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Double trouble
Tax
tips
Stay in Oman, work in UAE to beat high rents
GREEN HOUSE
Whither slowdown?
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Change in guard makes & mars
BATTERED by the global meltdown, the forthcoming Lok Sabha election has come as a double whammy for the real estate sector in Punjab. Investors are now wary of buying land, especially huge chunks, till the new government takes over at the Centre. And not without reason: Investors say that different governments make different policies about real estate and history has it that change in guard has made and marred investors.
The sub-registrar offices, which register sale deeds of properties, have reported fewer sale deeds in the recent past. They have reported a 30 to 40 per cent decline in deeds on a monthly basis. The state exchequer, which rakes in crores in stamp duty charged on every deed, too is suffering losses. “The next three months will spell doom for the market. There are no investors for the time being. Even if people have liquid cash, they are not willing to invest it in property. They just want to keep it safe and are not bothered whether it earns more or not. Keeping it aside is still a safer bet than investing in property,” said S.S. Atwal of National Estate Deals, Ludhiana. Identical is the case with commercial sites. Neither sale nor purchase has been reported except for a few cases of distress sale. “It is the same old situation for Punjab. Most owners are holding on to their property. They would rather forget the land for the time being but will not sell it cheap. These are the kind of investors we have here,” added Atwal. There are no investors in the market, rued Atwal. “Till two years ago, it was a trend to invest in property. There were instances when government employees were withdrawing large sums from their provident fund to invest in property. But not any more. Maybe the swearing in of new government can revive the trend,” said a hopeful Atwal. Agreeing with him, Ludhiana sub-registrar (central) Major Gurjinder Singh Benipal said that the lethal combination of meltdown and polls was being felt by his office as well. “I have not seen anybody buy 10-15 acre land for the last one month. Earlier, many deeds of such huge chunk were being registered in the offices,” he said. He also said only small pieces of land measuring between 50 and 150 square yards were being sold and purchased. The rest of realty presents a gloomy picture. “If on an average there were 100 sale deeds registered in my office everyday, the number has dipped to 60. This speaks volumes about the market’s health,” he said. Of course, individual investors and real estate agents have been at the receiving end, but the state exchequer too is facing the brunt of the situation. “The loss is very marked. Not very long ago, offices in Ludhiana alone would make crores for the exchequer every month, but not any more. More than the number of sale deeds registered, the money thus collected has taken a severe pounding,” said Major Benipal.
Smart Move
PROPERTY experts said that whatever few deals were taking place in the current economic climate were those of houses. And why not? Taking a cue from international trends, smart buyers have realised that it is better business sense to buy a house at corrected prices and simply divert the monthly rent to pay its installments.
Lower circle rates for Dehradun
THEY tried but could not succeed. Realising the fragile state of realty, the Uttarakhand Government attempted to prop it up with a proposal to lower circle rates in the capital city of Dehradun. But the proposal has been put on the back burner due to implementation of the Election Commission’s model code of conduct.
Like the overall economy, the real estate sector has been taking a beating in the wake of global recession and severe liquidity crunch. Uttarakhand, created in November 2000, was one of the hot spots on the real estate map. The sector got a boost during the five-year tenure of the Congress Government headed by chief minister N.D. Tiwari. Large-scale industrialisation in the Terai districts of Udham Singh Nagar, Haridwar and Dehradun give a fillip to the real estate sector as a large number of companies dealing in developing land and building flats and properties ventured into the state. However, the downtrend started with the coming to power of the Bharatiya Janata Party (BJP) government led by chief minister Maj Gen (retd) B.C. Khanduri in February 2007. In a major decision, Khanduri decided to put a cap on agricultural property an outsider could purchase in the state. During the Congress regime, the limit was fixed at 500 square yards but Khanduri halved it to 250 yards. Consequently, most outside financers withdrew creating a slump in the industry. Compounding problems, the state government also enhanced the circle rates of properties. This, in turn, led to a steep rise in the stamp duty to be paid on it in urban areas, particularly capital city of Dehradun, making it difficult for buyers. This stifled sale-purchase of properties in the city. For the past two years, there has been a 30 per cent fall in revenue from stamp duty and registries. In 2006-07, revenue stood at Rs 342 crore but last year it declined to Rs 231 crore. This has led to a 10-20 per cent correction in property prices. Still, there are no buyers. Concerned with the situation, the state government lowered stamp duty rates by one per cent, but it did not help. It also wanted to lower circle rates so that stamp duty on registration of properties come down encouraging people to register their sale deeds, but the Lok Sabha election has put the move on hold. With the coming out of new master plan for Dehradun city last month – many more areas were demarcated for urban housing — there was hope that sector would get a boost but there was not much impact on the market. The much-awaited plan proposed for the urban development of the capital till 2025, would ‘officially’ take away nearly 5,000 hectares of agricultural land in the Doon valley for urbanisation. “The global slump as well as high circle rate and stamp duty has led to the decline of the real estate business in Uttarakhand,” said Inder Singh, a property dealer of Dehradun.
