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TREND MILL
For luxury, recession no bar
Tax tips n
Annual value amounts to expected rent
GROUND REALTY
REALTY BYTES
Tata Housing adds 300 units to its low-cost housing projects
Unitech to roll out 20,000 low-cost houses
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The Old Lakkar Market in Ludhiana is the perfect place for those building their dreamhouse on a shoestring budget. Pick up used doors, windows, grills and refurbish with a little money, effort & creativity
Best out of waste Kanchan Vasdev REAL estate development often clashes with the interests of environmentalists, but an offshoot of the construction business is turning out to be a saviour of the environment, resources and traditional masonry and woodwork. Refurbished doors, windows and almirahs available freely in the Old Lakkar Market near the Jagraon overbridge not only save valuable pennies but also saving innumerable tress from axing. Besides, reusing of wooden items in the region has also given a new lease of life to traditional Indian woodwork and saved the art form from extinction. There is a sparkle in the eyes of Aman Sandhu of the posh Sarabha Nagar in Ludhiana as she shows off a large, gleaming showcase in her drawing room to the guests. To those with whom she can share the secret, it was bought for a few hundred rupees from the furniture market near Jagraon overbridge. Originally designed like a traditional showcase, Aman got hold of the neighbourhood carpenter, made a few changes here and there and lo, a unique, modern showcase was born! “I saw a design in one of these fancy interiors magazines and remodeled the showcase. It now looks classy, chic and costly. I saved a couple of trees,” she boasts among her socialite friends. Not just for the rich and innovative, the secondhand goods market has helped build their dreamhouse without burning a hole in the pocket. Here, the thumb rule is that goods are available for half the original price. Of course, a lot depends on your ability to strike a bargain! Amarjeet Singh, who takes contracts of razing old houses, says that the demand for old windows and large wooden trunks is on the rise, making his a profitable venture. “These days, a new house can be razed from the debris of the old,” he says, explaining how he assessed the value of the house going by the use of wood and wooden articles it comes with. “A traditional artifact like a wooden trunk that has been passed on from one generation to the other has many buyers and fetches good profits,” he says. In fact, building contractors have tied up with sellers of such products. Whenever a house is demolished in Ludhiana and its surrounding villages, the wooden and iron stuff is bought by these merchants at throwaway prices. They repair and repaint the products and exhibit them in shops. If a door is available for Rs 5,000 in the market, it is sold for Rs 1,500 to Rs 2,500 in the secondhand market. Once refurbished, the door looks as good as new. “We get all kinds of wood from the expensive teak to the humble Marindi. There is something for every budget in my shop,” says Chaman Lal, a merchant. “Not just those on a shoestring budget, everyone wants to save money in these times,” he shares. Deepak Kumar, another dealer in second hand goods, says he has a clientele for everything from windows, doors and ventilators to gauge doors and grills. “We have doors and windows in many sizes. Customers buy what suits their requirements. If you have a good carpenter, many things can be made from these at a fraction of what new wood costs. It’s the best idea as one can blindly trust old wood,” he says, adding that a door sold at his shop for Rs 1,500-16,000 would be available for double the price in the market. “That’s not all. We sell doors and windows with frames whereas these have to be bought separately when buying new ones,” he says. The market on Gill Road in Ludhiana also sells old iron gates, window grills and other products used for doing up houses. “People come to us even for shutters and pot stands. They do not mind buying second hand goods as we give them with a fresh coat of paint,” says an old iron merchant. But recession has taken a toll on their business, too. Unlike earlier times, they now wait for customers. And every day is not a lucky day. “Our market was doing very well and all of u were doing brisk business. But things have changed. We are hoping it’s a passing phase and gets over soon,” he says.
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For luxury, recession no bar
NOTWITHSTANDING the economic meltdown, investments for hotels, resorts and spas have started pouring into Uttarakhand. While the real estate sector in entire state, particularly Dehradun, has been in the throes of recession for the over one year, the interest shown by big corporate houses in setting up hotels and resorts at key tourist sites in Uttarakhand is certainly something to cheer about.
