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New Gurgaon
REAL VIEW
GREEN HOUSE
TAX TIPS
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New Gurgaon
With 58 new sectors in the offing, Gurgaon gears up to house its growing numbers, writes
Sunit Dhawan
Gurgaon, which has come a long way from being a sleepy town in the backwaters of south Haryana to one of the most hip ’n’ happening cities of the country, is in an expansion-cum-extension mode yet again. Christened as the “millennium city”, “cyber city” and so on, this cosmopolitan urban settlement located in the vicinity of the national capital has 57 residential, industrial and institutional sectors so far. However, these sectors have started proving insufficient for the increasing population of Gurgaon. In view of this, the Haryana Urban Development Authority (HUDA) and the state department of Town and Country Planning are now in the process of acquiring land for developing as many as 58 new sectors in the city. This is being done in accordance with the Gurgaon-Manesar Masterplan-2021, which has a provision for the development of as many as 115 sectors in the city. The plan also envisages a multi-utility corridor and a commercial belt to be developed in the upcoming sectors. In the first phase, the development of Sectors 58 to 67 is under way. Land has already been acquired for master roads and other essential services in these sectors and construction of roads is in full swing. Land acquisition notification under Section 4 for these sectors has been completed and case for Section 6 proceedings has been referred to the state authorities. Similarly, acquisition proceedings under Section 4 are in process for Sectors 81 to 95 and 99 to 115 (Sectors 96, 97 and 98 are industrial sectors). “Working on a strategic plan, we acquired the land required for the provision of essential services like the construction of master roads first so that work on these gets started right away…by the time we reach the final stages of acquiring land for residential plots and other services, the master roads and other essential utilities are ready, which streamlines the whole process,” maintains HUDA Administrator Deepti Umashankar. The initial phase of the work is expected to be complete by the end of this financial year. The fresh spate of development will stretch the city towards Badshahpur and Sohna townships, which are located towards the south. As of now, 1,417 acres of land is being acquired from eight villages for the first-phase work on 10 sectors. While Sectors 58 to 63 will be primarily residential, Sectors 65, 66 and 67 will be developed as residential-cum-commercial sectors. The villages from which land is acquired in the first phase include Nangli Umarpur (177.69 acres), Midawas (335.61 acres), Badshapur (393.53 acres), Tigra (0.76 acres), Ullahwas (262.71 acres), Kadarpur (36.88 acres), Behrampur (72.09 acres) and Ghata (137.80 acres). Services like master roads, sector roads, sewerage system, power and water lines will be ensured in the areas under development before HUDA floats plots in residential as well as commercial zones. Property pundits and real-estate developers observe that the upcoming sectors will give the much-needed fillip to the property market, which is still in the process of recovering from the influence of economic slowdown. Gurgaon houses the offices as well as manufacturing and other facilities of many companies, industrial units and MNCs, many of which bore the brunt of the recession. Hence, the direct or indirect upshot of the slump was suffered by the local property market, which remained rather quiet for several months. Now, with the process of development of new sectors getting under way, it seems that things will start looking up. The commissioning of the Delhi-Gurgaon metro rail link, intra-city bus service and other initiatives of the government taken in view of the forthcoming Commonwealth Games are also expected to boost the sagging morale of the real estate sector in the city.
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Tread cautiously
Sandeep Goel We have been discussing regulatory reforms in our previous issues. One very important aspect that needs attention is how to invest in the real estate sector. Buyers need to be extra-cautious!
The purchaser/investor, who is spending lakhs of rupees to buy a property, should not mind spending a few thousands to hire a professional consultant who would help in making the right choice. (The writer is a Mohali-based consultant)
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Watch the flowering
Satish Narula The biggest wait for the gardener is for his plants to come into flowering whether it is shrubs, seasonal plants or fruit trees. Flowering has to be carefully monitored and gardeners wait for one full cycle of a year for this. Now when spring is round the corner, almost all the fruit plants will start bearing flowers. But in case of some of them, this stage is very crucial. There is a thin line between full and no fruiting at all. And this is the right time to talk about a few fruits of this region. The king of fruits, the mango, will start flowering in a matter of a few days from now. This region is the home to mango, but it has its own problems ranging from malformation of flowers and vegetative parts to premature fruit and flower drop if we leave aside the fruit fall due to high summer winds. The malformation is the condition where the flowering panicles or the vegetative parts of the plants grow as abnormal compact bunches. These bunches have to be removed as and when they appear. The flowering bunches will not bear fruit and these also act as a source of infection for normal flowering bunches. They are also hiding and breeding place for insects. Such bunches, when removed, should be destroyed by burying or burning. In nature, the obnoxious life has perfect connectivity with its food chain. As the flowering in mango starts, there appear mango hoppers, which grow with the growth of the flowering panicles sucking sap and weakening it. At the time of appearance of flowering panicles, the hopper nymphs are young and only crawl. That is the right time to control them. They do not come alone. Their appearance coincides with that of a deadly disease, the powdery mildew. There appear as a white powdery mass on the flowering panicles and with the advancement of time the flowers turn brown and then black followed by premature drop of flowers and freshly set fruits. Both these problems of hopper and mildew could be settled with combined spray of karathane and thiodan, dissolved at one millilitre and two millilitre to a litre of water, respectively. The first spray is given at the time of flower panicle emergence when it is about three inches long followed by second spray when the flowers are about 60 per cent open. The third and the final spray is given when the fruits are pea-size. Since the chemicals used are contact chemicals, the spraying has to be thorough. The effect will be only at the places where the spray falls. Spray the tree in the middle as well. In case the tree has grown tall try to cover it by climbing any structure nearby. Litchi is another tree that will start flowering now. Although there is no serious insect, pest or disease on this tree, it is seen to benefit from bavistin spray at the time of flower panicle appearance. It is used by dissolving one gram to a litre of water. This is also the time for the peach, plum and pear. It is advised to spray them with systemic insecticides like rogor or metasystox dissolved at one millilitre to a litre of water even before the leaves appear but once the aphids attack the emerging leaves, they curl up badly. The fruit is also affected. In case the insects have appeared spray them with the chemical advised.