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Tax tips Within three years, it’s a short-term gain S.C. Vasudeva Q. I was allotted a plot by HUDA in March 1993 and possession of the plot was offered in December 1995. The sector in which I was allotted the plot has not been fully developed yet. I took the paper possession of the plot in January 2009, and till date I have not taken the physical possession. In case I sell the said plot after getting its physical possession in March 2009, which date will be accepted as date of acquiring the plot to determine the gain as long term capital gain or short term capital gain? Please advise. —Ved A. It is not understood as to what is meant by paper possession of the plot. Normally paper possession should mean that the possession of the plot has been handed over to you and you have acknowledged this aspect. Your acknowledgement in this regard is a proof with regard to the possession having been taken over by you. In my opinion, therefore, such possession enables the department to prove that the possession was handed over in January 2009 and Haryana Urban Development Authority transferred the plot in January 2009. Therefore, in case the sale of the plot takes place within three year of January 2009, the capital gain arising thereon shall be treated as a short-term capital gain.
You’ll have to prove date
Q. Thanks for your response to my question in The Tribune dated February 7, 2009. You have calculated the capital gain tax considering it as a short-term gain but this is not the case. The possession of plot was offered to my mother by Haryana Urban Development Authority on March 14, 2005 and as per clause 6 of the allotment letter, interest @ 11% on the remaining installments has been paid to the authority w.e.f. March 14, 2005 along with outstanding installments. My mother expired on September 3, 2003 and the actual possession did not take place. But as the interest @ 11% has already been recovered by the authority, it will be in order to assume that possession was given on March 14, 2005. As such, it appears to be a long-term capital gain. Please confirm if I am right and if so, what will be the long-term capital gain tax? Also is there any way to save this tax? I would like to add here that the plot was allotted to my mother in 2002, offer of possession was made on March 14, 2005, sale proceeds were Rs 14.75 lakh and total cost of the plot was Rs 7 lakh. — D.P. Singh A.
The word “transfer” in relation to a capital asset has been defined to include any transaction allowing of the possession of any immovable property to be taken or retained in part performance of the contract of the nature referred to in section 53A of the Transfer of Property Act, 1882. As would be evident from the definition, it is the date of possession that is important for the purposes of ascertaining the date of transfer of an immovable property. In case it can be proved that your mother took possession on March 14, 2005, it may be possible to claim that the gain arising on transfer on such a plot would be a long-term one. This fact will have to be proved before a claim on the aforesaid basis is made. A mere statement that the possession must have been taken by your mother on March 14, 2005 would not be sufficient.
If it is not a gift, no benefit allowable
Q. My wife was allotted one plot by the Haryana Urban Development Authority on February 28, 2002 and she paid Rs 7 lakh towards cost and interest on installments. She expired on September 3, 2003. However, installments were paid on due dates; last paid on February 27, 2008. The authority offered possession of the plot on March 14, 2005 and interest was paid along with the outstanding installments from the date of possession. I got the plot transferred in the name of my son in 2008, who sold the same in June 20008 for Rs 13 lakh. With the said amount, my son purchased from me a residential flat on the second floor of my commercial property for Rs 15 lakh in February 2009. Kindly advise if my son needs to pay capital gain tax? If so, how much and how can he save the tax? — Paramjit Singh A.
