This section of Starlit Suites FAQs covers cost, payment schedule & taxation related questions and if after going through this section, you do not find answers to your queries or need more clarity on other aspects of this investment, we highly recommend you view our 3 other categories of FAQs as listed on the main FAQ page as doing so will give you tremendous confidence and belief in this unique investment asset in India.

If you still cannot find answers to your questions from this section, please feel free to contact us (click here for contact details) and we will be glad to answer the same.

List of Questions

Given below is a list of questions / topics that are answered on this page. You can directly jump to a question by clicking on it or feel free to read through all the questions by scrolling further.

Question 1

Why does Starlit Suites seem expensive compared to normal apartments in the surrounding areas?

• When compared to other residential properties in the surrounding area, Starlit Suites appears to be expensive based on per sft rate even if I consider the extra cost involved for fitouts, air-conditioning and other amenities.
• I think it’s overpriced and it does not make sense to invest at this price when I can get an apartment for almost 20 to 30% less.
• Why should I invest in this if it’s so expensive?

1. Firstly, the price quoted by us on our website for Starlit Suites is ALL INCLUSIVE of the following :
   • Base or Basic Price Per SFT
   • Floor Escalation Premium
   • Premium Location Charges
   • Car Park and Club House charges
   • All Deposits such as Electricity, Water & Sewage, Sinking Fund, etc
   • Advance Maintenance Charges for 2 Years
   • VAT and Service Tax
   • Complete Furniture & Fitouts as per 2 / 3 Star Standards
   • Registration & Stamp Duty Charges as on date
   • Equipment, machinery and facilities of common areas and backend support services such as restaurant, banquet rooms, swimming pools, laundry facilities, etc. as explained in detail further below.
   • All above charges are charged separately by builders incase of a normal apartment and if you add up all the above to a normal apartment’s price, it will turn out to be equal to or more than what we are charging for Starlit Suites.
     .
2. When compared to a normal apartment, Starlit Suites comes with a number of important additional amenities and facilities because of which the operator is able to charge a high rate per room night, which in turn gives you higher rental income per month. Some of the major amenities provided in Starlit Suites which are not given in a normal apartment are :
   • Service Lifts (in addition to regular guest lifts)
   • Banquet / Conference Halls in single tower compared to combined one for all towers in other gated communities
   • Restaurant and service bays on each floor for room service purpose and house-keeping
   • Reception Lobby & Back Offices for Operator
   • Laundry and other Support Services for a Hotel
   • 100% Power Backup (even for Air Conditioners & Water Heaters)
   • Boilers and fresh air pumping systems
   • Staff Quarters/ locker rooms
   • And many other such facilities for which lot of space is required.
     .
3. All above make Starlit Suites comparable or equivalent to a 2/ 3 star hotel and since they are part of the hotel apartment, they will be jointly owned by all the unit owners of such a hotel apartment. In other words, each unit owner in Starlit Suites will own an undivided share of all the amenities put together which is also helping you earn 4 times greater rental income than a regular residential apartment.
   .
4. Infact, if you were to replicate this on your own (i.e. construct an apartment and then add all these common features and then add complete furniture and fitouts as per the list shown in the offer document, you will end up spending 10% to 15% more than what you are currently being charged by Starlit Suites. Because Starlit Suites is ordering all these fitouts and equipments in bulk, they can do it at a much lower cost that what individuals like you and me can do on our own.
   .
5. Also, since the entire tower is being negotiated by us for our own clients, we have already bargained and negotiated for the best possible rate as entire tower is being sold by us in bulk. Hence, you can be rest assured that best rate has already been negotiated on behalf of all our investors.
   .
6. We have created “Comparative Cost Analysis” table for each Starlit Suites location and these tables will shows a comparison of what Starlit Suites is charging you for a unit versus what it would cost you to replicate this on your own, individually. This clearly shows why there is such a difference in cost compared to a normal apartment and also shows you why Starlit Suites is still 10% to 15% cheaper than what you can achieve on your own. (this sheet is available in the “Financials” section of the offer document of respective Starlit Suites locations on our website).

