SITTING PRETTY

Ample green cover, easy accessibility from major cities in the region and planned development have made Karnal a favourite with realtors and buyers, writes Bhanu P. Lohumi

A well-developed project at Narsi Village; and Construction work in progress at the CHD City project site along NH-I. Photo Ravi Kumar

After Gurgaon, Faridabad and Panchkula, Karnal is the only city in Haryana that is vying with Rohtak in urban growth and where the prices of property have remained largely unaffected by recession over the past two years.

Builders and colonisers are converging on Karnal, the Haryana Urban Development Authority (HUDA) is carving new sectors for planned growth and people from the neighbouring districts of Panipat, Ambala and Yamunanagar also find it to be a better place to build a house or to buy an apartment.

The sprawling complexes of half a dozen agri-research institutes spread over thousands of acres have helped Karnal in retaining its green cover, making it a prime destination for real estate developers.

These institutions — National Dairy Research Institute (NDRI), Sugarcane Breeding Research Institute, Indian Agriculture Research Institute (IARI), Central Soil Salinity Research Institute, Directorate of Wheat Research (DWR), National Bureau of Animal Genetic Resources (NBAGR), and Horticulture Institute at Uchhana — based all around the city, have served as barriers against haphazard growth, encroachments and mushrooming of slums. As a result Karnal is today the least polluted developed town of Haryana.

With growing awareness about environment and stress on planned growth, the chances of the city becoming congested in future too, are very less. Thus Karnal is becoming a hot spot as far as investment in real estate is concerned.

Location advantage

Karnal is also the most centrally located city on the GT road. Major cities of the region like Delhi, Chandigarh, Merrut, and Patiala are all within 120 to 130-km range.

Same is the case with Ambala where the density of population is very high and the town has overgrown over the years. With construction of over a dozen more flyovers on GT road, the driving distance between Karnal and Ambala would be reduced to one hour and reaching Delhi or Chandigarh would be a 100-minute job. The proposal to open a private aviation school at Karnal and the rapid progress of work on the six-laning of the GT Road, have also made the city an ideal place for investing in property.

With a Rs 25,000-crore Petrochemical Hub coming up near Panipat and fast industrialisation in the neighbouring districts, the demand for plots and plots is bound to increase, further fuelling the prices of property.

Good investment

Though there has not been much appreciation in real estate during past two years, the prices of land and flats have stabilised and the overall upward trend being witnessed in the market is prompting the builders to indulge in aggressive competitive selling, says Kuldeep Kadian, a real estate expert.

About 40 per cent buyers are purchasing land and flats for settling here while remaining 60 per cent are acquiring property for investment purposes as experts foresee a boom in this sector within the next two to three years, said Suresh, a property dealer who is engaged mainly in land deals.

Even HUDA has increased the prices of land from 5,500 sq yard in 2006 to Rs 6,600 per sq yard for plots measuring less than one-kanal and Rs 7,200 per sq yard for plots with area above one-kanal while the prices of private land range between Rs 12,000 to 20,000 per sq yard to 20,000 per sq yards in prime locations and peripheral areas, leading property dealer Kewal Krishan Khurana said.

While the prices of flats and apartments have appreciated considerably in Panipat, Sonepat and Kundli areas, because of their proximity to Delhi, Karnal is still offering flats and apartments at “reasonable” prices. “A four-bedroom flat in one of the upcoming projects is priced at Rs 15.5 lakh, which is much less than what one will have to pay for in areas near Delhi and with all these flyovers and six-laning of the highway soon, distance is not going to matter that much, so investing in property here is a good deal at this time,” said a prospective buyer. As the flat culture is rather new for Karnal residents, with the trend of having independent houses being more prevalent, the builders have, kept the prices at reasonable level to stir demand for flats.

Rental value

Rapid industrialisation of Panipat is also adding to rental values as a large number of workers, especially the employees of Refinery are staying in Karnal and house owners are getting ready tenants.

The rental value of flats and houses in the city has gone up by 50 to 100 per cent over past five years. “There has also been sharp appreciation in rental value of built up houses, ranging from 100 per cent to 300 per cent, as we prefer to commute daily from Karnal to Panipat as the place is more convenient and decent accommodation is available here” said Surjeet Singh who is working as a manager in a factory in Panipat. Moreover, safety, peace and clean environment add to the attraction of the city.

Prime projects

Reputed builders like Ansals, Alpha International City, Global Spaces, Chandigarh City and DD Cruze, Palms Regency are developing townships or residential and commercial complexes over an area of about 1,000 acres and claim that response of people is very encouraging.

