REITS

Finance Minister Arun Jaitley, while presenting the budget for 2014-2015, said that Real Estate Investment Trusts (REITs) would soon be allowed. To support the idea  Securities and Exchange Board of India (Sebi) in the month of August  firmed up regulations that will govern real estate investment trusts, or REITs, and so-called infrastructure investment trusts (InvITs) that the market regulator decided to allow. A move that will enable easier access to funds for cash-strapped developers and create a new investment avenue for institutions and high net worth individuals, and ultimately ordinary investors

But how REITs will be a game-changer for Indian real estate and before that we also need to know what actually is REITS all about.

It is a security that sells like a STOCK on the major exchanges and invests in real estate directly, either through properties or mortgages. REITs receive special tax considerations and typically offer investors high yields, as well as a highly liquid method of INVESTING in real estate. The concept Real estate INVESTMENT trusts (REITs) was originated in the USA in 1960s. REITs were created by US Congress to give all individuals the opportunity to benefit from INVESTING in income-producing real estate. Just as mutual funds do with equity and debt, REITs will pool money from investors and INVEST them in income-generating (rental assets) offering them a way to diversify their portfolios by investing in property.

There are internationally three types of REITS:

a)     Equity REITs: Equity REITs invest in and own properties ( thus responsible for the equity or value of their real estate assets). Their revenues come principally from their properties rents.

b)     Mortgage REITs: Mortgage REITs deal in investment and ownership of property mortgage. Their revenues are generated primarily by the interest that they earn on the mortgage loans.

c)     Hybrid REITs: Hybrid REITs combine the investment strategies of equity REITs and mortgage REITs by investing in both properties and mortgages.

Few insights for REITS in India: The minimum public holding in REITs should be 25 per cent while the total number of outstanding units at all times as well as the number of unit holders — who are part of the public — should be 200.

Key benefits

1) Portfolio diversification: For small investors and institutions, REITs provide an opportunity to invest in largescale commercial real estate

2) A compulsory dividend payout (typically >80% globally and >90% in India) makes the underlying asset similar to a bond, with a growth component built-in through price appreciation.

3)  Tax concessions ensure that dividend payouts are healthy and less impacted by changes in central tax laws.

4)  Improved transparency and less volatile markets: REITs improve transparency in the real estate markets as information is periodically disclosed on average rents, occupancy levels, tenant profile, renewal profile, etc.

Further I would like to add more points to support this REITs term:

Nearly 30% of the country’s population is living in cities and urban areas and this figure is projected to reach 50% in 2030 based on which the present urban housing shortage is 1.87 crore units.

Overall housing shortage is of almost 6.3 crore units and the demand for houses are expected to increase by another 2.63 crore units in the next 3 years due to population growth at the current rate of growth.

With the above factors and nature of this new instrument we can conclude the things will become more prospective to bring/infuse more liquidity in the market.

For further Consultation or Help please feel free to write to us on contact@munim.in Or visit our website

Munim Team

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Tax Saving Instruments (2)

In the last post we have discussed the Housing loan under the head of Tax saving instruments:

We would like to discuss more instruments of Tax savings under 80C.

1)      PPF:

It is an all-time favourite INVESTMENT option and 2014-15 Budget has made it more attractive by enhancing the annual INVESTMENT limit to Rs 1.5 lakh. For PPF you can open an account in a post office branch or a bank. The maximum INVESTMENT of Rs1.5 lakh in a year can be done as a lump sum or as installments on any working day of the year. Just make sure you invest the minimum Rs 500 in your PPF account in a year, otherwise you will be slapped with a nominal, but irksome, penalty of Rs 50. Though the PPF account matures in 15 years, you can extend it in blocks of five years each.

2)      Equity-linked saving schemes (ELSS):

a)     Shortest Lock in period

b)    Minimum investment as low as Rs.500/-

c)     Unlike ULIP, PPF, insurance plan, no compulsion for continuity in investments over the years.

d)    It is also equity funds provide good returns over a long maturity period.