Though tight-lipped, government officials have confirmed receipt of quite a few proposals for setting up hotels and resorts in the state. Bharat Hotels is setting up a five-star hotel at Rishikesh, for which the government has already granted permission. Besides, Pindar Glacier Resorts is also planning to invest Rs 2.25 crore in a Resort at Kodiyala on the banks of the Ganga near Rishikesh. The decks have been cleared for the ambitious five-star hotel of Olympic gold winner Abhinav Bindra. Proposed to be constructed over nine acres near Bindra farms on the Haridwar Road in Dehradun, it will the city’s first five-star. It is scheduled to be operational by 2011 end. The approximate investment in the project is Rs 130 Crore. The state government has also received few proposals for setting up hotel resorts at Kempty Fall near Mussoorie. Similarly, the government had received proposals for building resorts near the Tehri Dam Reservoir Site as well. Information gathered from the state tourism department revealed that in the hilly Chamoli district, home to Badrinath shrine, the state government has received at least 23 new proposals for hotels and spas. The government is also contemplating encouraging yoga and ayurvedic huts in the hills and is on the lookout for entrepreneurs keen on eco-tourism, adventure sports and the service sectors. Officials feel that all the new proposals would surely give a boost to the tourism sector. “The upcoming hotels and resorts will be a major boost for state tourism and will help in increasing tourists inflow. Hotels in Uttarakhand have the potential to attract domestic and international guests, which in turn will aid the state’s economy,” says tourism minister Parkash Pant. Pant said that the state tourism department was working on chalking out a comprehensive strategy to increase tourist inflow in the state. Measures include popularising adventure sports, including river rafting, paragliding and mountaineering. “Uttarakhand has several tourist destination like Ranikhet, Nainital and Mussoorie that were developed by the British. Now, we intend to develop unexplored tourist destinations,” adds Pant.
All’s not well in Dehradun
WHILE investors may be interested in setting up hotels and resorts in
Uttarakhand, the real estate statistics in Dehradun are abysmal. According to official estimates, there has been a dip of 27-30 per cent in the revenue of stamp duty and registries during the past two years.
In 2006-07, revenue figures stood at Rs 342 crore but plummeted to Rs 231 crore last year. Despite the fact that property rates corrected 10-20 per cent in the last two years, there are hardly any buyers. According to those dealing in real estate, the BJP government’s decision to halve land buying by outsiders from 500 square meters to 250 proved disastrous for the sector. Prices of flats are also witnessing a decline. In the past few years, Dehradun witnessed an unprecedented apartment boom with a number of local and outside builders actively engaged in the construction of
multi-storey flats. HIG and MIG apartments had come up in various city areas including Mohini Road, Balbir Road, Old Survey Road, Shastardhara Road and Kalidas Road. Inquiries revealed that in the absence of buyers, owners have reduced prices.
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Tax tips The long & short of it Annual charge: Deduction not allowable for ’09-10
— Inder Mohan Soni A. Your queries are replied hereunder: n The deduction in respect of a payment as annual charge on property was allowable upto assessment year 2001-02. The same is not allowable as deduction for the year 2008-09 (assessment year 2009-10). n On the basis of figures given in the query, the income from house property would be computed in the following manner: - Gross annual letting value – house tax paid (Rs 1.2 lakh - Rs 8000 = Rs 1.12 lakh) - Less: Statutory deduction @ 30% of Rs 1.2 lakh (33,600) - Income from house property: Rs 78,400
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Annual value amounts to expected rent
Q. I understand that income from house property is taxed on the basis of annual value. It is not clear as to how annual value is determined. Please clarify.
