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Business Standard
22-07-2025
- Business
- Business Standard
From lock-ins to rent hikes: Rental clauses that can trip up tenants
Many tenants sign rental agreements in India without reading the fine print, only to regret it later. Legal experts say certain overlooked clauses can leave you saddled with unexpected costs, legal disputes, or even force you to stay in a property longer than planned. Here's a guide to the most critical provisions and what they mean for you. Why does the fine print matter? 'Tenants often miss crucial clauses like the lock-in period, rent escalation, and maintenance responsibilities. Later, these become grounds for hefty penalties or disputes,' said Rohit Jain, managing partner at law firm Singhania & Co. For example, if you're bound by a 12-month lock-in clause but vacate in six months due to a job transfer, the landlord can demand rent for the remaining six months or forfeit your entire security deposit. 'We've handled cases where tenants were asked to pay Rs 150,000 (six months' rent) after moving out early,' he adds. Security deposits and rent hikes: Know the rules Security deposit deductions are another flashpoint. 'Tenants don't realise vague terms like 'beyond normal wear and tear' allow landlords wide discretion,' says Ashutosh Srivastava, partner at SKV Law Offices. For example, you pay a Rs 50,000 deposit on a flat with Rs 25,000 monthly rent. At move-out, the landlord deducts Rs 10,000 for painting, Rs 5,000 for cleaning, and Rs 3,000 for minor repairs, even without major damages, leaving you just Rs 32,000. 'Unless the agreement specifies acceptable deductions, tenants can't contest such claims easily,' Srivastava explains. Rent escalation clauses also deserve scrutiny. 'A 10 per cent annual hike means Rs 25,000 rent becomes Rs 30,250 by year three, something tenants often don't budget for,' notes Jain. Tricky clauses to watch out for Landlords sometimes include restrictive terms that tilt the balance. Lock-in period: This traps tenants into staying or paying penalties. 'We've seen people pay 3 months' rent, Rs 75,000, after vacating early due to job transfers,' says Gaurav K Singh, founder & chairman of Womeki Group. Subletting bans: Hosting friends or family, even temporarily, could breach the agreement unless expressly permitted. Broad maintenance obligations: Tenants are sometimes made responsible for structural repairs or society charges, which are legally the landlord's duty unless agreed otherwise, Singh adds. What if the landlord enforces unfair clauses? If landlords impose unfair penalties, tenants have remedies under Indian law. 'Unconscionable or one-sided clauses can be challenged in court. For instance, a Bengaluru tenant recovered Rs 70,000 of her Rs 100,000 deposit after legal notice, despite the landlord citing vague 'repair charges',' says Jain. Aarya Bhat, advocate at Delhi High Court, cautions. 'Courts may reject challenges if agreements were signed without proper scrutiny. So it's better to get the agreement vetted before signing.' Understanding key terms in rental agreements Here's a quick explainer of common technical terms: Lock-in period: The minimum time both tenant and landlord are bound by the lease. Breaking it early often triggers penalties. Notice period: The time either party must give before ending the lease (e.g., 2 months). Force majeure: Covers unforeseen events like natural disasters that could make the property uninhabitable. Maintenance & repairs: Specifies who handles upkeep, tenant or landlord. Subletting clause: States whether you can rent out part of the property or host others. Termination clause: Details how and when the lease can be ended by either side. Indemnity clause: A legal safeguard requiring one party to compensate the other for losses caused by breaches. The bottom line 'Tenants must not treat rental agreements as mere formalities,' Srivastava advises. Spending a little time and money on legal vetting could save thousands later.