Alpha International City

The first phase of the Alpha International City, spread over an area of 304 acres near Sector 28, is nearing completion. More than 80 per cent of the constructed area has already been sold, Manager, Dipinder Singh said.

Ansals’ township

The Ansals group is developing a self-contained township near Sector 36 over an area of 97 acres. Kapil Atreja, Deputy Manager of the Ansals project said the construction had started in August 2007 is making fast progress and keeping in view of the rail and road connectivity, the buyers are rushing to book flats. “We are developing villas, independent floors, flats, shopping malls and various other complexes”, he added.

CHD City

Spread over an area of 200 acres, the Chandigarh City that is coming up on the GT road is offering single floor four-bedroom flats in the second phase. According to Rohit, a senior functionary of the company, almost 80 per cent flats constructed in the first phase have already been sold.

Global Space

Part I, which has come up over an area of 55 acres at Sector 32 has been completely sold out, while the Part II is coming up on 26 acres at Sector 33, informed sales manager Vinay Ahluwalia.

GROUND REALTY
The glass edge
Jagvir Goyal

PRACTICAL TIPS Measurements While noting down the measurements of glass panes for getting glass cut to size, always note the width first. It is a standard practice. Suppose a windowpane is 12 inch wide and 36 inch deep, it should be noted as 12”X36” and not as 36”X12”. In plain glass sheets, it may not matter but in panes with designs, etching or painted surfaces, it may cause problems. When a list of dimensions is sent to the glass dealer, he’ll always take the first figure as the width not depth. Also keep in view that the glass pane measurements are noted by leaving a margin of 1/16” or 1.5 mm so that the panes fit well into the space left for them. Fixing While fixing glass panes, see that there is no kink or distortion in the window shutters. If there is even a slightest kink or distortion, the glass panels will develop cracks after being fixed in position.

Glass is an integral part of every building. Earlier, it was mostly used for windowpanes or partly glazed and panelled doors or for bathroom shelves. Besides this, there was no other use of glass in buildings.

But now the use of glass has rapidly increased in buildings. People have started preferring aluminium windows with larger frames and more glass. Glass doors are being provided in centrally air-conditioned houses. Double-door system is used so that the outside heat doesn’t enter the house.

Glass is being used on a much larger scale in commercial buildings. Use of reflective glass in high-end hotels, high-rise buildings housing modern offices, corporate houses has increased immensely. Structural glazing and curtain walling are fast becoming common.

Preference for glass has resulted in the production of many types of glass, each type is suitable for a particular purpose. To save the user from getting lost in the glass-maze and choosing the wrong type of glass, here is a description of each type of glass with guidelines for its best use:

Float glass: This glass is made by floating molten glass over a bed of molten tin. It is made perfectly flat and uniform in thickness. It is used in windowpanes. It is also called as “Soda” or clear or flat glass. Though it breaks easily, it is most suitable for windowpanes as it is cost effective. Its thickness varies from 2 mm to 25 mm.

Coloured glass: It is prepared by adding colouring material to the molten mass before converting it into sheets. The coloring material used is in the form of metallic oxides.

Plate glass: It has both surfaces flattened and made parallel to provide complete visibility and reflection. Its thickness is 6 mm or more. It is used in luxury buildings.

Prism glass: Glass with ribs of prism shape on it is called prism glass. The ribs are provided at different angles. It deflects light.

Ground or frosted glass: It has a rough surface. It is made by grinding the polished surface of glass. It has reduced visibility and ensures privacy. It is used for the windowpanes of bathrooms, toilets or areas where privacy is required.

Wire glass: This glass is produced by embedding wire mesh in it. Electrically welded 13 mm square mesh is used in this.

Toughened glass: As the name tells, this glass is produced by treating the normal glass chemically or through thermal treatment. It is also called tempered glass. On breaking, it shatters into small pieces instead of creating sharp and cutting angles. That’s why it is mostly used in vehicles. It can withstand impact, shock and high temperatures.

Laminated glass: It is used in bulletproof cars and cabins. It is also used for glass floors. For structural glazing also, this glass is often used. It is called bulletproof glass also. AIS’s laminated glass is termed as security glass and costs around Rs 450 per sq. feet. It is also termed as burglar resistant glass.

Insulated glass: It is used for sound as well as thermal insulation.

Reflective glass: It is used to reflect heat.

Shatterproof glass: It is an extremely strong glass that takes five hours to break when hit by sledgehammers continuously.