— Jagdamba Prasad A. Section 23(1)(a) of the Income-tax Act 1961 (the Act) lays down that the annual value of a property as the sum for which the property could reasonably be expected to-let from year to year. Section 23(1) (b) of the Act further provides that in respect of property which is let wholly or partly, annual value of such property will be taken to be the sum so arrived at (a) above or the actual rent received or receivable whichever is higher. For determining ‘the sum for which the property may reasonably be expected to-let from year to year’, the inherent capacity of the property to yield income from year to year is required to be assessed. In determining such notional income, several factors have to be taken into consideration, such as actual location of the property, capacity of the property to fetch income depending upon the demand and supply position over a period of years etc. Municipal value is one of the tests applied in determining the bonafide value of the property because Municipal authorities determine the municipal valuation of a property with reference to the sum for which the property could reasonably be expected to-let from year to year.
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Claim deduction of 2009 in return of ’10-11
Q. I have a commercial flat that has been let out at a rental of Rs 20,000 a month. While computing the taxable income for the year 2008-09, my CA has advised me that deduction for house tax paid in April 2009 is not allowable as deduction, the same not having been paid to the authorities upto March 2009. Is this contention correct? The delay arose because the settlement by municipal authority took a lot of time.
— Surinder Sethi A. The annual value of a property is determined in the manner specified in Section 23 of the Act. A proviso to the said section provides for the deduction on account of property taxes levied by a local authority. However, such deduction is allowable in the year in which the tax is actually paid. Even if in a previous year, tax relating to more than one year is paid, the entire amount will be allowed as a deduction in the year of payment. The contention of your CA is, therefore, absolutely correct. You will be able to claim the deduction of amount paid in April 2009 in the return for the assessment year 2010-2011.
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Do you live more than 182 days in India?
— Raj Mundi A. The Foreign Exchange Management Act, 1999, defines the person resident in India as a person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include:
n
a person who has gone out of India or who stays outside India, in either case – - for or on taking up employment outside India, or - for carrying on outside India a business or vocation outside India, or - for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period; n
a person who has come to or stays in India, in either case, otherwise than – - for or on taking up employment in India, or - for carrying on in India a business or vocation in India, or - for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period; n
any person or body corporate registered or incorporated in India, n
an office, branch or agency in India owned or controlled by a person resident outside India, n
an office, branch or agency outside India owned or controlled by a person resident in India; It would thus be observed that primarily an Indian would become a non-resident Indian if he has gone out of India for (a) taking up employment outside India; (b) for carrying on a business or vocation outside India; or (c) any other purposes as would indicate his intention to stay outside India for an uncertain period. In case you came in any of the above categories, you will be treated as a non-resident Indian and will not be able to buy an agricultural land in India. The facts given in the query are silent with regard to the conditions mentioned herein-above. It is, therefore, not possible to reply to your query as to whether you can buy an agricultural land in India.
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Pay up from your bank account
— S.K. Sharma A. Your queries are replied hereunder: n There is no tax liability on the amount borrowed from your relatives. n It will be better to borrow the money by way of an account payee cheque that should be made out in your name. The same should be deposited in your bank account. The loan to PNB should be repaid by issuing a cheque from your bank account. n It would be in your interest to execute a document so as to have evidence with regard to granting of the loan to you by such relatives.