3)      SCSS: This assured return scheme is the best tax-saving avenue for senior citizens. However, the Rs 15 lakh investment limit somewhat curtails its utility. The interest rate is 100 basis points above the 5-year government bond yield. The interest is paid on 31 March, 30 June, 30 September and 31 December, irrespective of when you start INVESTING.

4)      Bank FDs and NSCs: Remember always that interest on FDs is taxable.

5)      Life Insurance Plans: Costliest Tax saving instruments, we always would like to suggest that Life Insurances should always be covered as per their genuine purpose instead of investing point of view.

6)      ULIPS: Keep in mind that a Ulip yields good results only if held for at least 10-12 years. A small charge levied for risk coverage.

For further Consultation or Help please feel freee to write to us on contact@munim.in Or visit our website

Munim Team

www.munim.in

Reach us @ +91 8800681678 | contact.munim@gmail.com | contact@munim.in

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SSI/MSME registration

Since our foray into SSI/MSME registration, we have been flooded with calls and orders. Here is this blog enlightening some registration and importance of MSME registration.

Government, in order to mark impactful governance, is providing online platform to register MSME though all the documents are required to be submitted.

This registration opens up gates for various government scheme for MSMEs under the Ministry of MSME development. Entities registered under MSME are given special treatment in all government tenders. MSMEs are also allowed to negotiate even after submission of bids.All the PSUs and government departments have been instructed to get certain quota of work done only by MSMEs.
Thus MSME registration comes with great advantage with almost zero annual filings.

Process to register under MSME.

1. Registration can be awarded to manufacturer and service providers falling under MSME criteria which is as follows:

For Manufacturers
          Investment                          Category
  A) less than Rs 25 Lacs.           Micro
  B) Rs 25 lacs to Rs 5 crore.      Small
  C) Rs 5 crore to Rs 10 crore.    Medium

For Service Providers
           Investment.                        Category
  A) less than Rs 10 lacs.             Micro
  B) Rs 10 lacs to Rs 2 crore.       Small
  C) Rs 2 crore to Rs 5 crore.       Medium

2. Applicant needs to keep the copies of certificates depicting value of land and land agreement, Board Resolution for the authorized signatories, Turnover details, list of products, Certificate of Incorporation.

3. The applicant needs to fill the registration form for state MSME.

4. The form is to be completed in all aspects.

5. The completely filled form is required to be signed by the authorized signatory (Director or 

Proprietor  preferred).

6. The documents are required to be submitted along with.

7. After the processing of the form and document the DC state will provide the SSI/MSME registration no.

Hurray your registration is complete, now you can quite your number in all government tenders, MDA activities etc to avail the benfits.

For more details or help in registration process, don't hesitate to visit or contact us.

Munim Team

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Registration with Export Promotion Council

As in previous blog we have discussed the importance,  role and benefits of registration with export promotion councils (EPC), in this blog we will discuss the registration process of EPC.

1. Each EPC represents a different fraternity of business with different markets. Thus, you need to first know which EPC to register for so as to reduce the wastage of efforts and time. After, identification of the related EPC the applicant need to fill up the form for the EPC. It is to be kept in mind that no area to be left blank, if the information asked is not related please write Not Applicable or NA.

2. The applicant can register with EPC as a merchant exporter or manufacturer exporter. Depending upon the operations one should register accordingly. If registering as a Manufacturer Exporter the EPC will ask for factory licence/ registration with concerned DC or MSME or any state authority certifying the manufacturing. For registration as Merchant Exporter no document is required.

3. The applicant need to provide the details of the export business for last 2/3 years. If not traded then write NA.

4. A DD or multi city cheque of the specified amount is required to be submitted to the main office or regional office (please confirm the acceptance of cheque from the EPC before applying)

5. The registration in any EPC is valid from 1st April  to 31st March of following year. That means even if registering in Feb the membership has to be renewed in next month with full renewal fees.

