The term installment plan refers to “pay a lump sum amount by dividing it in the form of installments”. These installments are designed in such a way that they are paid after regular intervals of time. Installment Plans are without a doubt an impetus in the land market as financial key players (investors) are given the choice to pay for their property as little installments over a time frame instead of a singular heavy amount installment. This makes it simpler for them to buy costly land furthermore decreases the danger of contributing a lot of cash without any delay in a land project which is in its underlying stages.
In the light of the present real estate scenario and the burden of over tax charges, buying land by means of installment plans may offer help to financial key players. Who are as of now in a condition of turmoil. Despite the fact that, the buyers of property on installments are obligated to pay charge, their tax installment might be drawn out over a longer period. In contrast to investors who buy a plot in a zone which has officially allowed ownership. At the point when investors are facing challenges they have to limit their profit margins. In such a situation, installment plan is the solution to get rid of tax charges temporarily.
Key solution to extend tax payments- with the help of installment plans:
At the point when financial key players (investors) buy a plot in a range where ownership as of now been allowed by making a singular heavy amount installment. They might be obligated to charges, for example, advance tax charges, stamp duty charges capital worth expense. If they sell this plot with in the time frame of five years they are additionally subject to pay capital gain charge. This amount is calculated by finding out the difference of the cost of the property when you purchased and when you sold it. This implies purchasers are at risk for various duties promptly in the event that they make a single amount installment for a property in a developed zone with ownership.
But good news is for those who are using installment plans, purchasers who are paying through installment plan are obligated for no duties promptly. Purchasers start their installment plan by submitting the booking expense or down payment. They proceed with month to month or quarterly portions without paying any extra charges on the spot. Once the project advances and purchasers have paid various portions, they are now prepared for ownership. Then this is the point when they might be obligated to pay property charge on property they have held for over a time of two years.
Selling your property
Let us discuss the case when the possession of the property has been granted and the owner wants to transfer it to another dealer. In this case the present owner and the interested party both will be liable to pay advance tax. The dealer who wants to transfer or sell the property to another party, will also be liable to pay capital gain charges. These tax are valid for the property owned for less than the duration of five years. Otherwise not.
For the investors who are using instalment plan strategy to overcome the burden of taxes temporarily. If in case the value of their property rises during the course of their instalments, they will also be liable to pay taxes. This will be charged when they will sell it. It does not matter that at what stage of instalment plan are they? They will be charged with capital gain tax.
So the theme of the story is that the investors opting installment plan are free from the stress of paying taxes temporarily. They are only liable to pay taxes in two situations. One is when there installments are paid and they are granted possession of the property they purchased. Second situation is when they are going to sell the property at any stage of installment plan. Though it is a temporary relief but the investors holding the possession of any particular property are subjected to pay taxes promptly. They are also more exposed to the risk of loss.
Key for investors to get rid of excessive taxes:
For those financial key players (investors) who want to avoid excessive charges till a certain period of time it is best to use installment plan. You can enjoy this tax free scenario until your payments are all paid up. But the investors who are paying installments more than worth rupees fifty thousand will be liable to pay withholding tax , when it is paid through bank. Otherwise they are free from paying tax charges. They can plan according to the prevailing trend that how to tackle the situation. Is it better to sell the property or to get possession?
Instalment plan provides an opportunity to act according to the circumstances. The market trend is analyzed and plans are made accordingly. Sometimes it is observed that paying through instalment plan cost you more as compared to paying a lump sum amount at one time. But when there are number of external forces affecting the market trend. Then it makes you secure to use it. It reduces the risk of loss. You can sell it any stage.
How should an investor work?
An investor is the person who is risking his resources to get the desired output. He has to consider many forces while buying or selling property. Installment plan seems to divide the risk of loss while dividing the amount of lump sum money. Nothing is sure in the market. The market trend is dynamic, it is never hundred percent forecasted. So the moral of the story is that you should go for installment plans. They may limit your profit but they will also limit your loss. Be very careful about it. Invest your money very wisely. Make more money out of your invested money. Installment plans are the solution to your problems.