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Home strong Home The C-factor: Cement is the single most important material required for the structural strength and stability of the house. Its selection should always be made carefully, warns JAGVIR GOYAL A MAJOR percentage of the inquiries I receive from house builders are about the type and brand of cement they should use. Often, a small discussion reveals that dealers trying to sell their stocks have misguided them. Cement is the most important material required for the structural strength and stability of the house and its selection should always be made carefully. Once the decision about cement has been taken, the house builder — engrossed with other things — keeps ordering for its further lots and spares no more time to think for a change. That’s why the initial decision itself should be perfect. Here are some guidelines for selection of cement: w OPC and PPC: Now a days, there exist many types of cements. Earlier, there used to be just cement in name of cement. Then industrial wastes were put to use and pozzolana cements were developed. Then, use-specific cements such as low heat portland, high strength portland, blast furnace slag cement, rapid hardening portland, high alumina cement, super sulphate cement and many other varieties were developed. Discovery of better quality limestone further led to various grades of Ordinary Portland Cement. Now these grades have become very popular. The most common types, known to the common user are OPC and PPC. OPC means Ordinary Portland Cement and PPC means Portland Pozzolana Cement. w Grades: OPC has three grades of cement. These are 33 grade, 43 grade and 53 grade. PPC has no grades. OPC 33 grade cement carries IS 269 mark on it. OPC 43 grade carries IS 8112 mark on its bags while OPC 53 grade carries IS 12269 mark on its bags. PPC bags carry IS 1489 (Part 1) mark on them. w Strength: Of the three grades of OPC, 53 grade is strongest. Its strength is 530 kg per sq. cm. OPC 43 grade cement has a strength of 430 kg per sq cm and OPC 33 grade has 330 kg per sq cm strength. PPC is considered equivalent to OPC 33 grade cement. Therefore, its strength is 330 kg per sq cm. These are the minimum strength norms for a cement lot to get ISI mark. Normally, the cement produced by good cement companies has more strength than these values. Strength of cement doesn’t significantly affect the price of cement. The cost difference of 53 grade OPC with 33 grade OPC or PPC is little and varies from company to company. w A tilt towards PPC: Availability of dry flyash from the thermal plants has attracted the cement manufacturers to produce more quantity of Portland Pozzolana Cement (PPC) and curtail Ordinary Portland Cement (OPC) production. Manufacture of PPC is much cheaper to that of OPC as substantial component of PPC is fly ash which is freely available from the thermal plants while the market rate of OPC and PPC is almost the same. Some manufacturers have altogether stopped production of OPC and are concentrating on PPC only. w Grade choice: One should choose OPC 43 grade for the RCC work of his house and PPC for the balance works like masonry in foundations, superstructure, plastering, flooring etc. However OPC is now not easily available in the market. Companies are supplying OPC either to bulk purchasers or government departments or RMC producers. In the market, only PPC is available. In case OPC is not available in the market, one can get RMC of OPC for the slab of his house, if a nearby RMC plant is available. For other RCC work, he may use PPC. If RMC is also not available, there is no alternative except using PPC for all work. Here, only a brand choice can be made. w PPC advantage: One need not lose heart if OPC is not available to him and use of PPC has to be made by him. PPC has its own advantages. OPC 53 grade requires more curing and should be chosen if adequate curing arrangements are available. Less heat of hydration in PPC is enhancing its use in mass concreting and in water retaining structures. Less shrinkage in it is helping in reducing the commonly noticed hair cracks in roof slabs. Thus PPC is becoming popular day by day. PPC being produced by some manufacturers is giving good strength, even better than OPC in some cases. w Brand choice: Over the last few years, the world has seen a remarkable development in cement production. Its manufacturing has undergone a technological revolution. All cement plants now use dry process for manufacture of cement. This is a better process and power consumption is lesser than in wet process. The cement being manufactured by reputed manufacturers is of extremely good quality. Among the reputed manufacturers are ACC, Birla, Gujarat Ambuja and JK. The strength results of the cement produced by different manufacturers keep varying from batch to batch. Engineers keep testing these batches or lots at time intervals. Therefore, a civil engineer should always be consulted to know which cement brand was giving better results at a time. w Beware of cryptic words: Some