Signing an agreement with a builder? Read this !!!

On handing over the house to you, the builder needs to also give a `Completion Certificate’. This is issued by municipal authorities which establishes that the building complies with the approved plan. You would need this certificate for registration of your house and other government formalities.

So you have identified the house that you want to buy, got the home loan approved and now are ready to own your house. Think its smooth sailing from here onwards? Think again. Once you have completed these formalities, the next part is ensuring that the builder does not entangle you in any legal traps. There are some very important points to consider when you are about to enter into an agreement with the developer. Let’s take a look at 5 such points you need to remember and the measures you can take against them.

Point 1 - Actual price of the house

The agreement you enter in with the builder details the various costs that you will need to bear for buying the house. This would include the cost for utilities like electricity and water, parking space, various taxes and in some cases even the registration charges. However, the builder may then levy some extra charges for any of these.

Measures to take

• Check the agreement very carefully for all the charges applicable.
• If possible, get the agreement checked by a lawyer for any missing or hidden charges and get the anomalies (if any) rectified by the builder.
• If the extra charges are for alterations made to the original plan, ask the builder for the sanction letter provided by government authorities for such alterations.

Point 2 - Actual size of the house

The agreement would clearly mention the size of the house you are purchasing. However, there is a clause which states ‘…the plans, designs, and specifications are tentative and the developer reserves the right to make variations and modifications….’. Therefore, you may agree for a certain size, but the builder can give a different size.

Measures to take

• Before freezing on your choice of a builder, do some research about the builder’s past projects.
• If possible, talk with other buyers who already have got possession about problems faced by them
• Try and include a clause in the agreement stating the minimum and maximum size beyond which the builder cannot increase or decrease.

Point 3 - Carpet Area

The area of an apartment or building, not inclusive of the area of the walls is known as carpet area. This is the area in which literally a ‘carpet’ can be laid. When the area of the walls including the balcony is calculated along with the carpet area, it is known as built-up area. The built-up area along with the area under common spaces like lobby, lifts, stairs, garden and swimming pool is called super built-up area. The carpet area can be 15-30 percent less than the super built-up area. However, you will not come to know the exact size until the flat constructions is completed.

Measures to take

• Purchase the property based on the carpet area of the flat.
• Ensure that this area is mentioned in the agreement.
• Try to get a clause included which will ensure that the contract can be terminated if the builder provides a house with the carpet area less than what is mentioned in the contract.

Point 4 - Date of Possession

The agreement normally mentions a tentative date of possession. However, there have been instances where builders have delayed possession by more than a year.

Measure to take

• Check the progress of the construction personally.
• If the progress is slow and would not meet the date of possession in a timely manner, build pressure on the builder.
• Forming a society with other buyers sometimes helps a lot in getting things to speed up at the builders end.

Point 5 - Completion certificate

On handing over the house to you, the builder needs to also give a completion certificate. This is issued by municipal authorities which establishes that the building complies with the approved plan. You would need this certificate for registration of your house and other government formalities.

Measures to take

• If the agreement does not mention the certificate, ensure that the agreement has a clause which states that the builder will provide the certificate while handling over the house to you.
• If the builder delays a lot, forming a society with other buyers sometimes helps a lot.

Other than these five points there more points such as the quality of the construction, management of the society etc. For this you can try to add clauses to the agreement or form a society to get the builder to meet your demands. Since there is no industry regulator you can turn to for the redressal of issues, it is important that you are aware of what you want and what you are getting.

source: bankbazaar.com

Are You Happy?

May this question halt you for a while. But then every child is growing up asking a lot of questions! Once they grow up to be adults, most of them are scared to ask questions. What happens when we stop asking questions? We receive no answers! Similarly when we don't monitor our attitude, we stop being flexible. For true success and happiness, ask yourself these four questions: Why? Why not? Why not me? Why not now?

Happiness is a simple possibility. Just do what is right, the right way, at the right time then happiness will settle down comfortably in your life.

Is it difficult to change an attitude? We don't pause to ask ourselves why we entertain negative attitude. Muster the courage to challenge the negative thoughts, just once or twice every day. Coax yourself to substitute the wrong/negative attitude with the right/positive attitude. After a few months you will pleasantly be surprised that it is indeed easy to stay positive for most of the time in life. The mind is like the modeling clay. It can be shaped into any way provided you meditate to shape it. Nothing is automatically going to happen in anybody's life. A well brought out mind can do wonders. It creates positive thoughts, is versatile and makes people happy. A badly disciplined mind is negative and causes havoc. It thinks too fast for comfort and makes people miserable because of criticism and hurt. Flexible attitude makes life easier and peaceful by and large. The flexible mind will let the wind of change to breeze through without any agitation. The rigid attitude will lock the door for happiness and the mind will dwell only in negative thoughts. Flexible attitude enables us to adapt to changes and the mind remains open widely.

