is illegal to take over any land that is owned or controlled by, or allotted to any SC/ST member as well as forcing an SC/ST member to leave her home unless it is done legally. 

The takeover of the property is considered illegal if it is done

  • without the agreement of the victim, or
  • by threatening her or someone connected to her, or
  • by making false records.

It is also a crime to similarly illegally deprive an SC/ST member of his property or to prevent him from exercising his rights over any land. This includes:

  • Blocking an SC/ST member from accessing any forest rights under the Forest Rights Act.
  • Blocking rights to any water source or irrigation source.
  • Destroying or taking away crops.

You can face imprisonment of a term of 6 months to 7 years for using fire or bombs to damage homes, religious places and/or property belonging to SC/ST members. You can report such crimes.

Calculating Taxable Income

The Income Tax Department taxes you based on your income from the categories given below(( Section 14, Income Tax Act, 1961)). Gross total income is the total income calculated based on these categories. It is from this amount that deductions are made.

Income from Salary 

Income from salary is taxable in India. Salaried income which is taxable consists of:

  • Salary due from the employer (including a former employer) to the taxpayer during the previous year. The salary will be taxed even if it has not yet been paid.
  • Salary paid by the employer (including the former employer) to the taxpayer during the previous year, before it became due. For example, if the employer pays the salary for a project in advance.
  • Any arrears or pending salary paid by the employer (including the former employer) to the taxpayer during the previous year. This happens only if tax was not charged to this amount in an earlier year.

The following break-ups within your salary are fully taxable:

Basic Salary Fully Taxable
Dearness Allowance Fully Taxable
Bonus, Fee or Commission Fully Taxable

Income from Capital Gains

Income from capital gains(( Capital Gains, Income Tax Department, available at https://www.incometaxindia.gov.in/Tutorials/15-%20LTCG.pdf. is charged only in the following conditions: There should be a capital asset((Section 2(14),Income Tax Act, 1961)). In other words, this refers to any property held by a taxpayer.

  • During the previous year, the capital asset is transferred by the taxpayer.
  • There should be profits or gains as a result of transfer. Read more here to understand which transactions are not considered to be “transferred” by the taxpayer.

Some transactions not taxed are:

  • Distribution of assets(( Section 46(1), Income Tax Act, 1961)) in a company to the shareholders at the time of liquidation
  • Distribution of capital assets (( Section 47(1), Income Tax Act, 1961))on a partition of a Hindu Undivided Family

Income from House Property 

A house property could be your home, an office, a shop, a building or some land attached to the building like a parking lot. The Income Tax Act does not differentiate between a commercial and residential property. All types of properties are taxed under the head ‘income from house property’ in the income tax return. This includes property you own. Income from house property is taxable if:(( Section 22, Income Tax Act, 1961))

  • The house property should consist of any building or land attached with it
  • The taxpayer should be the owner of the property
  • Business or profession is not carried on by the taxpayer in the house property

Income from Business and Profession 

Remuneration, bonus or commission received by a partner from the firm or anyone working independently in a business or profession, is not taxable as ‘Income from Salaries’. Rather, it would be taxable as ‘Income from a Business or Profession’ (( Section 17, Income Tax Act, 1961)). Tax is charged  on the following from a business or profession(( Section 28, Income Tax Act, 1961;Section 41, Income Tax Act, 1961; Section 43 , Income Tax Act, 1961)):

  • Any compensation or other payment owed to or received by any specified person.
  • Income derived from a trade, profession or any specific services performed for its members, like an income made by a contractor.
  • Cash assistance (by whatever name it is called) received or receivable by any person against exports under any scheme of Government of India.
  • Value of any benefits arising from a business or a profession.
  • Interest, salary, bonus, commission or remuneration owed to or received by a partner from partnership firm.

Read more examples on which income is charged here.

Income from Other Sources 

Any income which is not chargeable to tax under any other heads of income, but which is not to be excluded from the total income, is chargeable to tax under the head “Income from Other Sources”.(( Section 56, Income Tax Act, 1961)) Some examples of these are:

  • Dividends
  • Income from winning lotteries, crossword puzzles, races including horse races, card games, gambling or betting of any form or nature.

