INDIA Law and Practice Contributed by: Vivek Chandy, Archana Tewary, Kumarmanglam Vijay and Megha Arora, JSA
7.6 Liens or Encumbrances in the Event of Non-payment Contractors/designers do not typically have a lien or encumbrance on a property in the event of non-payment. In most contracts, a delay in pay - ment attracts penal interest. Furthermore, non- payment beyond a certain threshold of time con - stitutes an event of default by the owner, leading to the suspension of works and termination. The contract usually provides for a mechanism to address disputed payments, failing which dis - pute resolution may be invoked by the disputing party. However, in procurement contracts involv - ing the sale of goods, an unpaid seller has a lien under Indian law, on the undelivered goods. Once delivered, the unpaid seller has the right
• 5% or 12% on commercial apartments, depending on the type of project, with restric - tions on the availability of input tax credit. GST is not applied on the sale of constructed property. The tax burden can be passed onto the buyer commercially. 8.2 Mitigation of Tax Liability In certain circumstances/structures, stamp duty on the transfer of immovable property can be lower than the typical stamp duty rates for con - veyance – eg, where property is contributed by a partner into a partnership firm. However, such structures have to be analysed individually. 8.3 Municipal Taxes Municipal taxes are calculated based on the location, size, age and occupation of the prop - erty (self-occupied/tenanted). Sometimes, tax - es are based on rents received. There are no exemptions against the payment of property taxes, except for properties used for charitable purposes/religious institutions. 8.4 Income Tax Withholding for Foreign Investors Tax consequences in India follow the residential status of the income-earning person. Residential status is determined for every tax period (ie, April An Indian citizen having India-sourced taxable income exceeding INR1.5 million during the tax year will be deemed to be India-resident if they are not liable to tax in any other country by rea - son of domicile/residence/other similar criteria. A company is regarded as non-India-resident if it is a foreign company incorporated outside India 1 to March 31 financial year). Deemed Resident (Individuals)
to sue for the price of such goods. 7.7 Requirements Before Use or Inhabitation
In most states, a building comprising more than a prescribed number of floors can only be occu - pied after an occupancy certificate has been obtained from the relevant planning authority.
8. Tax 8.1 VAT and Sales Tax
VAT has been subsumed by GST, which is pay - able on the leasing, licensing or transfer of development rights of land (at 18%), and on the transfer of property that is under construction. The leasing of residential apartments for residen - tial use is exempt from GST. GST on the transfer of property that is under construction varies, as follows: • 1% on affordable residential apartments; • 5% on residential apartments (other than affordable residential apartments); and
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