Different types of glass available in the market can be used for different purposes. So select appropriate type according to your need:

Windowpanes

For windowpanes, one should choose float glass. While doing so, see that it is free of cracks, bubbles, air holes, veins or blisters. Also see that it is flat and clear. Further see that it has no distortions. If looking for IS mark, check that it is IS 2835 marked. Earlier, IS 1761 mark was used but now, this mark stands withdrawn.

Use 4 mm thick glass in windows. Its weight should not be less than 10 kg per sq. m area. However, if the windows are of large size and panel area is more than 5 sq. feet, use 5 mm thick glass. Its weight should not be less than 12 kg per sq. m area.

For bathrooms and toilets, use frosted glass. See that the weight of frosted glass is not less than 10 kg per sq. m. While fixing the frosted glass panels, see that the frosted face of glass is on the inner side of the window.

Door panels

The use of frosted glass in internal doors of residential houses is also increasing. If using a single panel of glass for doors, choose a minimum 10 mm thick glass as the panel area is often above 15 sq. feet. Prefer etched frosted glass to painted or stained glass. Flower designs are less in fashion for doors. Architectural designs combining curves and geometrical figures look more beautiful.

Wide choice

Choose glass panes from glass sheets manufactured by reputed companies like Modi Guard, Saint Gobain, Asahi, AIS, a subsidiary of Asahi, Fuso and Pilkington. In India, till 1992, only sheet glass was produced and limited quantity of other types of glass was imported.

In 1993, first float glass company was set up in India by Gujarat Guardian limited, a joint venture of Guardian Inc., USA and Modi group of India. Today, it claims to be the only ISO9002 glass company of India. The French major, Saint Gobain has also opened up its branches in India. Pilkington, the largest producer of glass in the world, has also set up a Rs 600 crore unit.

This column appears fortnightly. The writer is deputy chief engineer, civil, PSEB. He can be reached at www.jagvirgoyal.com

TAX TIPS
Stamp Valuation Authority’s assessment final
S.C. Vasudeva

Q. I am an NRI. I purchased a vacant plot in May 1997 for a sum of Rs 1,35,000. However, the registration was effected for total sum of Rs 31,000. I spent another sum of Rs 16,000 for fencing and water connection for the plot. I have sold this plot in September 2009 and I have received a cheque payment of Rs 25 lakh.. However, the conveyance deed mentions the market value of the plot at Rs 36 lakh. The amount of Rs 36 lakh is based on the circle rate prevailing in the area in which the plot is situated. Will the capital gain be computed by taking into account the actual sale price of Rs 25 lakh or the circle rate of Rs 36 lakh on which the stamp duty has been paid?

— Rahul

A. According to the provisions of Section 50C of the Act, the amount of capital gain will be computed by taking the value adopted or assessed or assessable by Stamp Valuation Authority for the purposes of payment of stamp duty in respect of transfer of a property and the value so adopted or assessed or assessable shall be deemed to be full value of consideration received or accruing for the transfer of the property. In view of the above provisions of the Act, the capital gain in your case will have to be computed on the basis of the value adopted by the Stamp Valuation Authority for the purposes of payment of stamp duty i.e. Rs 36 lakh. The cost for the purpose of indexation will be Rs 31,000. The expenditure of Rs 16,000 incurred on improvement would also be indexed. Such indexed cost (property as well as improvement thereto) would be deducted from the amount of Rs 36 lakh and the balance amount would be taxable as a capital gain.

No tax on gift

Q. What is the tax liability for a person who settles his apartment to his son and has no other real estate property but only some bank deposits? What is the position for the son in respect of tax? Is there any Capital Gain on such a transaction?

— Venket

A. It seems you intend gifting the apartment to your son. You will have to execute a gift deed in favour of your son and get it registered with the Sub-Registrar’s Office of the city where the property is based. This will involve the payment of stamp duty on the market value of the property as on the date of the execution of the gift deed. Presently no gift tax is payable on such a transaction and therefore no gift tax would be payable on such a gift. Such a gift would not be exigible to Income Tax under Section 56 of the Income Tax Act, 1961 (the Act) and your son would not be liable to pay any Income Tax. This is because gift to a relative is exempt under the provisions of the said Section. There is no capital gain chargeable on such a transaction.