By now, you will be convinced that Starlit Suites is cheaper than you initially thought and it is also worth the extra amount being invested as you are also earning much higher rental income than a normal apartment.

Click Here to Scroll Back Up to the List of Questions
You can also continue scrolling down to view other questions.

Question 2

Why is there a significant difference between saleable area (for which I am being charged) and the carpet area (actual usable space of my apartment)?

• When compared to a normal apartment, Starlit Suites comes with a number of important additional amenities and facilities as above because of which the operator is able to charge a high rate per room night, which in turn gives you higher rental income per month.
  .
• These amenities make Starlit Suites comparable or equivalent to a 3 star hotel and since they are part of the hotel apartment, they will be jointly owned by all the unit owners of such a hotel apartment.
  .
• In other words, each unit owner in Starlit Suites will own an undivided share of all the amenities put together and the cost of these amenities is accordingly shared between all unit owners.
  .
• This is the reason for the difference between the “Carpet Area” (the useable area in your individual unit) and the “Saleable Area” (what you are paying for) as each unit owner jointly owns all these common amenities and which are hence proportionately added to the saleable area of your individual unit.
  .
• Typically in a normal apartment, the ratio between Carpet Area and Saleable Area is 75% to 78%. Incase of Starlit Suites, this ratio is lower and for reasons explained above.

Click Here to Scroll Back Up to the List of Questions
You can also continue scrolling down to view other questions.

Question 3

Do I get a share of the revenue from all the common areas & facilities such as restaurant, banquet halls, etc?

Firstly, since you (as the investor) are NOT contributing to or bearing the expenses involved in running these facilities (and this is quite a substantial expenditure every month), you should not think about earnings from such facilities.

Secondly, all the common facilities such as restaurant, gymnasium, conference rooms, swimming pool are operated by Starlit on a nominal profit as this is how they are able to remain competitive when compared to other hotels by charging 30% to 40% less than comparable hotels but at the same time, giving people almost the same experience as a 3 star hotel.

• Facilites such a buffet breakfast, gym and swimming pool are offered complimentary as part of room package and are not charged any extra amounts and hence don’t generate additional revenue.
  .
• Banquet rooms and restaurant may generate some revenue but even that is enough to only cover the cost of operations and they may generate small profits which are too small to bother, when compared to the massive revenue from room rentals.
  .
• Infact, the operator incurs heavy expenditure every month just to maintain these facilities and this expense is being paid out of operator’s share of the revenue and is not paid by you or shared with you.
  .
• Moreover, it is because of these facilities and the low prices being charged that Starlit Suites is able to maintain such high occupancy which is in turn giving you higher rental income every month.

Hence ultimately as the investor, you should only focus on the larger picture, which is earnings from room rentals and not worry about small and insignificant revenue from all other facilities of the building.

Even though you are not getting share of revenue from above facilities, you are still earning 10% to 12% per annum on your investment, which is 3 to 4 times greater than the 2% to 3% that you can earn through normal residential apartments.

Click Here to Scroll Back Up to the List of Questions
You can also continue scrolling down to view other questions.

Question 4

The room rate being charged by the operator seems to be expensive or not all that cheaper when compared to other star hotels in the area. So why will people stay in a serviced apartment if they can pay few hundred rupees more and stay in a star hotel instead?

• For example, the operator is saying that his ARR (Average Room Rate) in 1st year of operations at Hyderabad is Rs.3900 whereas LemonTree & Radisson (comparable hotels in the vicinity) are charging Rs.5500 normally and for bulk bookings, they may give a discounted corporate rate of Rs.5000 or even 4800 per night. So just by paying Rs.800 to 1000 more, people maybe tempted to stay in a star hotel than in a serviced apartment. Or on the other hand, if operators like OYO Rooms / Treebo etc are giving serviced apartments at Rs.1500 to 2500 per night, why will people pay Rs.3900 per night and stay at Starlit?
  .
• In other words, wont “budget” star hotels and cheaper “serviced apartments” affect Starlit Suites business?

