Loan settlement? Here is what you need to be careful about

loans, borrower, loan settlement, loan repayment, ABN AMRO Bank, NOC, Dadar Police Station, Delhi Police

Seven years after he settled a loan, a borrower is being subjected to numerous calls, notices and even arrest warrant. The only mistake, he committed was not to collect the NOC and account statement from the lender after his settlement 

Mumbai-based trader Ramnik Patel (name changed) was happy and relieved when in 2007 he repaid Rs58,000 to ABN AMRO Bank as full and final settlement against his loan outstanding. Seven years down the line, he is receiving calls from recovery agents, and notices from lawyers and warrants from places located thousands of kilometres away from Mumbai. He is not only disturbed, but feels like being mentally tortured just because a small mistake committed by the bank while updating its record.

In 2005, Patel took a personal loan of Rs2.15 lakh from ABN AMRO Bank. However, during 26/7 monsoon fury, he suffered heavy loss and could not repay his loan on time. Then on 21 March 2007, he received a letter from the Bank offering him a settlement. As per the offer letter, he was asked to pay Rs58,000 in two tranches of Rs29,000 each. The Bank also promised him that it would hand over all his unused post-dated cheques (PDCs) and no-objection certificate (NOC) within seven working days of the loan being closed on its system.
After accepting the offer from the Bank, Patel, promptly paid Rs29,000 each time on 28 March 2007 and 20 April 2007 to ABN AMRO Bank as per the settlement offer.
Meanwhile, ABN AMRO Bank was sold to Royal Bank of Scotland (RBS). RBS then sold all the debts of ABN AMRO to Kotak Mahindra group. Phoenix Asset Reconstruction Co Pvt Ltd, a unit of Kotak Mahindra group handles the recovery of these debts acquired from RBS.
Suddenly, in 2012, he received a phone call from somebody called as Choudhary from Patiala Parliament Police Station informing that there was a case filed against him and warrant was also issued by the Court. The warrant was sent from Delhi Police to Dadar Police station in Mumbai for execution. When Patel reached Dadar police station, he was told that a case was filed against him in 2011, which was transferred to Delhi Court. This was related with the loan he took from ABN AMRO Bank, he was told.
Here is a Checklist if you are going for a settlement with a lender…
  1. Keep copies of all your written communication with the lender
  2. Always have everything in writing (Even if you receive a phone call, send an acknowledgement mentioning points discussed during the call)
  3. Keep copies of the settlement letter, cheque/DD or pay order you submitted
  4. After the settlement, obtain a NOC and collect all your post-dated cheques, if any
  5. Do no forget to collect your loan account statement that shows zero balance

Interestingly, Patel never received any notice, memo or any warrant for his arrest from anybody until the phone call from Choudhary. Patel, then asked his lawyer to send reply to all concerned, including one lawyer called S Gupta from Delhi and police stations at both Delhi and Mumbai.

Again, in November 2013, Patel received a notice from Mumbai-based lawyer on behalf of Phoenix ARC Pvt Ltd. The lawyer, in the notice invited Patel to settle his loan in a conciliation camp (for settlement) organised by Kotak Mahindra Bank on 2 December 2013. The lawyer claimed that as on 30 April 2012, Patel had an outstanding of Rs42,811.95 that would have to be repaid along with an interest of 2% per month. Patel, then again had to reply to this notice and submit all the documents.
Next year, on 3 April 2014, Patel received a notice from the Mumbai District Legal Services Authority to be present during a hearing in the Lok Nyayalaya on 12th April. Phoenix ARC had approached the Lok Nyayalaya to take up the matter.
Patel went to the hearing and put forward his case. After looking at the documents and hearing Patel’s side, the representative of Phoenix agreed to verify his account and get back to him within seven days. They even gave an undertaking in writing.
This has been about nine months, since Patel went to the Lok Adalat and yet there is neither any response from the Bank nor any respite to him from the recovery agents.
So what went wrong with Patel? From his side, he did not collect the NOC and unused PDCs from ABN AMRO Bank, while the Bank failed to make necessary changes into its account books. This also raises big question, on how can a big lender like ABM AMRO forgets to update its loan book and record the settlement and passes on the same as dues to the buyer. In addition, since ABN AMRO no longer exists, how and where the borrower, who is being shown as defaulter, and harassed for recovery of dues that he had already paid, would go?
If you are facing similar issues, then you may want to take help from Moneylife Foundation’s free Credit Helpline  which offers free counselling to help you get out of this trap. In Mr Patel’s case, he approached the Credit Helpline and Moneylife Foundation’s trustees have also taken up this case with the Reserve Bank of India’s customer services department.

