I am planning to buy a flat that's yet to be constructed in a society from a very reputed builder of Hyderabad. This flat is from landowner's share. There are multiple blocks in the society and the block in which I am buying this flat only has plinth and underground parking constructed. The flat I am buying is on 14th floor of 19 floors. So technically as of today the flat doesn't exist. Now the landowner is insisting on registration of the flat. Sale deed will have a mention of transfer of landowner's right to me. Also there is a development agreement between builder and landowner which talks about all the details related to construction dates, etc. There is no involvement of builder anywhere in this deal. My questions are: 1. Can a property which is yet to be constructed can be registered? It will take at-least 1 year to reach till 14th floor. I have seen around 100 properties already registered on the Telangana registration website. Not sure if this is possible or not. as the entity is yet to be created. 2. Total value of the flat is rs 4500 per sft. Of which registration value will be rs 2000 per sft and remaining 2500 will be taken on account of work order. Is that ok? Work order with landowner? 3. What kind of taxes are required to paid in this deal and how much? I am being asked for service tax @7.5% (half of 15% as it is under construction)of registration value (@2000 rs sft). Since landowner is not providing any services of construction, do we even have to pay service taxes on this? 4.any other risks?
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1. The sale agreement in respect of proeprty to be constructed can be done. This is legally permissible.
2. I am not sure about work order. the value of rs.4500/- can not be broken into 2 aprts.It is to be all consolidated.
3.Service tax in respect of under construction flat is permissible. However Rs. 2000/- per sqft consent is unique and I can not advise you to do the same.
1) Does builder have building commencement certificate ?
2) Flats can only be sold after plans are sanctioned by municipal corporation
3) it is always better to purchase flat after building is constructed and OC issued
4) total sale consideration of 4500 per square feet should be mentioned. Do not agree to 2500 for work order
5) you don't have to pay service tax but GST on under construction flat
6) wait for builder registering his project with RERA then take a call on purchase of flat
1. No. A property which is yet to constructed cannot be registered. There can be agreements respect of property yet to construct which can be registered. Registration of title document in respect of non existing property is not advisable. Initially the registration authorities will registered the property if both seller and buyer appear before them and later they may inspect. However the registration authority may not bothered about non existing of property since they have got revenue by way of registration charges. Any title document in respect of non existing property or property yet to construct whether registered or unregistered is a Premature document and does't have any validity in the eye of Law and you cannot take any shelter of said document before court.
2. Generally there will be variation in value of seller and registration market value. The excess value can be adjusted as per convenient of seller and buyer. The aspect of work order with owner or not will be according to Development Agreement between landlord and builder. Every thing will there in the development agreement.
3.No service tax applicable at this juncture.
4. Must take care of title of property, permissions from concerned government authorities viz., GHMC, HMDA etc., and NOC from Fire department etc.,
My questions are:
1. Can a property which is yet to be constructed can be registered? It will take at-least 1 year to reach till 14th floor. I have seen around 100 properties already registered on the Telangana registration website. Not sure if this is possible or not. as the entity is yet to be created.
If you are buying the vacant site then you can get it registered but you cannot register an unreconstructed flat.
Do not take a risk just because somebody else is doing so.
2. Total value of the flat is rs 4500 per sft. Of which registration value will be rs 2000 per sft and remaining 2500 will be taken on account of work order. Is that ok? Work order with landowner?
This can be opined only after seeing the relevant papers mentioning the condition and the rates therein.
3. What kind of taxes are required to paid in this deal and how much? I am being asked for service tax @7.5% (half of 15% as it is under construction)of registration value (@2000 rs sft). Since landowner is not providing any services of construction, do we even have to pay service taxes on this?
You must ask him the landowner that how can he demand service tax when he is not a service provider