The following amounts fall under the head “income from other sources”. Amounts not taxed under the head of ‘Profits and Gains from Business or Profession’, fall under this category. This is applicable only if

  • Any money received by an employer from his employees as a contribution towards PF (Provident Fund), ESI (Employee State Insurance), Superannuation Fund, etc.
  • Interest on securities
  • Income from machinery, plant or furniture belonging to taxpayer and let on hire
  • Composite rental income from letting of plant, machinery or furniture with buildings
  • Any sum received under Keyman Insurance Policy (including bonus)

Steps for Negotiation with Landlord

Steps to Take for Negotiation with Landlord

Ask for Identity Proof

You can ask the landlord/licensor for identity proof so that you can confirm that the landlord is the owner of the house or has the permission of the owner to rent the property. The purpose of asking for identity proof is to check whether the person is who they claim to be. Some of the most common identity cards used are Aadhaar card, Driving License etc. The ID card must have the picture as well as the permanent address.

Negotiate Rent and Security Deposit

Negotiate the rent and security amount with him and try to ask for the receipts for both. In some cases, the brokers can be very helpful while trying to negotiate the rent, so you can also request him to accompany you during the rent negotiations.

Negotiate Requirements in the House

While inspecting the house if you have come across any changes or additions to be made, you should tell your landlord before signing the contract. It is helpful to do it before as you will know whether the landlord is open to negotiations for the requirements you want and to assess whether you are getting your house for the best price. Make a list of repairs and installations so that your landlord can look into them.

Valid Will

For a will to be valid:

  • It must have your signature (or your thumb impression).
  • The signing/fingerprinting should be done in the presence of two other people who will act as witnesses.
  • Both witnesses will sign the will or put their thumb-impression in your presence.

You can also direct someone else to sign your will in your presence. There is no prescribed format or prescribed place for this signing. Anyone can be a witness to your will – including the executor.

What are consumer rights?

Consumers who are unaware of their rights are vulnerable to the marketplace. It is vital for consumers to be aware of their rights so that they can make choices confidently, and with due regard to their interests. Consumer Rights include, but are not limited to, the following ((Consumer Rights, Department of Consumer Affairs, accessed at https://consumeraffairs.nic.in/organisation-and-units/division/consumer-protection-unit/consumer-rights:

Right to protection against goods and services which are hazardous to life and property

Goods should not only meet the consumers’ immediate needs, but also fulfill long-term interests, and the use of goods and services  should not result in any harm to consumers. For instance, if a person uses a medicine that cures an immediate ailment such as the flu, but the medicine causes worse side-effects, then they can file a consumer complaint.

Right to be informed

Consumers have the right to be informed about the quality, quantity, potency, purity, standard and price of goods. This right ensures that sellers put out authentic information on the product labels and do not make claims which are not true.

The government also publishes a price monitoring list for essential commodities along with Mandi prices, daily price reports, educational material on consumers’ digital safety etc. Some state Governments, such as Tamil Nadu, have also published advisories to educate consumers.

Right to choose a variety of items at competitive prices, wherever possible

Consumers have the right to get basic goods and services at fair prices. For example, you have the right to buy medicines either from the hospital medical store or from general stores at fair prices.

Right to file a complaint at Consumer Redressal Forums

Consumers have the legal right to use Redressal Forums to file their complaints. Every consumer has a right to file a complaint and be heard so that the grievance can be resolved.

Right to seek redressal against unfair trade practices

Unfair trade practices usually relate to cheating, deceiving, or defrauding the consumer through schemes, advertisements etc. The law protects consumers from being exploited and creates a system for the consumer to claim a fair settlement through the redressal forums.

Lodging a complaint with the Bank

Most banks have staff dedicated to matters like this. The relevant contact details are found on the backside of your card as well as the website of the bank. Telephone numbers of help desks are also displayed at every ATM machine.

If you have suffered a loss you must immediately contact the banks via phone (preferably) or email. Do not forget to note the complaint number and follow up your complaint using the same number. The bank should acknowledge your email.

The Code of Bank’s Commitment to Customers (CBCC) enacted by the Banking Codes and Standards Board of India (BCSBI) mandates each bank branch to display the name of the official at the bank branch responsible for addressing customer grievances.

If your complaint is unresolved at the branch level, you may approach the Regional or Zonal Manager or the Principal Nodal Officer (PNO) at the address displayed at the branch.

Typically, within 30 days of receiving the complaint, the bank will send you a final response or explain why more time is needed to investigate. The Bank will also tell you the process to take the complaint forward in the event you are still unsatisfied after the final response from the bank.

What are the advantages of having a last will and testament and how can I make one?