Implications of VAT/Service Tax on Redevelopment

Whether all receipts in the hands of the Society/ its individual members shall be net of Vat and Service Tax Responsibility/ liability of Society/Its Members towards the same for services rendered to it by professionals/consultants.

Ans. As Society is not providing any Services to the Developer, the Society is not liable to pay Service Tax or VAT on any of the payments receipt by the Society in the form of reimbursements or Corpus Money or Compensations, etc. If the Society is making any payment of Fees to the Professionals or Contractors, then the Society is liable to pay Service Tax @10.3% to the Professionals and Service Tax or Vat to Contractors on such a payment. The professionals and the Contractors would in turn pay the same to the respective Central Government or State Government as applicable.

Responsibility/ Liability towards stamp duty.
Responsibility/Liability of the Society/its individual members towards Stamp Duty, if any, in transition from surrender of existing premises to the Develop to the occupation and registration of the Redevelopedpremises
Ans. Normally, in the cases of Redevelopment, the Stamp Duty and the Registration Charges on surrender of the existing premises to the Developer for the purpose of Redevelopment would be paid by the Developer. Whereas, when the Individual Members receives the Redeveloped Premises from the Developer, he is liable to pay Stamp Duty and Registration Charges on the same. The Stamp Duty payable would be on the cost of construction of the present area of the Premises and on the market value for the extra area received as per the Ready Reckoner Value published by the Government of Maharashtra every year on 1st January.

Click Here for the original story from Accommodation Times

Service Tax on Societies, Clubs & Associations

The service tax department started demanding service tax on member’s contributions in 2005. In 2006, a “clarification” was issued confirming such demand. This is applied to member’s contribution towards expenses of a Cooperative Housing Society, membership subscription of associations, and similar collections.

Maharashtra Chamber of Commerce Industry Agriculture, circulated this demand through its Patrika of January 2008. Subsequently, there was a meeting with the finance secretary; where the finance secretary reminded members that contributions below Rs.3000 were exempted. This satisfied most members and the issue was abandoned.

Litigation in Kolkata and Delhi High Courts confirmed that where every member was a share-holder and every share-holder was a member, there was no provision of service from one entity to another and therefore the application of service tax does not arise. However, this stand has not been accepted by the service tax department. A 2014 circular confirms service tax on contributions to Resident Welfare Associations.

At present, several housing societies are collecting and paying service tax. Associations, clubs and chambers of commerce are also collecting tax on membership subscriptions.

A report in Times of India of 2015 Jan.13 states that two societies have secured a favourable decision in the Mumbai High Court. This is good news not only for the two societies; but also for thousands of other societies and associations. It states:

“The CESTAT decision is the first of its kind for the western zone. The tribunal, based on decisions of other jurisdictions, accepted the principle of mutuality – the society provided services to itself which could not be subject to service tax. However, finality will be reached only once the Supreme Court adjudges on a similar matter pending before it”, said Bakul Mody, chartered accountant, who represented Mittal Towers.

We should be thankful to the two societies and Bakul Mody for taking up the fight. Now let us support them by joining in the fight.