1. Firstly, the ARR (Average Room Rent) being shown by Starlit Suites is the average room rent being charged for all the room sizes put together.
   • For example, at Starlit Suites Hyderabad which has 3 different room sizes – Studio of 380 Sft, 1 BHK of 675 to 740 Sft and 2 BHK of 1100 Sft – the ARR is Rs.4000 per room night.
     .
   • Which means that a Studio could be sold for as low as Rs.1500 to 2000 a room night, a 1 BHK for Rs.3500 to 4000 a room night and 2 BHK for Rs.6000 to 8000 a room night (this room can accommodate 4 people in total, and hence is as good as booking 2 different rooms at another hotel), thus bringing the average room rent to Rs.4000 per room night.
     .
2. Comparable hotels in the vicinity are charging Rs.5500 to 8000 per room night at present (infact these are the best discounted rates from online travel portals) and these rates are being charged for a standard hotel room that is typically only 200 Sft to 250 Sft in size, at the maximum. For your reference, below is the average rates for comparable hotels in the area and you can infact go online and verify these prices yourself :
   • LemonTree Premier Madhapur : Rs.5700 to 6500 per night.
   • Radisson HiTech City : Rs.7500 to 7800 per night.
   • Avasa Hotel (5 star hotel) : Rs.6000 to 8000 per night.
     .
     * Above prices are cancelable bookings for double occupancy with breakfast (which is what corporates want and what Starlit provides).
     * Also above prices of hotels does not include a number of hidden charges and fees which may push up final price by almost 10% to 15% and these are shown in the fine print on the online booking portals which you can once again verify yourself on sites such as booking.com, cleartrip.com, makemytrip.com etc.
     .
3. In comparison to above, Starlit Suites Hyderabad is significantly cheaper and more value for money because :
   • Starlit Suites is charging an AVERAGE room rent of Rs.4000 for a room that is atleast 1.5 times to almost 5 times LARGER than the room of comparable hotels in the vicinity. Hence, customers are getting a LARGER ROOM for lesser cost than other hotels.
     .
   • While above mentioned rates are being charged by comparable hotels RIGHT NOW (i.e. they are currently selling rooms at Rs.6000 to 8000 per room night), Starlit Suites is going to charge average room rent of Rs.4000 per room night AFTER 2 years from today, by which time the prices being charged by other hotels would have gone up by atleast 10% to 15%.
     .
4. Therefore when operations begin at Starlit Suites AFTER 2 years, it will be significantly cheaper than comparable hotels as Starlit will charge Rs.4000 per room whereas other hotels may have increased prices from Rs.6000 / 8000 to Rs.7000 to 9000 per room night.
   .
5. Even if you were to assume that the price difference between Starlit Suites and comparable star hotel was not too large, there is a big segment of corporate travellers who travel for long durations at a time and hence would like to stay in a serviced hotel apartment which is much larger than a standard hotel room and provides a “home away from home” feeling of comfort to the traveller. Hence, these travellers would prefer staying in these hotel apartments EVEN if the price difference between this and a star hotel was not too large and this way, there is no danger of existing or new “budget” hotels eating into the demand or business of Starlit Suites.
   .
6. Lastly, while there are a large number of cheaper “serviced apartments” in the Rs.1500 to 2500 per room night category, corporates do not prefer using those to accommodate their employees due to below reasons :
   .
   
   • SMALL CAPACITY
     Such serviced apartments are typically small towers with just 30 to 50 rooms at max and due to this small size, such towers cannot accommodate large group bookings as corporates typically take 20 to 30 rooms at a time on a regular basis and infact larger MNCs routinely take 40 to 70 rooms in bulk at a time.
     In such a case, companies do not want to split their employees across 4 to 5 small towers and would prefer to host all of them in ONE LARGE TOWER and this is where Starlit Suites has a major advantage as Starlit has enough inventory of rooms to satisfy even the largest of corporate bookings.
     .
   • FIRE SAFETY & OTHER INTERNATIONAL NORMS
     Unlike small serviced apartment operators that are not regulated by anyone or follow any basic safety norms, Starlit Suites is required to and is regularly audited by all its top MNCs clients to ensure that Starlit Suites buildings meet the highest safety norms that such MNCs are compulsorily required by law to follow across the world, such as evacuation routes, emergency exits, state of the art fire extinguishing systems and sprinklers, certified 100% power back-up (even for air-conditioning and water heaters) etc.
     Therefore, no major company / MNC would house its employees in these smaller and very casually run, “one man show” serviced apartments and hence there is ABSOLUTELY NO COMPETITION or threat to Starlit Suites from such low end serviced apartments.
     .….
   • CORPORATES WANT TO DEAL WITH LARGER PAN INDIA OPERATORS
     Large corporates and MNCs increasingly want to work with PAN INDIA operators who can provide accommodation to their employees across all major locations of India as that way, they can deal with one single operator to get rooms across major locations where their employees travel to, instead of having to deal with multiple smaller operators who operate small towers with lesser number of rooms and who operate only in one city or often in just one single locality of each city which is a lot of hassle for them.
     Hence this way too, Starlit Suites is at a major advantage over other players as they can negotiate with large MNCs to get bulk bookings from them across all its locations in India, which gives them assured and stable business throughout.