manufacturers write 53 in bold letters on the PPC bags produced by them. A common user thinks that the cement is 53 grade of PPC while in actual, PPC has no grades. A close look on the bags tells that the words ‘stronger than’ are written above the numerals 53 in very small words. Manufacturers should not resort to such tricks to attract buyers but should bank upon the quality of their product. w Look for freshness: One must concentrate on choosing cement as fresh as possible. Manufacturers attach tags to cement bags and these tags carry the week and year of manufacture. Here the week should not be confused with the month. A tag with a 6/09 stamp means 6th week of year 2009. It shouldn’t be read as June, 2009. Therefore, always check the date of manufacture and don’t accept cement bags more than two months old. Remember that cement absorbs moisture from air. Cement more than two months old loses a part of its strength if not stored properly. w Check the Weight: Instead of taking it granted, one should always check the weight of cement bags. Each full bag should weigh 50 kg. Weight of empty bag is extra. These days, plastic bags are used and these carry negligible weight. Earlier, jute bags were used for packing of cement and 500 gm extra weight was counted for them. As it is not possible to check the weight of each bag, one should take out some cement bags at random and check their weights. The cement should be purchased only if the weight of the bags is not less than 50 kg. w A word for the BIS: There are no grades specified by Bureau of Indian Standards for PPC. Its only grade, manufactured as per IS 1489 Part I is considered equal to OPC 33 Grade howsoever high strength it may be giving. This deficiency is holding the engineers and users from economizing on cement usage. Some manufacturers proudly claim that the PPC produced by them is as strong as 53 Grade OPC. There is no use of cement having such high strength when it is not permissible to economize cement content on this account. If we develop different grades in PPC also, judicious use of higher grades of PPC can be made. BIS should look into laying the norms for higher grades of PPC and on redefining minimum cement contents for each grade of OPC and PPC. More guidelines will follow next fortnight. Till then, happy building! ALWAYS check the condition of cement bags. These should be intact and not torn from anywhere. Generally, labourers handling cement bags use a hook. The skilled ones don’t pull the hook after inserting it into the bag and are adept at shifting them from one place to the other without causing damage. However, unskilled labourers may tear the bags in the shifting process, causing loss of cement and making it susceptible to moisture from the atmosphere. (This column appears fortnightly) The writer is deputy chief engineer, civil, PSEB. He can be reached at www.jagvirgoyal.com
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India calling!
India realty expo in Dubai sees deals worth Rs 65.33 cr sealed, NRIs participate in large numbers THE 12th India Realty Expo 2009 held in Dubai saw 106 flats worth Rs 65.33 crore being booked, a senior real estate industry official said. “106 flats worth Rs 65.33 crore were booked (during the expo),” Maharashtra Chamber of Housing Industry (MCHI), CEO, Zubin Mehta, said. “Around 86 flats worth Rs 80.18 crore are in the pipeline when the NRIs come down to India in July-August on their annual vacation,” Mehta added. MCHI is a leading body of real estate builders and developers. The expo evoked an encouraging response with 2,700 NRIs visiting the exhibition in three days during June 4-6, the release said. “The softening of real estate prices and home loan interest in India were the key reasons that attracted a large number of NRIs during the expo,” Mehta said. Fifteen leading developers and builders showcased their properties at the realty expo. Home finance institutions that participated in the expo included HDFC, DHFL and Bank of Baroda. “Majority of the walk-ins was Mumbai-specific and this reflected into an opportunity for the developers to close a few deals during the expo itself,” MCHI’s co-ordinator and co-chairman, international exhibitions, J.S. Augustine, said. That the expo took place in Dubai when the first signs of an economic revival globally were being witnessed also made a positive impact, he said. The exhibition, which was inaugurated by Consul (Commerce) to the Consulate General of India, Dubai, Partha Roy, aimed to provide a one-stop solution to all the needs of NRIs intending to purchase property in India. MCHI president Pravin Doshi, describing the response as “encouraging”, said that “this encouraging response denotes the demand and popularity of housing in India by NRIs in the Middle-East.” The 15 developers who participated in the expo were Ajmera Builders, Mayfair Group, Akar Creations, Better Homes, Everest Developers, Hiranandani Constructions, Marathon Group, Nahar Group, Nirmal Lifestyle, Nyati Group, Our Town, Pathy Housing, Pranjee Group, Rustomjee and Total Environment.