On the basis of the facts given in the query, the profit arising on the sale of the plot, which was transferred in the name of your son in 2008, would be a short-term capital gain and therefore, no benefit would be allowable for claiming exemption under any of the provisions of the Act. In view thereof, your son will have to pay capital gains tax on the sale of the plot without any indexation benefit. I may add that the above reply to your query is based on the presumption that the transfer to your son was not by virtue of a gift deed in his
favour.
Only house owner can claim deduction
Q. I work in an IT company and took a housing loan from HDFC Bank. I am the co-applicant. The property is in my mother’s name but she is a housewife and I pay all EMIs. Am I eligible for tax benefit?
A.
A deduction under section 80C of the Act towards the payments made by way of repayment of amount borrowed by the assessee from the bank for the construction or the acquisition of a residential house is allowed to a person who is the owner of the residential house. In your case, the owner of the house being your mother, you would not be entitled to any deduction under the said section.
File revised return before March 31
Q. I have income from salary from a nationalised bank. I had filed my return of income for the assessment year 2007-08 with income returned at Rs 1.5 lakh before due date and the assessment was completed by December 2007. I sold my residential house in September-2006 at a loss of around Rs 1.5 lakh (calculated on index basis), which I forgot to mention in the return of income, as I did not have any tax liability. I want to know if I can file a revised return of income for the assessment year 2007-08 now, mentioning the sale of house and set off loss also as I am going to get arrear of pay from April 2006 till date? A.
You have the right to file a revised return before March 31, 2009. However, the loss of Rs 1.5 lakh may not be allowed to be set off against any other income in view of the provisions of section 71(3) of the Income-tax Act 1961 (the Act), which provide that in respect of any assessment year the net result of computation under the head ‘capital gain’ is a loss and the assessee is assessable under any other head of income, the assessee shall not be entitled to have such loss set off against the income under the other head.
This column appears weekly. The writer can be contacted at sc@scvasudeva.com
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Get your dream home, now!
HOME loan customers are now increasingly shifting their loan accounts from private sector banks to public sector banks. Low interest rates in public sector banks are stimulating demand and luring both new and existing borrowers.
There is a great rush at State Bank of India counters across the country, as customers have started making queries about shifting their loan portfolio from private sector banks. Recently, SBI introduced an 8 per cent home loan rate offer, valid for a year, for new borrowers. Any existing home loan borrower shifting from another lender to SBI would also be treated as a new borrower and thus could avail lower rate of interest. For a home loan above Rs 20 lakh, the current rate is around 12 per cent while SBI is offering the same for 8 per cent. This translates to a saving of around Rs 4,000 per lakh over a 12 month period. The SBI has already received over 30,000 applications across the country, some of which are from existing borrowers of other banks. Their target is to disburse Rs 15,000 crore by the end of March 2009. To discourage existing borrowers, some private sector banks have increased pre-closing home loan account charges from 2 per cent to 3 per cent. SBI’s home loan portfolio was estimated to have increased by 22 per cent to Rs 55,000 crore this January from Rs 43,000 crore at the end of December 2008. Total home loan disbursement of banks in the country stood at around Rs 2,40,000 crore as of December 2008. For existing home loan customers, SBI has introduced a multi-purpose SBI lifestyle loan. Customers can borrow up to 10 per cent of their home loan up to Rs 5 lakh at an interest rate of 8 per cent per annum for one year. This effectively works like a personal loan. If an individual has availed any other personal loan at a higher cost, this attractive interest provides an opportunity to swap the loan and to reduce the interest cost at least for a year. However, the maximum amount of such personal loan is restricted to Rs 5 lakh. SBI can afford to lend at such cheap rate as it has one of the best current and saving account deposit ratio and these deposit are the cheapest source of funds for a bank and high current and saving ratio bring down their average cost of funds. This in turn helps the bank in offering cheaper credit while maintaining their net interest margin, the difference between the rates at which banks borrow and lend. According to State Bank of Patiala former general manager Hardarsh Singh, the product was seeing some traction from borrowers transferring existing loans from other banks, new home buyers still seemed reticent. One of the private sector banks chief termed SBI’s decision to freeze home loan rates at 8 per cent for a year as a gimmick. State-owned banks started cutting their home loan rates after the country's largest lender, State Bank of India, froze its new home loan rates at eight per cent for one year recently. Well, it is now for the borrowers to judge.