Click Here to Scroll Back Up to the List of Questions
You can also continue scrolling down to view other questions.

Question 5

Are there any maintenance charges? If yes, how much are they and how will they affect my ROI? Does the investor have to pay such charges?

• As an owner, you are not required to pay any maintenance charges as all expenses incurred in running the hotel apartment are borne by the operator as part of the operational expenses.
  .
• However, Starlit Suites towers are always part of a gated community or an integrated township where common maintenance charges are payable for maintenance of areas outside of Starlit’s tower and for shared facilities such as security, landscaping and general cleaning, common water and electricity, etc.
  .
• But as an investor / owner, you are NOT bearing this cost out of your own pocket as this is deducted from overall revenue of the building and then the balance is shared with you and EVEN AFTER such a deduction from gross revenue, the final amount that comes to your pocket is the projected income of 10% to 12% per annum.
  .
• Therefore, this maintenance is being paid out of building’s revenue and not out of your pocket and EVEN after factoring this into the total revenue of the tower, what is paid out to investor (you) is still 10% to 12% per annum.
  .
• In other words, the projected income being shown to you as per offer document is AFTER backing out the common maintenance expenses (it is the final amount that comes to you without any deductions) and hence this does NOT reduce your income in anyway and hence is NOT an expense to you.
  .
• Hence, you do not pay any such maintenance or any other operational costs out of your pocket and this does not affect your income / ROI %.

Click Here to Scroll Back Up to the List of Questions
You can also continue scrolling down to view other questions.

Question 6

Does the investor have to pay taxes related to the operations such as luxury tax, service tax etc or will the operator bear the expense?

• As an owner/investor, the only expenses you pay out of your pocket are :
   – Property Tax to the municipality.
   – Income Tax on the rental income.
  .
• Above taxes are something you pay even for any other residential or commercial property you own and hence is not an additional or new expense involved only with Starlit Suites.
  .
• Any other taxes and charges such as luxury tax, service tax and any other such taxes or charges/expenses involved in running the hotel apartment are borne by the OPERATOR out of his share of the revenue and hence you as investor/owner will NEVER bear such charges and hence the same does NOT affect or reduce your income in anyway.
  .
• As investor/owner, you only pay the above 2 taxes which is property tax and income tax but everything else is borne by operator.

Click Here to Scroll Back Up to the List of Questions
You can also continue scrolling down to view other questions.

Question 7

Is the price quoted on your website all inclusive or are there any other additional or hidden fees involved? What additional expenses are involved in this investment?

• The prices quoted on the website is all inclusive – including the basic cost of the unit, furniture and fitouts as per the Furniture & Fixtures List shown in the annexures at the end of this article, all statutory deposits, taxes, registration and stamp duty.
  .
• However, Registration Charges, Stamp Duty and Govt Taxes such as VAT, Service tax etc may be changed by the Govt. from time to time and hence final price applicable to you may vary slightly from what has been mentioned in the offer document.
  .
• There are no other extra or hidden charges.
  .
• The only other expense you incur will be G&C’s professional fee / service charge of 1.5% of unit value. which is payable by you after agreements are executed with the builder.

Click Here to Scroll Back Up to the List of Questions
You can also continue scrolling down to view other questions.