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Business Standard
17-06-2025
- Business
- Business Standard
Paid taxes abroad as an Indian resident? Here's how to claim tax credit
If you're an Indian resident earning income overseas and have already paid tax on that income abroad, you may be eligible for a foreign tax credit (FTC) while filing your tax returns in India. However, experts caution that to successfully claim it, careful documentation and timely filing are critical. Who can claim foreign tax credit in India? Any Indian resident, individual or entity, who has paid taxes in a foreign country on income that is also taxable in India, can claim the foreign tax credit. 'FTC can be claimed whether or not there is a Double Taxation Avoidance Agreement (DTAA) between India and the foreign country,' said SR Patnaik, partner (head-taxation), Cyril Amarchand Mangaldas. 'The credit is allowed in the year in which the corresponding income is taxed in India,' he added. According to Abhishek Nangia, senior associate at SKV Law Offices, 'FTC helps avoid double taxation and can be claimed under Section 90 or 91 of the Income Tax Act. The credit is limited to the lower of the foreign tax paid or the Indian tax payable on that income.' Documents needed to claim foreign tax credit The experts suggest that filing Form 67 before submitting your income tax return is a mandatory requirement. This should be accompanied by: A statement of foreign income taxed in India Proof of foreign tax payment (such as bank challans, tax certificates) Nature and amount of income Tax Residency Certificate (TRC) from the foreign country (recommended, especially when claiming DTAA relief) In some cases, Form 10F and a No Permanent Establishment declaration 'A self-declaration along with proof of tax deduction or payment abroad is also necessary,' noted Suresh Surana, chartered accountant. Common mistakes to avoid while claiming foreign tax credit All three experts agree that filing Form 67 late or with incomplete details is a major reason for rejections. Errors in reporting foreign income, mismatches with Form 26AS, or claiming FTC on income that is exempt in India also trigger scrutiny. 'Disputed foreign taxes cannot be claimed unless resolved, and penalties or interest paid overseas are not eligible for credit,' Nangia added. Surana warns that 'claiming more credit than allowed under Indian tax rates or without proper documents may attract notices or disallowance.' How credit is calculated The credit allowed is the lower of the foreign tax paid or Indian tax payable on that same income. 'If the foreign tax is higher, you only get credit up to Indian rates; the rest is your loss,' said Nangia. Patnaik clarified that Rule 128 governs this, and DTAA provisions apply if beneficial to the taxpayer, except where GAAR is invoked. In DTAA cases, Surana said, credit may be given under the exemption or credit method, and if no DTAA exists, unilateral relief is allowed under Section 91 of the Income Tax Act. Bottom line: Claiming foreign tax credit is not difficult, but missing even a single step can cost you. To stay on the right side of the tax department, stick to timelines, maintain thorough documentation, and consult a tax professional if needed.
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Business Standard
02-05-2025
- Business
- Business Standard
Change is coming: Why RBI wants more Rs 100, Rs 200 notes in ATMs
The Reserve Bank of India (RBI) earlier this week asked banks and White Label ATM (WTA) operators to load at least one cassette of Rs 100 / Rs 200 notes in 75 per cent of ATMs by September 30 and 90 per cent by March 31 next year. WLAs are automated teller machines managed and operated by non-banking entities, as mandated by RBI norms. 'By mandating regular dispensing of Rs 100 and Rs 200 notes, the RBI aims to smooth out the perennial chhutta [small change] crunch — but it also raises fresh questions around convenience and digital adoption,' says Vineet Kumar, senior associate at SKV Law Offices. The RBI's direction this should lead to: Help people have cash for small purchases and reduce the need for larger currency notes. Support micro-merchants who often struggle to provide change. Convenient but not always ''Small purchase' is a relative term,' Vineet notes. 'Carrying 150 or 200 of Rs 100 notes for a Rs 15,000 expense is unwieldy; carrying 30 or 40 of Rs 500 notes is far more manageable.' said Kumar. He highlighted the points mentioned below. Withdrawal frequency: You may have to visit ATMs more often to get small notes, potentially pushing you past your free‐withdrawal limit (three in metro cities, five in non-metros). Operational hurdles on the ground NPCI manages the network of ATMs in India and according to the date published by it there are more than 2.6 lakh ATMs. Reaching these targets nationwide entails: Cassette reconfiguration across tens of thousands of machines. Rapid logistics to replenish small-note supplies daily. 'As things stand, cash-outs happen regularly,' says Kumar. Temporary 'dry ATM' spells could spike if banks and operators don't coordinate closely. Balancing cash and digital Will easier access to small notes tempt you back to cash? Or will the convenience of digital payments still win out? Your choice will hinge on factors such as: transaction fees, bulk versus convenience, and personal preference. What you can do