Abraham Lincoln in one of his speeches said, “Important principles may and must be flexible”. How true?

The flexible attitude is the key to unlock lot of doors. This key can enable access to a good job, good friend, good association and everything else that sustains happiness in life. Therefore whatever is the state of mind of the other individual; let us make sure that our state of mind is flexible and filled with good wishes for others.

“Enjoy the little things, for one day you may look back and realize they were the big things”.

LLP can now act as an External Auditor of a Company

A Limited Liability Partnership (LLP) can now be a statutory auditor of a company, thanks to the Corporate Affairs Ministry. The Ministry has now clarified that a LLP of chartered accountants will not be treated as ‘body corporate' for the limited purpose of Section 226(3) (a) of the Companies Act. An executive order to this effect has been issued. This provision of Companies Act specifies that a ‘body corporate' is disqualified from appointment as auditor by a company. The CA institute had represented to the Ministry that the Limited Liability Partnership law of 2008 specifies a LLP as a ‘body corporate'. Hence, LLP among chartered accountants will not be qualified for appointment as auditor by a company, the CA institute had submitted. By taking LLP out of the purview of ‘body corporate' for the limited purpose of appointment of auditor, the Government has enabled conversion of more CA firms into LLPs.

source:internet

PPF vs. EPF which is better?

Public Provident Fund (PPF) and Employee Provident Fund (EPF) are long term investment instruments for retirement. The beauty of these options lies in their slow, steady and secure nature. You keep investing a small amount and end up with a big corpus by the time you retire. It is very important for every working individual to take advantage of these instruments. However a lot of people are confused between these two. We clarify all your doubts.

Public Provident Fund (PPF)

PPF is a statutory scheme of the central government started with the objective of providing old age income security to the unorganized sector workers and self employed persons

Employee Provident Fund (EPF)

Employee Provident Fund (EPF) is a retirement benefit applicable only for salaried employees. It is a fund to which an employee and employer contributes 12% every month (Pre-set by the Government of India) of the employee’s basic salary. Every year, the employer deposits with the Employee Provident Fund Organization (EPFO), the contribution from the employer and the employee. Knowingly or unknowingly, 24% of your basic salary is saved every month. Amount accumulated in the EPF account can be withdrawn to the employee at the time of retirement or resignation. This can also be transferred from one company to the other if one switches jobs.

Return on Investment

PPF: 8 % Per annum

EPF: 8.5% per annum (For the year, 2010-2011, EPF is at 9.5%)

Investment Tenure

PPF: Amount can be withdrawn on maturity i.e. after 15 years. It can be extended for a period of 5 Years

EPF: Amount is paid at the time of retirement or resignation whichever is earlier. It can be transferred to one company to other in case of a job change

Loan Option

PPF: Can avail loans up to 50% of balance of the 4^th year from 6^th year onwards

EPF: Can make withdrawals for personal needs by disclosing suitable documents

Tax Implication

PPF: Investment qualifies U/s 80C. On maturity amount, there is no tax

EPF: Investment qualifies for deduction under Section 80C.Withdrawal of EPF amount is subject to tax if withdrawal within 5 years of employment with the same employer. If you have not worked for at least five years with the same employer but the EPF has been transferred to the new employer, it is not taxed.

Which is better?

EPF has an edge over PPF because of the following reasons

Employer contribution

Employer contributes to the Employee Provident whereas in case of public provident fund no such contribution happens

Return on Investment

Rate of interest on EPF is higher than interest on PPF

Liquidity

An individual having EPF can withdraw amount for personal needs anytime providing necessary documents while an individual holding PPF cannot withdraw money till the completion of tenure

Conclusion:

Though both the investment options has got their own pros and cons, from above we can observe that EPF has got edge over PPF in terms of Return on investment, Employer Contribution, Liquidity.  For salaried people who have the option of contributing in EPF schemes, make sure you make the contribution to the fullest extent.  Since EPF is not available to self-employed and employees in un-organized sector, for those PPF is a good alternative.

source:internet

Know About LLP !!!

Overview:

Limited Liability Partnership (LLP) is a corporate business vehicle that enables professional expertise and entrepreneurial initiative to combine and operate in a flexible, innovative and efficient manner. It provides the benefits of limited liability of a company, but allows the flexibility of organizing their internal management on the basis of a mutually arrived agreement, as is the case in a partnership firm. In an LLP, all partners have limited liability for each individual's protection within the partnership, similar to that of the shareholders of a limited company. However, unlike the company shareholders, the partners have the right to manage the business directly. An LLP also limits the personal liability of a partner for the errors, omissions, incompetence, or negligence of the LLP's employees or other agents.