Central Bank cuts rates
PUBLIC sector lender Central Bank of India has frozen lending rate on new housing loans up to Rs 20 lakh at eight per cent for a period of one year. The bank has targeted to disburse an additional Rs 500 crore of home loans by April end with the introduction of the new scheme. Lending rates for loans between Rs 5 lakh and Rs 20 lakh would now be offered at eight per cent as against 9.25 per cent earlier, the bank said. After one year, this rate would be reviewed according to the prevailing market situations, a Central Bank official said. Customers who have been sanctioned loans between March 12 and April 30, 2009, can avail the benefit of the scheme, the bank said. In February, Central Bank had reduced its lending rate on home loans up to Rs 5 lakh from 8.5 per cent to eight per cent.
— PTI
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Stay in Oman, work in UAE to beat high rents
FRUSTRATED by the high rents in the UAE, many expats and nationals are now living in the neighbouring Oman and working in the UAE in order to make both ends meet.
People working in Abu Dhabi, Dubai and Al Ain are increasingly looking to reside in Buraimi, property agents say. As a result, rental prices in the city, which lies adjacent to Al Ain on the Omani side of the border, are going up and vacant homes are becoming scarce. Of 10 Buraimi property agents visited last week, only two had apartments or villas for rent. They said most had been rented to Emiratis, other GCC citizens and expatriates working in the UAE, a national daily reported. “Look around when you drive and you will see as many Abu Dhabi licence plates on cars as you do Omani ones,” said a real estate official in Buraimi. He expects the rents to remain 30 per cent higher on average than they were two years ago if the border remains open. A newly built three-bedroom villa with living room, dining room, three bathrooms, a large kitchen and garden rents for Dh36,000 a year on average, according to real estate listings. A year ago it would have rented for less than Dh20,000. By comparison, a similar size villa in Al Ain rents for at least Dh80,000, and in Abu Dhabi the price would be at least Dh200,000. Vani Bhagavath, of Oman Homes, said rents had risen by 25 per cent in the past year, “a direct result of the high demand being put on the Buraimi real estate market by those coming from the UAE to live in Oman”. The people do not seem to mind the hour long drive to Dubai and two hours to Abu Dhabi. “I bought my five bedroom villa in Buraimi a little over five years ago for Dh180,000,” said Saeed al Nuami, 32, an Emirati holding a government job in Abu Dhabi. “A villa of the same size in Abu Dhabi or Dubai would cost me over Dh1.5 million to buy,” he said.
— UNI
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TREND MILL Granite is versatile, sturdy yet chic and comes in 80 colours. Ceramic tiles, step aside: the stone of the future is here Saurabh Malik
You too can use it to spice up the kitchen décor. It’s hot when it comes to kitchen renovation. Or else, you can let panache flow in your bathrooms by putting up glazy granite all across — on the counters, over the walls. This is not the end of it. Granite on the gateposts and pillars can be used for building up portals to style. You can also use it to setup a border around the driveway. Come on, you have seen it in so many luxury hotels in Chandigarh and other boom towns of the region. The driveway of the Taj, Chandigarh, too, has a distinct granite frame. Is granite better than other stones?
Another thing — granite can withstand heat and metal abrasion. Seal it with a silicone-based impregnator and it can let hot grease and oil smoothly slip away without damaging the surface. Also, the polish stays forever, and ever.
Where all can I use granite?
YOU can cover the floors with granite or give the walls a distinct look with it, says Pawan Mittal, proprietor of Panchkula-based Empire Granite and Marble. “Granite also provides high-end countertop solution for homes and office spaces. In fact, a granite countertop stands out amidst other features and the furniture of your house. Having innate distinction of being hard-wearing, long-lasting and tough, it’s good for the driveway and the kitchen, even better for the bathrooms.”