M. B. Damania.

2015 Jan.13

Click Here for copy of the order


Housing Societies Service Tax

How to get rid of telemarketers

Still receiving marketing calls and SMS? File a complaint against them either by calling a toll free number or via SMS. The penalty they face is strong.
After the Telecom Commercial Communication Customer Preference Regulations, 2010, it was expected that mobile subscribers will not receive unsolicited commercial communication (unwanted calls/SMS) from telemarketers from 27 September 2011 onwards. But the menace still continues and mobile users are being harassed by unwanted calls and SMS, albeit at lower frequency.
However, there is a small difference. Earlier, we used to receive calls or SMS from numbers that we could identify (after few calls). Now they are originating mostly from personal mobile numbers. For example, earlier we used to receive calls from numbers like 012466005000 (representation only) or similar such numbers. However, these days it can be any mobile number. And since most of the times, it is an unknown number; users are fooled into receiving the call or reading the message.
On its part, the TRAI has created the National Customer Preference Register (NCPR) that keeps records of subscriber preferences for receiving commercial communication. Under NCPR, there are two categories, fully blocked and partially blocked. If you do not want to receive any unwanted calls or SMS, then send an SMS START 0 to 1909. At present there are seven preferences to choose from for partially blocking unwanted calls or SMS. The user can opt to receive such communication based on her choice by sending a SMS for example START 4 to 1909 to receive messages on health products.
If despite registering for fully blocked category if you are receiving unwanted calls and messages, then you can file complaint against the telemarketer. You can also file complaint, if you are receiving such communication from categories other than you allowed. This is quite simple and easy.
The subscriber can file complaint either by dialling 1909 (toll free) or sending SMS. When you dial the toll free number, you can either register the complaint through the customer care executive or through the Interactive Voice Response System (IVRS).
For this method, you would be required to provide particulars of the telemarketer, the telephone/ mobile number from which you received the call/SMS, date and time and a brief description of the call or SMS. After this, you will get a unique complaint number.
For registering the complaint via SMS, you need to send a SMS to 1909 in the specified format.
“COMP TEL NO XXXXXXXXXX, dd/mm/yy, Time hh:mm”
Where XXXXXXXXXX – is the telephone number or header of the SMS, from which the unsolicited commercial communication has originated.
Here you would receive the complaint number via SMS. In both cases, you would be informed within seven days on the action taken on your complaint.
Important thing to keep in mind is the complaint has to be registered from the telephone number on which unsolicited commercial communication has been received and the complaint must be made within three days of receipt of the unsolicited commercial communication.
According to the Telecom Commercial Communications Customer Preference (Thirteenth Amendment) Regulations, 2013, if the telemarketer is found to be not registered with the NCPR, then the service provider (mobile operator) is liable to pay financial disincentives of Rs5,000 on each complaint.
In addition, if the unwanted call or SMS contains reference to another telephone number or an entity like bank, insurance company or builder for which the commercial transaction is solicited, then telecom resources issued to the subscriber or entity is discontinued across all service provides after receiving a complaint, after serving notices each on the first and second complaint.
For example, if you received marketing call from XYZ Bank or ABC Insurance Co, from numbers that are not registered as telemarketers, then your complaint and its follow up may lead to disconnection of all telephone/mobile connections provided to XYZ Bank or ABC Insurance across the country.
If your issue is not resolved, then you may want to use the Right to Information (RTI) Act. File an application under the RTI and ask for daily progress, name and designations of officers who handled your complaint, the time frame to resolve such complaints, and the action taken on officials, who have failed to resolve the complaint within the stipulated time.
Another way to get rid of the telemarketers is to use an application on your smartphone. For example, TrueCaller and SPC (Super Private Conversation). TrueCaller allows the user to identify unknown callers and also block spam or unwanted calls. In addition, you also can mark a call as spam and report that helps other users of TrueCaller to avoid such calls. Only disadvantage is you will have to share you phone book with the app. TrueCaller is available for Android, iPhone, Windows Phone and BlackBerry devices.
SPC is an app for Android platform that blocks SMS and calls from unknown sources through a blacklist. In addition, the user can move private conversation to a private place inside the mobile device. The app is simple and easy to use and block unwanted SMS and calls.
Although, you can file a complaint against a telemarketer if you receive unwanted call or SMS, there is no respite from such communication on instant messengers like WhatsApp.  Although, you can block such number in WhatsApp, you need to open and read the message before knowing the identity of the sender.
At present there are over 90 crore mobile subscribers in India. Low tariffs and direct reach to consumers has made SMS and direct calling as one of the most cost effective ways of selling services and products. However, telemarketing had brought with it serious issues of invasion of privacy and has become a major irritant to customers. Although, this is has come down tremendously, there still are some telemarketers, who are troubling subscribers through unwanted calls and SMS. However, you can now file complaint against such telecallers and teach them a lesson for disturbing you with their unwanted calls/SMS.