LLP – A Separate Legal entity

LLP is a body corporate formed and registered as per provisions of the Limited Liability Partnership Act, 2008. LLP is separate legal entity from that of its partners having perpetual succession. Any change in the partners of a LLP shall not affect the existence, rights or liabilities of the LLP. It can continue its existence irrespective of changes in partners. Also, LLP is capable of entering into contract and holding property in its own name.

Key Features

1.    Body Corporate

2.    Separate Legal Entity

3.    Perpetual Succession

4.    Limited Liability of Partners

5.    Profit Motive

Advantages and Disadvantages of LLP

Advantages	Disadvantages
Separate legal entity	LLP cannot raise funds from Public
Perpetual existence irrespective of changes in partners	Under some cases, liability may extend to personal assets of partners
No restrictions as to maximum number of partners	Any act of the partner without the other may bind the LLP
No requirement of minimum capital contribution	No separation of Management from owners
LLP and its partners are distinct from each other i.e. liability of Partners are limited	Can not be formed for charitable purpose
Partners are not liable for Act of other partners
Personal assets of the partners are not exposed except in case of fraud
No requirement to maintain statutory records except Books of Accounts
Easy to establish
Internationally renowned form of business in comparison to Company

Major Advantages As Compared To Company

1.    No Limit on number of partners

2.    No need of converting into Public Company to have members more than 50

3.    Less Government Intervention

4.    Minimal Cost of Formation

5.    Less Compliance Level

6.    No requirement of holding any meeting

7.    No requirement of maintenance of large statutory records

8.    No need to pay large fees for increasing the contribution, as required in case of capital

Name

Every LLP shall have the word “limted liability partnership” or the “LLP” as the last word of his name.

Partners / Designated Partners of LLP

A LLP must have at least 2 partners; there is no limit for maximum number of partners. Partners of LLP can be consisted of:

1.    Individuals

2.    Body Corporate

3.    Companies incorporated in and outside India

4.    LLP incorporated in and outside India

Only individuals can become Designated Partners of LLP. A LLP must have at least 2 Designated Partners and at least 1 individual Designated Partner shall be a resident in India. Where bodies corporate are partners, then Individual nominees of such bodies corporate shall act as ‘Designated Partners’.

Ideally, the incorporation document of LLP should specify who are to be designated partners; else all the partners mentioned in incorporation document were deemed to be designated partners. Every Designated Partner should give his prior consent to act as a Designated Partner to LLP. LLP should file with the registrar the particulars of every designated partner within 30 days of his appointment. Also every Designated Partner shall obtain a Designated Partner Identification Number (DPIN) after making an application to Central Government. Designated Partner of LLP shall be responsible for the doing of all acts and things that are required to be carried out by the LLP and is responsible for the compliance of the provisions and filing of document / returns/ statements of LLP Act and as may be specified in the LLP agreement. Every Designated Partner shall be liable for penalties imposed on the LLP for any contravention of the provisions of this Act.

Management of LLP

Limited Liability Partnership is managed as per the LLP Agreement, however in the absence of such agreement the LLP would be governed by the framework provided in Schedule 1 of Limited Liability Partnership Act, 2008 which describe the matters relating to mutual rights and duties of partners of the LLP and of the limited liability partnership and its partners.

Capital Contribution in LLP

There is no requirement for minimum capital contribution by each partner in LLP. The contribution of each partner shall be accounted for and disclosed in the Accounts of the LLP along with nature of contribution and amount.

Maintenance of books of account, and audit

LLP Act has not specified any books of account to be maintained by LLP. But books of account shall contain details of:

1.    All sums of money received and expended

2.    Income and Expenditure

3.    Assets and Liabilities

4.    Statement of cost of goods purchased, inventories, WIP, finished goods and cost of goods sold etc.

Books of Accounts are maintained on cash basis or on accrual basis under double entry system of accounting. Books of account shall be preserved for 8 years from the date on which they are made. Every LLP shall file the “Statement of Accounts and Solvency” in Form 8 with the Registrar, within a period of 30 days from the end of 6 months of the financial year to which they relate. “Statement of Accounts and Solvency” shall be signed on behalf of the LLP by Designated Partners. Accounts of LLP are subject to audit, if the turnover exceed Rs. 40 Lakhs or if contribution exceed Rs. 25 Lakhs. Appointment and remuneration of auditor shall be done by Designated Partners. Only Chartered Accountant are eligible for appointed as auditor.

Annual Compliance

Every LLP shall file an Annual Return with Registrar within 60 days from the closure of the financial year.

Any comments and suggestions will always be appreciable.

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CA Paresh Bhagwat

+91-9320144199

paresh.bhagwat@rediff.com

capareshbhagwat.blogspot.com