How much is not too much?
THE entire wall right up to the ceiling can be covered with granite, but the stone looks best up to the sink level, be it bathrooms or the kitchen. “The entire flooring can be done with granite, though. Some feel granite tiles on the floor are too cold and the stuff looks better in an office. But in a contemporary style house, it look cool, rather than cold,” says another Chandigarh-based interior designer-cum-furniture artist Vimple Wadhera.
What are my colour options?
WELL, granite can actually add colour to your home. You may find it hard to believe it, but the stone comes in nothing less than 80 colours, ranging from shades of whites to browns, reds, greens, blues, and black. Brown and beige are popular tints. The premium shades of elegance include black glory, icon brown and telephone black. “The nominees for the buyers’ choice award in the premium category include Hanuman red, lakha red and premium black,” Mittal asserts. “Darker shades look better on the walls and as borders. The flooring should preferably be of lighter tones.”
Is the stone very expensive?
NOT really. Complete renovation of an average size bathroom with granite will cost you anywhere between Rs 20,000 and Rs 30,000. The premium brand of granite is costs anywhere between Rs 160 and Rs 220 a square foot. A normal good quality stone will cost you something like Rs 100 to Rs 150 per square foot. “But considering the fact that it is a lifelong investment, one can go for it,” says builder Jas Brar.
Any precautions?
A RELATIVELY cheaper quality of granite is also available in the market. You can get shades like rose pink and cheema pink for as less as Rs 50 to Rs 60 a square foot. But the stone is best suited for covering large floor areas. You also have light-shade granite that’s porous in nature and well disposed to stains. If you are going in for it, remember to put it on the walls, instead of the floor. So,
just remember the good old saying “as hard as granite” and go for it. Happy renovating!
Granite is Forever
GRANITE has its roots in Latin. It comes from the Latin root word “granum”. Just in case you don’t know, the word means “grain”. The stone enjoys the hardness of diamonds. In fact, diamonds are used to cut and polish granite. Now that somewhat explains the high price!
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GREEN HOUSE Water is known to nourish plants. So, how about using it as a medium to grow plants? Well, SATISH NARULA tries his hand at it & finds that it’s not just the money plant that thrives on water
You must have all seen money plant growing in water. It lives and flourishes and easily multiplies there without any ‘root chocking’. Now see the accompanying picture. This is the ‘slip plant’ of ornamental pineapple (annanas), which was detached from the mother plant generously gifted to me by former Kerala Governor Justice Kang. It is the exact replica of the common pineapple plant except that its leaves are variegated and the fruit is deep pink, unlike the yellow and brown fruit that you normally see. The tuft on the top of the fruit is similar in appearance and nature. It was absolutely stunning to see the fruit appearing on a long stalk in the 12-inch pot on my terrace garden. The fruit stayed for more than a month and a half. There appeared two tufts on the fruit. What I am going to explain now will not only be of interest to gardeners, but also school and college teachers, who can lay this experiment for the benefit
of students.
You can try your hand at growing almost all shade-loving plants. I have successfully rooted Dracaena, variety Song of India, ivy, syngonium, Monstera and behold, a Yucca plant! Another very common example is that of the Lucky Bamboo, the one you will find kept indoors by Feng Shui lovers. It thrives in dark corners indoors, its roots submerged in water. Let me first put the record straight. The plant neither has anything to do with bamboo nor is remotely related to any of the grass family plants. It is a kind of Dracaena, the Dracaena sanderiana. It successfully lives with wet feet.
(This column appears fortnightly) The writer is a senior horticulturist and can be contacted at satishnarula@yahoo.co.in
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Whither slowdown?