Question 8

Do I get a discount if I book multiple units or my friends invest together? Are there any discounts / incentives for bulk bookings?

• Since Starlit Suites is a returns based asset, to ensure that everyone earns the same ROI on their investment, every investor is required to pay the EXACT SAME PRICE, hence the price is fixed and it is not possible to give any discount for bulk bookings.
  .
• For your comfort, you will be happy to know that even the Chairman of G&C has to pay the same price as everyone else in any Starlit Suites project and even if the builder’s own family has to invest in this project, they also have to pay the same price as every other investor in the building.
  .
• Also unlike normal apartments where you have to pay extra premium such as floor rise premium, premium location charges, etc, in Starlit Suites, there are no such premiums and you pay the same price for any unit on any floor of the building. This is one of the biggest advantages of investing in Starlit Suites and this ensures that everyone earns the same returns no matter which unit you purchase.

Click Here to Scroll Back Up to the List of Questions
You can also continue scrolling down to view other questions.

Question 9

Is a separate parking provided for each unit owner in Starlit Suites?

• Since a separate parking slot is not required for each and every unit in a hotel apartment like this, depending on the city, location and size of unit being purchased, you may or may not be allotted an individual/dedicated car parking.
  .
• However, a certain number of car parks will be provided as part of the common amenities and hence will be jointly owned by all the unit owners in the hotel apartment and the same will be loaded onto the saleable area of each unit.

Click Here to Scroll Back Up to the List of Questions
You can also continue scrolling down to view other questions.

Question 10

Is there a difference in Price Per Square Feet between different unit sizes and floors (i.e. is there a premium for bigger units or higher floors?)

• NO, there is no difference in basic price per sft for any type or size of unit and there is no extra premium for higher floors or premium location etc.
  .
• You pay the same price per sft for all unit sizes and floors as this ensures that all unit owners earn the same return on investment (ROI) as everyone else in the project.
  .
• Therefore, you don’t have to bother about the size, floor, position or facing of your unit as irrespective of this, you will earn the same ROI as every other unit owners.
  .
• Hence, if the unit of your choice or preference is not available, you should still go ahead with whatever is available as unit’s position, facing or floor does not affect your income.

Click Here to Scroll Back Up to the List of Questions
You can also continue scrolling down to view other questions.

Question 11

Since you are not committing a minimum guaranteed returns, I don’t think this is a lucrative or safe investment. Why should I invest if there is no such guarantee?

1. The maximum returns you can earn today from an investment that can give guaranteed returns is 8% (the highest possible rate of interest for a long term Fixed Deposit).
   .
2. In such investments that give you guaranteed returns, your returns are fixed at a comparatively low rate and your money remains locked in for a very long time and there are also no tax benefits. Also, you get fixed returns in these investments and there is no scope of earning more than this fixed rate.
   .
3. The capital value of such investments also remains the same or appreciates at a very low rate, when compared to Starlit Suites in which capital values appreciate significantly every year.
   .
4. Lastly, if you try to exit these investments before the original maturity date, then you are charged a huge penalty or loss of ROI due to reduced returns.
   .
5. In Starlit Suites, while there is no minimum guaranteed income, you are given 50% share of total income, which means that when the hotel apartment generates greater income, you also earn greater income as you get 50% of that income and there is no upper limit on how much you can get.
   .
6. Hence even though you are not guaranteed a minimum income, because of the immense potential of the business mode and because the operator has already tied up more than 200 companies who have agreed to purchase room nights in bulk at these hotel apartments, you can be rest assured that your income will easily match or in most cases, even exceed the initial projections of the operator (i.e.Starlit Suites).
   .
7. Also incase of Starlit Suites, you earn income irrespective of whether your individual unit is rented out or not and hence this is an additional safeguard to ensure that you earn income consistently month after month irrespective of occupancy rate of your unit.
   .
8. Alternative : However, if you still prefer assets that give guaranteed income, the only other alternative is to invest in Grade A commercial space that can be leased for a fixed rent – on average between 8% t 10% p.a. with some escalation clause every few years. This way, you can expect to earn an average returns of 12% to 14% in 10 years. But the investment ticket size in this case is much larger, starting from a minimum of Rs.2 crores if you want to invest in a branded builder in a good location. You will not get a home loan for this, which means entire investment will have to be funded with your own funds or you will have to take a commercial property loan which charges as much as 13% to 14% interest p.a..

