Simplified Laws Guide to Taxation and Legal Concern
“My calculation went wrong. I had to shell out more than I thought of”, “This has come as a surprise” “I had not planned for it”. Have you heard people talking like this? We hear only half, trust and plan our money accordingly to buy the goods/services. I have listed out a couple of instances where our calculations may go wrong.
- CTC and Take home salary: One has to carefully scrutinize the offer letter and read between the lines! The CTC (Cost To Company) given in the appointment letter may look very attractive but when it translates to monthly take home salary, it will be very disappointing! So, whenever you change jobs, check the salary structure and arrive at the take home salary accurately. A detailed article is posted on this topic. [Read: Ten reasons why your Take Home Salary is much lesser than the CTC for more information].
- Buying a flat – area: All real estate advertisements mention about the rate per square feet. For example – “a 2000 sft luxury flat for just Rs.80 Lakhs. 82% open space, garden, pool etc.” The area mentioned by the builders is called ‘super built up area” Based on the advertisement, you will dream of a 2000 sft house. But when you really see the flat, it will be much smaller than you imagined. The difference between the super built up area and the carpet area (wall to wall measurement of the flat) will be around 30%. For instance, a 2000 sft flat will have a carpet area of around 1400 sft. So, when you buy a flat, ask the builder about the actual carpet area.
- Buying a flat – price: The price quoted by the builder, say Rs.80 lakhs* to be checked twice. They always put * mark. The * mark means a lot! Don’t ignore. Asterisk mark is equal to atleast 25% of the base price. For instance, in case of Rs.80 lakhs flat, you will end up in spending additional Rs.20 lakhs towards VAT, Service Tax, Water and Electricity, Legal and documentation charges, registration charges, khata transfer, etc. So, whenever you buy a flat, ask the builder about an ‘all inclusive price or cost to consumer price”
- Buying a plot (site) – size: You would have seen advertisements about ‘sale of residential plots of 30×40 sft, 30×50 sft, 40×60 sft. The rate per sft is Rs.2500/-. Again this is deceptive. The land (or the sites) is measured in meters and not in sft. For example, 30×40 sft means 9 x 12 square meters. (The area is not 1200 sft, but it is 1162 sft). So, if you are buying a site, you have to pay for 1162 sft and not for 1200 sft. Most of the private developers will ask you to pay on 1200 sft, but it is wrong.
- Lodging – room rent per night: If you enquire about the room rent, the hotelier will quote Rs.5000 per night. But for your surprise, when you settle the bill, they will take around Rs.6000 per night! The difference is taxes. So, when you book a room, ask for ‘all inclusive rate’
- Restaurant – rate per plate: You would have seen boards in front of many 3 star hotels “Rs.325 for lunch buffet” But when you pay, it will cost around Rs.400! The difference is VAT and Service. So, when you get into the restaurant, check the ‘NET price” [Read: Tax on hotel food for more information
- Service Fees – Almost all the service providers will quote basic fee. You have to double check the total price including service tax. Most of the services are subject to service tax of 12.36%
- Car or motor vehicles – price: You would have seen advertisement about ‘car at Rs. 30 Lakhs launched” But when you enquire in the showroom about the price, it will be Rs.40 Lakhs. The price quoted in the advertisement is the base price (ex-showroom). You have to add the cost of Insurance, Road Tax, extended warranty, basic accessories etc. So, when you buy a car, ask about ‘ON ROAD’ price.
- Hospital – Duration at the time of discharge: In case of discharge from hospitals, the doctor may say that ‘you can be discharged today around 12 noon’. It doesn’t mean that you can leave the hospital by 12 noon. If you start settling the bill around 12 noon, you will end up in going home around 3 pm. The discharge in hospital is a very lengthy procedure. So, get prepared for the delay
- Airfare: The misleading advertisement says “Bangalore to Goa Rs.699”. When you really book the flight, you will realize your plight. You will double check the rates, instead of Rs.699, the screen shows Rs.1899! If you see the break up, it will include airport charges, taxes, etc. So, check the airfare in the booking portals and don’t get excited seeing the advertisements!
Thought for the day
When things go wrong, you will find they usually go on getting worse for some time; but when things once start going right they often go on getting better and better. Have patience!
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