A will is a written document a person makes to describe how their assets and wealth are to be distributed among their descendants. The making and execution of wills is governed by the Indian Succession Act of 1925, which applies to all religions except Islam.

Drafting a last will and testament ensures that your property is safely and securely distributed amongst your beneficiaries, as per your wishes. This would avoid intestacy and minimize the chances of a dispute over right of inheritance and avoid long-drawn court processes. You need to name an executor (who will carry out all the proceedings of the will) and a legal guardian for your children if they are minors.

To know more, do read the Nyaaya explainer on Wills.

Why is registration of an immovable property so important?

The purpose of registering transfer of immovable property is to record the signing of the document. The ownership and transfer become legal only after registration, i.e. the ownership of the property is rightfully transferred only upon registration before the sub-registrar. Another significant benefit of paying registration fees and stamp duty is that the same are eligible for tax exemption under Section 80C of the Income Tax Act, 1961.

Tax Rates

The rates of income-tax and corporate taxes are available in the Finance Act passed by the Parliament every year. You can also check your tax liability and calculate the amount of income tax you have to pay by using the free online tax calculator available at the Income Tax Department website.

The Budget 2020 has given taxpayers the option to choose between:

  • existing income tax regime with applicable income tax exemptions and deductions or
  • a new tax regime with slashed income tax rates and new income tax slabs, but no tax exemptions and deductions.

Given below are the income tax rates  for individuals:

Old/existing tax rates

Net Income Range Income Tax Rate for Assessment Year 2020-21
Up to Rs. 2,50,000 No tax
Rs. 2,50,000 to  Rs. 5,00,000 5%
Rs. 5,00,000 to Rs. 10,00,000 20%
Above Rs. 10,00,000 30%

 

New reduced tax rates(( The Finance Act, 2020 (Rates applicable from April 1, 2020))

Net Income Range Income Tax Rate (optional, applicable from April 1, 2020)
Up to Rs. 2,50,000 No tax
Rs. 2,50,001 to  Rs. 5,00,000 5%
Rs. 5,00,001 to Rs. 7,50,000 10%
Rs. 7,50,001 to Rs. 10,00,000 15%
Rs. 10,00,001 to Rs. 12,50,000 20%
Rs. 12,50,001 to Rs 15,00,000 25%
Above Rs. 15,00,000 30%

 

Income Tax for Senior Citizens

Senior Citizens are those who are above the age of 60 years or more during the previous year.

Net Income Range Rate (Assessment Year 2021-22) Rate (Assessment Year 2020-21)
Up to Rs. 2,50,000 No tax No tax
Rs. 2,50,000 to  Rs. 5,00,000 5% 5%
Rs. 5,00,000 to Rs. 10,00,000 20% 20%
Above Rs. 10,00,000 30% 30%

 

Income tax for Super Senior Citizens

Super senior citizens are those who are above the age of 80 during the previous year (year in which income is earned)

Net Income Range Rate (Assessment Year 2021-22) Rate (Assessment Year 2020-21)
Up to Rs. 5,00,000 No tax No tax
Rs. 5,00,000 to Rs. 10,00,000 20% 20%
Above Rs. 10,00,000 30% 30%

Read more on income tax rates for a partnership firm, Hindu Undivided Family,  etc.

Negotiating your Rent Agreement

Process of Negotiating your Rent Agreement:

  • While negotiating you should try to first establish the identity of the person who you are going to enter into an agreement with. Having this information is important to be able to assert your rights and bargain/negotiate with the person you are entering into an agreement with. Further, if you have this information, then it will be easy for you to go to the police/court in case:
    • There has been any cheating or fraud even before signing the agreement.
    • There is any problem or dispute about the agreement or payments.
  • While you are negotiating your agreement it is important to establish all your terms clearly and translate these terms into the written agreement as you have agreed upon verbally. Once the rent arrangement is signed:
    • It cannot disputed easily. Hence, it is important to negotiate and read your agreement prior to signing it.
    • If your landlord/tenant asks you for anything else which is not in the contract then you can refuse since it is not in your contract.

Contents of a Will

You can give away all of your property over which you have complete ownership. You cannot give away property which you do not own. In some cases, you may have a life interest in the property, i.e. when someone has given you the property under their will only to use for your lifetime, but you do not own it.

You may include any movable or immovable property which you have acquired by yourself. If you are a member of a Hindu joint family, you can only give away your portion of the ancestral property in a will.