You should also keep in mind that by investing in Starlit Suites, you enjoy the following advantages when compared to investing in such commercial property as explained above :

• Greater ROI
  In Starlit, you can earn average ROI of as much as 15% to 18% in 10 years versus the 12% to 14% that commercial assets give you.
  .
• Home Loan Available
  You can get a home loan at just 11% interest rate where upto 60% of property value can be funded via loan. In comparison, in case of commercial property, you can fund only upto 50% of property value and interest rate is much higher, ranging from 13% to 14%.
  .
• Smaller Ticket Size
  In Starlit Suites, ticket sizes start at Rs.30 lakhs making them highly affordable, in comparison to commercial properties which need a minimum investment of Rs.2 crore and more if you want a good property from a branded player in a commercial zone of any major city.
  .
• Zero Maintenance for Starlit Suites
  Incase of Starlit Suites, entire maintenance is taken care by the operator on your behalf and you don’t spend / pay for the maintenance as it is paid for by the operator. Incase of commercial assets, you have to pay very high maintenance charges and also take care of all the maintenance by yourself.

Therefore when you consider all the above advantages and ultimately higher returns and peace of mind that Starlit Suites gives you, you are much better of investing in Starlit than any other asset, for you to earn high monthly income.

Click Here to Scroll Back Up to the List of Questions
You can also continue scrolling down to view other questions.

Question 12

How is the income from these hotel apartments taxed? Are there any tax benefits or exemptions allowed on this rental income?

Income from these hotel apartments is considered as rental income from residential property and is added to your total taxable income for that year and taxed at the overall slab rate in which you fall into.

For your idea, the current tax slabs are as below (these figures may change from time to time and hence you are requested to check the Income Tax Department’s website to know latest applicable tax slabs) :
 – 0 to 2,50,000 : No tax
 – 2,50,001 to 5,00,000 : 10%
 – 5,00,001 to 10,00,000 : 20%
 – Above 10,00,000 : 30%

However, the total / gross rental income received by you is not fully taxable. While calculating the taxable value of rental income, various deductions are available as follows :

1. Standard deduction of 30% of total Income : That is, if you earn Rs.100 per month as rental income, Rs.30 is considered to be tax free / deduction and only Rs.70 is taxable / added to your total taxable income.
   .
2. Municipal taxes (i.e, Property Tax) paid to the local authority;
   .
3. Interest paid on a loan taken for construction / purchase of the property;
   .
4. Deduction of Pre-EMI / Pre-construction period interest paid on the home loan (this is available as deduction in five instalments from year subsequent to construction completion year).
   .
5. Repayment of principal amount of home loan taken for such property (maximum deduction allowed under this section is Rs.1.5 lakh).
   .
6. If the property is jointly held, then the income and deductions can be availed by each co-owner based on the respective shareholding in proportion mentioned in the purchase deed or agreement.

Therefore, this hotel apartment asset is one of the most tax efficient and rewarding investment available to you today in India and there is NO other investment asset that can give you such a large range of tax benefits.

The above tax benefits are available to both Resident Indians as well as Non-Resident Indians.

Click Here to Scroll Back Up to the List of Questions
You can also continue scrolling down to view other questions.

Question 13

Being an NRI / PIO / OCI, do I pay taxes on this rental income and if yes, how much do I pay, how do I pay such tax & do I enjoy any tax breaks / benefits?