Child Password

You protect your email, your Bank Account and your phone with your Password – why not your child ?

You can help prevent your child from being abducted by simply doing the following:

1. Create a special password that is shared by you and your child and other trusted people. Under no circumstances should this be shared with anyone else.

2. Make sure your child memorises it.

3. If a stranger approaches your child and tries to convince him or her to come with them, your child should demand the password.

4. If the stranger doesn’t know the password, your child should refuse to go with the stranger and immediately alert a nearby teacher, parent or policeman.

Income Tax Exemption on Tenants under Redevelopment

Where a tenant is provided accommodation in the new building on ownership basis, the value of accommodation for the purpose of determining the capital gains shall be the fair market value of the tenancy rights transferred and the cost of acquisition being ‘Nil’, the entire value will be subject to capital gains. However, since the tenancy rights are exchanged for the ownership of a flat, it can be considered as purchase of a residential house by investing the full value of consideration received on surrender of tenancy rights and the tenant would be entitled to claim the reinvestment benefit available under section 54F, subject to compliance of the certain conditions stipulated therein. However, serious difficulties may arise where new premises received in lieu of surrender of tenanted premises are commercial premises, since in such cases the tenant shall not be able to claim the reinvestment benefit available under section 54F as the reinvestment is in a property, other than a residential house. Hence, extreme care should be taken while drafting the agreements so as to ensure that the tenant does not end paying huge capital gains tax on the basis of market value of the tenanted premises upon surrender of tenanted premises for the commercial premises. In such a situation, it is advisable for the tenant to pay nominal consideration to the landlord i.e 120 month’s rent for acquiring ownership rights in the commercial premises.

Click Here for the detailed explanation

Latest Judgements on Income Tax related matters in Redevelopment process

Receiving money through NEFT can put you in trouble

Despite directions from RBI, banks refuse to share details of the entity sending money through NEFT

The National Electronic Fund Transfer (NEFT), used by almost everyone to transfer money quickly, can also put the receiver in a difficult position. The main reason is, there are no details available about the remitter or sender and if the amount is large, then the recipient may end up facing Income Tax (I-T) Department queries. Remember what happened with Aishwarya Rai, when in 2006 she received a parcel containing 23,000 euros (around Rs14 lakh at that time) sent by an unknown person from the Netherlands?

Well, with banks hesitating in sharing details of the person or entity who is transferring money via NEFT, it may be you next time. Although the Reserve Bank of India (RBI) has directed banks to furnish appropriate details in passbook or account statement for credits sent and received by the customer through NEFT, all the recipient gets is just a name and amount. “A very generic mention as ‘NEFT’ or ‘NECS’ does not help customers in identifying the source of credits, particularly where multiple credits are afforded to their accounts through these products. The Core Banking Solutions (CBS) of banks should be enabled to capture complete information from the relevant fields in the messages, data files which can be displayed to customers when they access their accounts online or provided to them additionally when they approach the branch counters, help desks, call centres,” the RBI had said.

However, all the recipient gets to know is just a name. There are no details like sender’s PAN number, address and the cause/remark for the money transfer.

Often money launderers are found using bank accounts of low-income individuals for transferring money. In addition, due to the forceful implementation of the Jan Dhan Yojana, we have about 10 crore new bank accounts, out of which 73% do not have a single penny. But consider that tomorrow, if somebody uses these accounts to launder money, then without detailed information about the remitter, how is a poor Kalawati supposed to answer queries from the authorities, including but not limited to I-T department. In the absence of detailed information about the remitter, how will she explain the unaccounted money remitted into her account through NEFT?