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Tata Housing adds 300 units to its low-cost housing projects
Buoyed by a huge response, real estate firm Tata Housing has added 300 units to its offer of 1,000 low-cost houses, which are being sold for Rs 4 lakh a flat, in Boisar near Mumbai.
“We are very encouraged by the enormous response we have received from not just India, but across the globe. “Nevertheless, while the enhancement of units being offered for the Boisar project will not meet the demand we have received at this time, it will allow us to fulfill the dreams of 300 additional families,” Tata Housing Managing Director and CEO Brotin Banerjee said. The company would now offer a total of 1,300 units instead of 1,000 flats announced earlier. The bookings have been closed and the allotment of for new units would be announced by the end of June this year. Earlier last month, the Tata Group firm had announced the housing project at Boisar, about 100 km from Mumbai. The project, built on 63.58 acres, would offer 283 sq ft flats with a room and a kitchen at Rs 3.9 lakh under the brand ‘Shubh Griha’ and would also have a demarcated area where the price of units may range between Rs 10 lakh and Rs 16 lakh. It would also have a hospital, a school and recreational facilities.
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Unitech to roll out 20,000 low-cost houses
UNITECH will roll out 20,000 affordable houses under the brand ‘Uni Homes’ and the first of such projects will be launched in Chennai this month.
“The company will launch 20,000 affordable houses across the country in the current year. We have already received lots of queries from customers in the last two months and to popularise the project, we have decided to market it under Uni Homes brand,” a Unitech spokesperson said. The housing units would be offered at a price between Rs 10 lakh and Rs 30 lakh in all major cities. “The first project under this brand will be launched in June in Chennai. Apartment sizes will start at 660 sq ft,” the official said, adding the next such project would be introduced near Manesar in the National Capital Region, priced at about Rs 15 lakh. Earlier last month, Unitech had announced to construct 20,000 affordable houses at a cost of Rs 1,700 crore to become India’s numero-uno realty company within a year. Besides low-cost housing, the company would also develop 1,500 dwelling units every year on mid-income category. In order to reduce its debt, Unitech last month raised Rs 1,621 crore through Qualified Institutional Placements. It is also selling various assets like hotels, school plots and office complexes.
— PTI
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and spas have started pouring into Uttarakhand. While the real estate sector in entire state, particularly Dehradun, has been in the throes of recession for the over one year, the interest shown by big corporate houses in setting up hotels and resorts at key tourist sites in Uttarakhand is certainly something to cheer about.
Cement is the most important material required for the structural strength and stability of the house and its selection should always be made carefully. Once the decision about cement has been taken, the house builder — engrossed with other things — keeps ordering for its further lots and spares no more time to think for a change. That’s why the initial decision itself should be perfect. Here are some guidelines for selection of cement:
India realty expo in Dubai sees deals worth Rs 65.33 cr sealed, NRIs
participate in large numbers
Q. I inherited a property from my late brother, who had directed that his wife be paid Rs 3,000 a month. Is this amount deductible from income from property? Presently, the property has been let out for Rs 10,000 a month. Also please calculate the income from property. The amount of house tax paid for the year 2008-09 was Rs 8,000. No other expenditure has been incurred in this regard.
Q. I have been working with the Foreign Merchant Navy for last 10 years. I read that NRIs can’t buy agriculture land in India without RBI approval. In this matter can you please advise that whether Merchant Navy personnel fall under NRI category for buying agriculture land in? Please advise whether I can buy agriculture land.
Q. I have taken a home loan from Punjab National Bank (PNB) but want to repay the same by borrowing money from my relatives. Would there be any tax liability on the borrowed amount? How should the borrowed money be taken i.e. by cheque or cash? Should I take it in my name or directly in the name of the bank? Will any document be required for such borrowing?