1. RENTAL INCOME ARISING IN INDIA IS TAXABLE IN INDIA

• As an NRI, you are required to pay taxes on any income arising in India and hence income from this property too will be taxed in India, as per the overall tax slab / rate that you fall into for that particular year.
• For your idea, the current tax slabs applicable to an NRI are as below (these figures may change from time to time and hence you are requested to check the Income Tax Department’s website to know latest applicable tax slabs) :
   – 0 to 2,50,000 : No tax
   – 2,50,001 to 5,00,000 : 10%
   – 5,00,001 to 10,00,000 : 20%
   – Above 10,00,000 : 30%

2. NO DOUBLE TAXATION OF INCOME

• Since India has Double Tax Avoidance Agreement (DTAA), with over 127 countries (including major ones like USA, UK, Singapore, Australia, European countries, Middle Eastern Countries, and more), you will not be taxed again in your country of residence when you repatriate this income (i.e. you will not be taxed TWICE, that is once in India and once in your country of residence).
• But you may have to pay the differential tax if any, incase you fall into a higher tax bracket in your country of residence than what you have paid in India. That is, if you have paid tax in India at 30% slab but you fall in the 40% tax slab in your country of residence, you will have to pay the differential tax of 10% in your country of residence.

3. TAX DEDUCTED AT SOURCE

• Incase of NRI, operator is obliged to deduct Tax at Source (TDS) at the rate of 30.9% irrespective of which tax slab you fall into.
• At the end of each financial year, you can claim for a reimbursement of tax incase your overall tax liability for that year is less than what has already been deducted at source by the operator for that particular year.

4. TAX DEDUCTIONS & BENEFITS

• The total / gross rental income received by you is not fully taxable as following deductions are allowed while calculating the taxable value of rental income :
  Standard deduction of 30% of total Income : That is, if you earn Rs.100 per month as rental income, Rs.30 is considered to be tax free / deduction and only Rs.70 is taxable / added to your total taxable income.
• Municipal taxes (i.e, Property Tax) paid to the local authority;
• Interest paid on a loan taken for construction / purchase of the property;
• Deduction of Pre-EMI / Pre-construction period interest paid on the home loan (this is available as deduction in five instalments from year subsequent to construction completion year).
• Repayment of principal amount of home loan taken for such property (maximum deduction allowed under this section is Rs.1.5 lakh).
• If the property is jointly held, then the income and deductions can be availed by each co-owner based on the respective shareholding in proportion mentioned in the purchase deed or agreement.

5. ASSISTANCE IN FILING YOUR TAXES & REPATRIATION

• Filing your taxes and claiming for a refund (if applicable) is a very simple process that can be done over the internet and with the help of a chartered accountant in India.
• We will be glad to connect you to a highly seasoned Chartered Accountant in India who has helped many of our NRI clients in the last few years in filing their taxes online.
• Please reach out to our team member who is in touch with you or alternatively, write to us at office@gcglobal.in incase you want to be connected to the accountant who can help you both with filing your taxes and also with repatriating your money from India back to your country of residence.

Click Here to Scroll Back Up to the List of Questions
You can also continue scrolling down to view other questions.

Question 14

If I take a home loan, will my EMIs begin immediately and if yes, what will be the amount approximately?

• If you invest using a home loan, then banks will fund approx 70% of unit cost and only balance of 30% has to be paid out of your pocket and even in this, you pay only 20% now and balance 10% is payable in instalments spread across the construction period.
  .
• When you take a loan for under construction properties, you are NOT required to pay complete or full fledged EMI right from the beginning.
  .
• Since the total loan amount will be disbursed to builder in instalments based on construction progress (i.e. as per builder’s payment schedule), bank will charge you ONLY SIMPLE INTEREST ONLY ON THE AMOUNT DISBURSED to the builder (this is also popularly knows as Pre-EMI).
  .
• Your full fledged EMIs (which includes Principal Repayment + Interest) will be charged to you by the bank ONLY after project is completed and handed over to you (i.e. post possession of the building).
  .
• Hence, when you take a home loan to invest in Starlit Suites units, you have to ONLY pay simple interest on the loan amount disbursed to the builder (which will be very small amount in the beginning and gradually grows every month as construction progresses) and your full fledged EMI will be charged to you / becomes payable ONLY after you take possession of your unit.
  .
• And since the average monthly income in the 1st year of operations itself will be equal to or greater than the EMI you pay on your entire loan, you will no longer have to invest or pay out of your own pocket once project is operational and your investment will pay for itself and infact leave you with a surplus every month.