6. Depending upon the EPC, the time taken for registration after receiving correct application is somewhere around 15 to 30 days. Thus refrain from starting the registration process in the month of Feb as it would be an economical loss.

7. Fees once submitted whether with correct or incorrect application form is valid only till 31st March. This means if the process is initiated in January and fees submitted to the EPC and because of some reasons/ mistakes the registration could not be completed before 31st March (fault at applicant side), then the fees is required to be submitted again.

8. EPC would require a board resolution on the letter head of the company, approving application to the EPC and authorizing a representative to be the authorized signatory.

9. Two sets of self certified PAN, Certificate of Incorporation and MOA & AOA is required to be submitted.

10. The duly completed form signed by the director/prop and authorized signatory (wherever required) needs to be submitted either in person or  by post/courier.

11. Please be sure to that the application should be correct in all senses.

12. And lastly a cover letter letter listing all the documents enclosed and request to register with EPC.

Incase of any query or help or consultancy, please refer to our website or contact us directly

Munim Team

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Tax Saving Instruments (1)

We are heading now for the year end and everyone of us is looking for better prospects in this approaching year with our very well known lines “ acche din aane vale hai”.

And I hope each one of you is looking now for investments as the next agenda will be tax savings declarations. May be you are going for advises from your CAs or taking help from newspaper or other articles. But trust me, it would always be better to invest for long term.

Markets are booming with long jumps, in fact, BSE is establishing new highs almost on daily basis, which is an indication of more prosperous nature of markets in next 3-4 years to come. Gold has taken a leap of almost Rs.1000/- in the last week.

So, preparation should be to invest for next 3-4 years for heavy gains rather than saving taxes only. That would automatically be taken care once the direction for investment will be chosen carefully.

Still it depends upon individual, if only the tax saving is the motive; we are defining few of such schemes with our priority list   :

1)      Home Loans : the Repayment of Home Loan into 2 components:-

a)      Repayment of the Principal Amount

b)      Repayment of the Interest on Home Loan

The amount paid as Repayment of Principal Amount of Home Loan by an Individual/HUF is allowed as tax deduction under Section 80C of the Income Tax Act. The maximum tax deduction allowed under Section 80C is Rs. 1, 50,000. (Increased from 1 Lakh to Rs. 1.5 Lakh in Budget 2014)

This tax deduction is the total of the deduction allowed under Section 80C and includes amount INVESTED in PPF Account, Tax Saving Fixed Deposits, Equity Oriented Mutual funds, National Savings Certificate, Senior Citizens Saving Scheme etc.

This tax deduction under Section 80C is available on payment basis irrespective of the year for which the payment has been made. The Amount paid as Stamp Duty & Registration Fee is also allowed as tax deduction under Section 80C even if the Assessee has not taken Loan.

There is a catch in this also, tax benefit of home loan under this section for repayment of principal part of the home loan is allowed only after the construction is complete and the completion certificate has been awarded.

Tax Benefit on Home Loan for payment of Interest on Home Loan can be claimed as Deduction under Section 24 as well as under the newly inserted section 80EE.

The maximum tax deduction allowed under Section 24 of a self-occupied property is subject to a maximum limit of Rs. 2 Lakhs.

It is also important to note that this tax deduction of Interest on Home Loan under Section 24 is deductible on payable basis, i.e. on accrual basis. Hence, deduction under Section 24 should be claimed on yearly basis even if no payment has been made during the year as compared to Section 80C which allows for deduction only on payment basis. Moreover, if the property is not acquired/constructed completed within 3 years from the end of FINANCIAL year in which the loan was taken, the interest benefit in this case would be reduced from 2 Lakhs to Rs 30 thousand only.

We would be continuing this in our next blog, For further Consultation or Help regarding IEC registration/modification please write to us on contact@munim.in

Munim Team

www.munim.in

Reach us @ +91 8800681678 | contact.munim@gmail.com | contact@munim.in

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