Receiving funds from unknown remitters becomes an even bigger issue for non-governmental organisations (NGO), who need to give a receipt as well as I-T exemption certificate. If there is just a name of the remitter, how and where is an NGO, like Moneylife Foundation, supposed to send the receipt?

Another issue with NEFT fund transfer is the delay. According to RBI policy, banks need to afford credits to beneficiary accounts or return transactions (uncredited for whatever reason) to the originating / sponsor bank within the prescribed timeline. It also directed banks to move towards hourly settlement starting from 9am to 7pm on all week days and between 9am to 1pm on Saturdays. Yet, it appears that banks are still using the last part of the work-day or first hour of the next day for NEFT transactions.

Coming back to the Aishwarya Rai episode, the actor was grilled by the Customs official for two-and-a-half hours at the international airport as soon as she landed in Mumbai from Jodhpur. The parcel was allegedly sent by one Avineshwar from the Netherlands marked to the actress. It arrived at the Foreign Post Office in Mumbai during September 2006. Besides the currency, it also contained a top-brand shirt, a pair of binoculars, a DVD player and other electronic items. Following a notice, Aishwarya’s father Krishnaraj Rai, on 15th November met Custom officials to clarify her position. However, the officials insisted to know details from Aishwarya, due to which the actor had to come to Mumbai to clarify her position. She was shooting for the movie ‘Jodha Akbar’ in Jodhpur at that time. After the enquiry, she was give a temporary clean chit by the Customs.

Therefore, it is high time the central bank issues another order mandating banks to share all details of the remitter who is sending money through NEFT or any other payment method to the recipient and actually penalises banks if there are persistent complaints about flouting the RBI’s order.

Courtesy : MoneyLife Foundation

June 30 new deadline for hsg society polls

Cooperative housing societies can now elect managing committees by June 30 instead of the earlier deadline of December 31. The state legislature recently cleared the deadline extension.

The state had told societies to complete elections by December 31. Experts said the cut-off date was “unrealistic“ since many societies had not held elections over several years. “The extension will help us comply with due procedure with an extended period for hearing of objections over nominations,“ said a society functionary.

After the deadline was initially set at December 31, many societies had been asking members to attend urgent meetings to decide on the election agenda. Some had issued an ultimatum to members and told them to pay pending dues within a short span of time to become eligible voters. Moreover, several rounds of meetings had to be held by societies to make members aware of the new regulations before going in for elections.“Several members live abroad or out of the city and have rented their flats. We need to do the groundwork to ensure free and fair polls,“ said a member from a housing society in Chembur.

“Our society recently issued a notice asking us to pay maintenance and repair dues within four days. How can we shell out the amount in such a short span of time? They should give us at least a fortnight,“ said a resident of Shivaji Park, Dadar.

Experts said they were getting many calls from anxious residents to convene meetings to spread awareness on new rules and help housing societies comply with the new regulatory administration.

“We had started conducting meetings to create awareness among members, auditors and employees and labourers working in housing societies in order to ensure maximum participation of societies and their members in the elections,“ said Surendra More, vice-chairman of Bombay Suburban District Housing Federation.Ramesh Prabhu, president of the Maharashtra Societies Welfare Association, said his organization was guiding people on how to file all the details online and upload audit statements. Elections of all housing societies are being conducted through secret ballot, provided there is no unanimity over managing committee candidates.

December 29 2014 : The Times of India (Mumbai)
by Chittaranjan Tembhekar, Mumbai

Times of India issue dated 29 December 2014 - June 30 new deadline for hsg society polls


By overstaying, a licensee cannot claim tenancy rights


With the passage of the time the system of giving properties on leave and license basis in Maharashtra is taking roots, but still a good number of the property owners are apprehensive; because they are not sure that they would get back the possession of the properties on the expiry of the term.  However, in view of the latest judicial pronouncements, such fear seems unfounded, provided legal requirements are complied with.

Click Here for the recent judgements and precautions to be taken

By Accommodation Times News Services