The projects comprise a 150-room hotel, a mall and an IT park at Rajarhat on the northeastern fringes of Kolkata. “We will invest Rs 250 crore for building the hotel and the mall and Rs 300 crore for Ecospace,” Ambuja Realty chairman Harshavardhan Neotia said. The construction work for the mall and the hotel started in 2006 and for the IT park, called Ecospace, in 2007. The IT park is being built in association with Bangalore-based corporate real estate developer RMZ Corp. “All these projects will be ready in another four to five months,” Neotia said. Asked how the company is planning
to beat the current global economic slowdown, he said: “Metaphorically,
by working hard. That’s the only thing one can do. There is no formula. There is no prior knowledge of how things will turn out.” However, though the company is not dropping any project on account of the economic slowdown, it will go slow on new and upcoming projects, he said. “We can’t drop any project that is already under way. It will be suicidal. We have decided certainly not to do new projects till the downturn fades.” The company has put on hold plans for building three luxury hotels in the northern part of the state at Makaibari in Kurseong, Siliguri (both in Darjeeling district) and in Gorumara forest of neighbouring Jalpaiguri district. “Now, the projects are on hold for two reasons. There are some political problems in the hills and also due to the economic crisis,” Neotia said. The hills are witnessing a political movement for a separate Gorkhaland state to be carved out of Darjeeling district besides parts of Jalpaiguri district. “The projects are on hold till we get a better sense of how the hill problems will be. As soon as we have a little clarity, we will take stock and proceed in that direction.” Ambuja Realty is engaged in construction in residential and commercial sectors , which includes IT parks, retail malls, special economic zones, theme parks, hotels and banquets, and education and healthcare centres. Apart from these, Neotia said there are at least three projects - an IT park and hotels - for which the company has got the land clearances from the government. Regarding the long-term investment plans, which the company earlier put at Rs 5,000 crore for the coming five years, he said long-term investment plans would be reviewed. “As real estate and property prices have fallen, what was earlier targeted at Rs 5,000 crore may come down to Rs 4,000 crore now,” he said. The company is also building a retail and residential complex at Raipur in Chhattisgarh, townships in Amritsar and Mohali in Punjab, and near Nagpur
in Maharashtra. — IANS
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Q. I was allotted a plot by HUDA in March 1993 and possession of the plot was offered in December 1995. The sector in which I was allotted the plot has not been fully developed yet. I took the paper possession of the plot in January 2009, and till date I have not taken the physical possession. In case I sell the said plot after getting its physical possession in March 2009, which date will be accepted as date of acquiring the plot to determine the gain as long term capital gain or short term capital gain? Please advise.
TREND
MILL
NO life can exist without water, we have all read. It is essential for the uptake of nutrients by plants and maintains body temperature in all life forms. But is it a plant propagation medium too? Yes, yes and a very effective one. I have tried and successfully grown many ‘hard’ plants with success. Water is a gardener’s delight in more ways than one.
— Harminder Singh
— Sant Singh Longowal
GRANITE can leave you floored. That’s right, folks. When it comes to stones, it’s hard to beat granite. No wonder, it’s hammering the old tiles out of the walls and the floors in houses, even commercial establishments, all over.
OF course! Look at marble. It is “oh-so-common” these days. To top it all, granite involves zero maintenance. Unlike marble and other stones, granite has the unique ability to resist stains. “So you really do not have to drive down to the arcade in search of detergents and solutions that act tough on all those yellowish tints staining the getup of your floor,” says Jalandhar-based inside-outside expert Deepak Joshi.
NO life can exist without water, we have all read. It is essential for the uptake of nutrients by plants and maintains body temperature in all life forms. But is it a plant propagation medium too? Yes, yes and a very effective one. I have tried and successfully grown many ‘hard’ plants with success. Water is a gardener’s delight in more ways than one.
I removed the fruit and horizontally cut the tufts exactly where they emerged from the fruit. I inserted the base of one tuft in pure sand and the other in a bottle and filled it with plain water so that the base of the tuft submerged. The water was topped up every time it left the base. It was a patient wait for about a month. Then the roots started showing up from the base of the tuft. After about another month now, the roots are about a foot and a half long and fill the bottle! It has become a thing of curiosity for my visiting friends. The one planted in sand also has developed a good and healthy root system at the base. The mantra is not to use fresh water. Use only tank water and also make the volume with it only.
NOTWITHSTANDING the slowdown, Kolkata-based developer Ambuja Realty plans to unveil three new real estate projects in West Bengal this year, a top company official said.