Unlocking the Golden Seal: The Significance and Uncommon Aspects of Building Completion Certificates

Buying a house or a flat is a major financial decision that needs to be thought through carefully. Even though it involves significant costs, it is a good investment as you are acquiring an asset that will appreciate in value over time. This investment will help you save on rental expenses and provide you with the opportunity to create the home you and your loved ones deserve. Obtaining complete documentation from the builder/developer is essential to protect your legal rights and investment. One of the necessary documents you will require before taking possession of the flat or apartment is the Building Completion Certificate, also known as the Completion Certificate.

As a homebuyer, the Completion Certificate can be important to you in various ways. Let us understand some of these aspects in depth.

What is a Completion Certificate?

A Building Completion Certificate is an essential document issued by the local municipal corporation or development authority. It is issued after the corporation undertakes a physical verification to ensure that the completed construction complies with approved plans and building safety regulations specified by the Buildings Act of 2004 and the National Building Code of India. This means that the property is safe for occupants and is up to code.

Why is the completion certificate important for a homeowner?

Construction activities in India are subject to certain regulations and guidelines that are put in place to ensure the safety of residents and reduce the environmental impact of construction. These rules cover both commercial and residential buildings and include requirements for construction norms, fire safety measures, and maintenance codes. The National Building Code of India, designed by the Bureau of Indian Standards (BIS), is crucial to ensure the safety and longevity of constructed buildings. The completion certificate verifies compliance with these regulations.

It is important to remember that as a homeowner, you should never take possession or move into a flat or apartment that does not have a completion certificate. Doing so might be considered illegal and could result in penalties or even eviction. Additionally, living in a flat or apartment without a completion certificate may not be safe.

Whose responsibility is it to apply for a Completion Certificate?

It is the responsibility of the builder or developer to apply for and obtain a Completion Certificate before they can apply for water, electricity, drainage connections, and other utilities from the Municipal Corporation. The Provisional Completion Certificate is issued when the project is almost complete, but it is important to note that it is only a temporary certificate. Within six months, the developer must obtain a permanent Building Completion Certificate to replace the provisional one. Before taking possession of the flat or moving in, insist on this certificate as a homebuyer.

Is the certificate important for availing a home loan?

If you are planning to buy a house, you may decide to apply for a home loan from a bank or a well-known NBFC. In case your loan request is approved for a ready-to-move property, you will be required to submit the completion certificate along with your application. While your eligibility criteria are based on your income, credit score, and personal information, banks and lenders are more likely to approve your loan application for a property that has a completion certificate compared to an under-construction property.

Completion certificate and tax implications

The value of a property can be affected by the completion certificate. If you are a homebuyer and the property is still under construction, you will be required to pay 5% GST on the property value if it falls in the non-affordable housing category (property value over INR 50 lakh). However, if the construction is completed and the completion certificate is issued, there will be no GST levied on the purchase of the apartment.

The availability of the completion certificate can impact your income tax deduction on the home loan taken to finance your property purchase. According to Section 24B, the interest repayment component of the home loan is eligible for a deduction of up to INR 2 lakh. However, this deduction can only be claimed from the year of completion, which is after the issuance of the completion certificate.

The Building Completion Certificate is a crucial document that the developer must obtain, and you, as the homebuyer, should verify. This document will be required in several instances - from securing a home loan to claiming income tax deductions, from applying for utilities to reselling the property. It is vital to understand more about this document and obtain a copy from the builder.