EXAMPLE
To illustrate above, let’s assume you purchase a 1 BHK in Starlit Suites Hyderabad which costs Rs.59.4 Lakhs all inclusive. Of this, you take maximum possible loan of Rs.40 lakhs and you pay balance Rs.19.4 lakhs out of your own funds.

1. Positive Cash Flows / Surplus From Day 1 of Operations

• On average today, the EMI per Rs.1 lakh of loan is approx Rs.982 to 1000. Hence assuming higher estimate of Rs.1000 per lakh of loan, your total EMI would be Rs.1000 x 40 lakhs = Rs.40,000 per month on the higher side.
  .
• From the Income Projection Sheet for Starlit Suites Hyderabad, you will notice that 1st year income itself is Rs.40,950 per month (lower / conservative estimate), whereas your EMI is only Rs.40,000 per month (higher estimate) – thus showing very clearly that income from the project is enough to not only pay off the EMI completely but to also leave you with a surplus every month.
  .
• Infact by the 3rd year of operations, the income will reach Rs.57,000 per month but your EMI will remain at Rs.40,000 per month, thus leaving you with a massive surplus of Rs.17,000 per month or Rs.2,04,000 per annum and this surplus will only keep growing over time.
  .
• This investment is therefore cash flow positive right from 1st year of operations which means once operations begin, you no longer have to invest any further out of your own pocket as the investment will pay for itself.
  .
• But just for arguments sake and to be more conservative, if we assume that income for first few months is lower than projected figures (as this brand new hotel apartment would need couple of months to stabilise), you should be prepared to pay approximately Rs.3000 to 5000 per month as difference between income and EMI but this will be for just a couple of months before income reaches / matches your EMI, after which you need not bother paying out of your pocket. This is only a conservative estimate just to ensure you are not caught by surprise.

2. Pre-EMI Interest

• Coming to the Pre-EMI interest, on the loan of Rs.40 lakhs, you will end up paying a Pre-EMI / Simple Interest of approx Rs.3.2 lakhs in instalment over the next 2 years until the completion of construction.
  .
• This Pre-EMI interest of approx Rs.3.2 lakhs will be payable by you in instalments every month and to begin with, it will be a very small figure of Rs.4000 per month and this will keep growing every month to reach a maximum of Rs.28,000 per month towards the nearing of completion / handover of this project, adding upto total of Rs.3.2 lakhs approx.

Click Here to Scroll Back Up to the List of Questions
You can also continue scrolling down to view other questions.

Question 15

I have reviewed my TDS forms and have observed a potential error. The additional one month rent in the period January 2015 to March 2015 should actually belong to the period April 2015 to June 2015. You can also see that in the April 2015 through June 2015 TDS form, only 2 month’s rent is reported.

I have checked my bank account and confirmed that April 2015 through June 2015, I have received 3 month’s rent. I think the TDS forms have been filed incorrectly and please send me corrected ones.

The TDS certificates have been issued correctly and following is the explanation as to why its done this way :

• The rent for March gets paid in April and the one in April gets paid in May, and so on. However, in India 31st March being the year end, any money paid in April in fact belongs to rental for previous year (i.e. for the month of March which belongs to the previous financial year) and it is thus obligatory we pay the TDS by 30th April but record the same as paid in previous financial year (i.e. in March) as on 31st March.
  .
• Hence every year, in the first quarter (i.e. April to June), you will receive the TDS form for 2 months and in the last quarter of a year (January to March) you will receive 4 months, eventually year end totalling to 12 deductions and TDS reflected. The forms issued thus are correct and the payment received by you in April 2015, in fact belongs to 31st March 2015, to be paid by Starlit Suites on or before 30 April 2015.
  .
• In the previous year ending 31st March 2015, since Starlit had to write off the entire amounts paid to you as RENT (even though it was advance), hence this treatment was essential as per the accounting principles.

Click Here to Scroll Back Up to the List of Questions
You can also continue scrolling down to view other questions.

 Other FAQ Categories 

To learn more, we encourage you to read our other FAQ sections as shown below :

• Income Related Questions
• Lease, Rental Management Agreement & Other Documentation Related Questions
• NRI Related Questions