Purchase of house on hire-purchase basis

Q. I have the following queries with regard to the purchase of a house on hire-purchase basis:

I purchased a house on hire-purchase basis in August 1980 and the possession was taken immediately. The cost of the house excluding interest was Rs 49,521. The payment was made in installments spread over a period of 12 years commencing September 1980 and completed in August 1992. I sold this house for an amount of Rs 12 lakh and the conveyance deed was executed in May 2009. Please intimate the long-term capital gain on the same. I purchased a share in a co-operative group housing society in March 2007. The second last installment of Rs 5.82 lakh of this flat was paid in February 2009 and the last installment of Rs 2.55 lakh was paid in September 2009. Can this amount of Rs 8.37 lakh be reduced from the long-term capital gain arising from sale of the said house for calculating income tax on long-term capital gain?

— Usha Gupta

A. The principal cost of the house being Rs 49,521, the possession of which was taken by you immediately after purchase in August 1980 will have to be indexed. I assume that the fair market value as on April 1, 1981, would be same and therefore the cost of Rs 49,521 would be indexed by taking the financial year 1981-82 as the base year. The index for financial year 2009-10 has been notified by the Government at 632. On the said basis the indexed cost would work out at Rs 3,12,973. Thus, there will be a long-term capital gain of Rs 8,87,027. The indexed cost of Rs 1,29,243 mentioned in reply published in the columns of this newspaper on July 18, 2009 was based on the presumption that the possession of the house was taken in August 1992.

Regarding the claim for exemption under Section 54 of the Income-tax Act 1961, (the Act), reply published on August 1, 2009, is relevant. The purchase of the house has been effected in January 2007, whereas the transfer of the earlier house took place in May 2009. It may not be possible to claim the exemption on the basis of the strict interpretation of the provisions of the Act. According to this Section, the purchase of a residential house has to be effected within one year before the date of the sale/transfer of the residential house. A beneficial interpretation by the court may enable you to claim the exemption for installment of Rs 5.82 lakh paid in February 2009, having been paid within one year before date of the sale of the house.

NRIs to pay tax in India

Q. I am an NRI living abroad for the past 20 years. I am planning to buy three properties in Amritsar and my queries are as follows:

Suppose I buy three properties (two plots and one built up house) with drafts from overseas each worth Rs 50 lakh, do I need to file Wealth Tax return in India annually? If yes, then how much will I be required to pay annually for the property?

If I sell the said property within one or three years, then can I take the whole amount back to the country where I am living without paying any tax in India or I will have to pay tax before remitting the amount abroad? 

— R. Singh

A. Your queries are replied hereunder:

One house or part of a house or plot of land belonging to an individual is exempt from Wealth Tax provided the plot is not more than 500 sq. meters in area.

Wealth Tax would be leviable on the plots as “urban land” is exigible to Wealth Tax. The Wealth Tax for assessment year 2011-12 (financial year ending 31.03.2011) would be payable at the rate of 1 per cent on Rs 70 lakh (1 crore – 30 lakh) plus education cess of three per cent thereon.

A capital asset if held for a period of less than three years, would be a short- term capital asset and any profit arising on sale thereof shall be taxable as short-term capital gain.

The short-term capital gain is assessable to tax at the normal slab rates applicable to an individual. A capital asset which is held for more than three years would be a long-term capital asset and any profit arising on the sale thereof would be a long-term capital gain, taxable at the rate of 20 per cent plus education cess at the rate of three per cent.

It will be possible for you to remit the sale proceeds of various properties purchased in India through banking channels since the purchase has been made by remittance in foreign exchange. You will, however, be liable to pay tax on the profit arising from the sale of such properties.

This, therefore, implies that you would be able to remit the sale proceed less tax chargeable on gain arising from the sale of such properties.

Loan repayment and ownership

Q. I have availed a home loan in which I am the primary applicant and my wife is the secondary applicant. For auspicious reasons we have registered the property in my wife’s name. She is a housewife and does not have any source of income. In this scenario, am I eligible to claim the repayment of principal (80C) and interest paid (Section 24) towards the home loan towards my Income Tax exemption?

The bank, however, issues all home loan repayment letters for principal and interest in my name only as I am the primary applicant. Please help me in getting this clarified.

— Sunil

A. The deduction under Section 80C of the Act towards the repayment of loan borrowed for the construction of residential house is allowable to a person who is the owner of a house. It seems the house property was constructed with your funds, but has been registered in the name of your wife on account of the auspicious reasons. I hope that a declaration has been made in your tax return that the property is owned by you and your wife is only a Benami and income from such house property has been reflected in your tax return. In such a case you would be entitled to claim deduction for the amount paid towards the repayment of the loan raised for the acquisition of the house.

The deduction for payment of interest stands on the same footing and would be allowable provided the above conditions are complied with.