This column appears fortnightly. The writer is a senior horticulturist at PAU and can be reached at satishnarula@yahoo.co.in
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Need for integrated housing complexes
Pradeep Sharma Col. RS Perhar (retd), president, strategic marketing of the Bhoomi Infrastructure Company, a firm involved in the development of group housing, malls and the IT parks, speaks with authority on various realty issues. In fact, one of the top executives of the firm, which has come out with the state-of-the-art housing project — Bhoomi Greens, Sector 30, Panchkula — Colonel Perhar forsees a boom in the housing sector. Excerpts from an interview: Q: What is the future of housing sector in India? A: With middle class projected to comprise about 80 per cent of the total population by 2020, the housing sector will witness an upward trend in the years to come. Moreover, Indian people’s aspiration to have a house of their own will virtually set the realty on the roll in the major cities. Q: Are apartments an answer to the housing needs of the millions of "homeless" people? A: Well-planned integrated housing complexes having living, entertainment and sports facilities are answer to the housing needs of the people. In fact, wisdom is dawning on people about the utility of the community living. Apartments score on several counts, including security and utility and the cost. Q: Is slump in the realty sector is over? A: Since the Indian economy was consumption-driven the recovery from recession was faster than other third world countries. As housing for the masses was a necessity rather than luxury, the slump in the sector is a thing of the past. Q: Do you think that real estate sector in India is highly regulated? A: Though the real estate sector is highly regulated, yet a lot needs to be done on the implementation part. Anyway, there is strong case for making the real estate sector rules and regulations uniform and transparent to loosen the stranglehold of the bureaucracy. Q: How do you see potential of Chandigarh’s periphery? A: Panchkula is the city of the future. The strategic location of the township coupled with strict enforcement of the various town-planning norms by the Haryana Urban Development Authority (HUDA) will catch the fancy of the end users and the investors. Q: How can the government agencies check the haphazard growth in Chandigarh’s periphery? A:
A plan of action for the regulated growth of the tricity is the need of the hour. In the absence of an action plan haphazard construction will go unchecked destroying the very purpose of urban planning and architectural norms.
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Buying residential property
S.C. Vasudeva
— Dr D.P. Singh A. In accordance with the provisions of section 54F of the Act, the long term capital gain arising on the transfer of a capital asset other than a residential house would not be chargeable to tax in case the net consideration in respect of the capital asset other than the residential house is utilised towards the purchase of the residential house within the specified period. The net consideration for the purposes of this section means full value of consideration received or accruing as a result of the transfer of a capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. Accordingly, in case the net consideration for the sale of plot held for more than three years is Rs 40 lakhs, the amount of Rs 40 lakhs will have to be utilised for the purchase/construction of a residential house within the specified period so as to save the tax on the capital gain arising on the transfer of the plot. Taking home loan again
— L.S. Bedi A.
There is no restriction for claiming deduction in respect of the repayment of principal amount for the purchase of a residential flat if the home loan has been obtained from the Central Government or any state government, any bank, including co-operative bank, the Life Insurance Corporation and the National Housing Bank Any public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of residential houses in India Any company in which the public are substantially interested or any co-operative society where such company or cooperative society is engaged in the business of financing the construction of houses Employer where such employer is an authority or a board or a corporation or any other body established or constituted under a Central or State Act Employer where such employer is a public company or a public sector company or a university established by law or a college affiliated to such university or a local authority or a co-operative society. It may be added that the deduction in respect of repayment of principal amount would be within the overall limit of Rs 1 lakh allowable under section 80C of the Act, which also covers deductions allowable for payment of Life Insurance premia, provident fund contribution, deposit in a public provided fund account etc.
Loan from relatives
Q. I have been following your Q&A in “The Tribune” and find them highly informative. I plan to purchase property and have a few queries and seek your advice on the same: I want to take a loan from near relatives to purchase property. What process should I follow? Would this count for my home loan interest subsidy? Can such a loan be taken for property that I purchase on General Power of Attorney {as administration has currently stopped transfer of property in our city}? The seller wants a portion of premium to be paid in cash. As my source of money would be clean, is there any implication for the buyer in such a case? — Savita Sharma A.
Your queries are replied here under: A loan from a near relative should be taken by an account payee cheque. A confirmation from him with regard to the giving of loan with his Permanent Account Number should also be obtained. The interest paid/payable on such a loan would be allowable as a deduction against the income from house property. The interest on loan taken for purchasing a property on Power of Attorney basis should be admissible as deduction under section 24 of the Income-tax Act 1961 against the income from house property provided the possession of the property has been taken by paying part consideration towards the purchase of the property. It would be advisable to make the entire payment by an account payee cheque for purchase of the property. Even if the payment has to be made in cash by you, it should be recorded in the documents executed for the purchase of the property so as to form part of the total consideration payable.
Capital gains
— Dr Rajesh Sharma A. On the basis of the facts given in the query the tax payable on the capital gain arising on the sale of residential plot would work out as under: There would thus be a long term capital loss of Rs 25,923 which can be carried forward for eight years and can be adjusted against long term capital gain.
Cost of sale deed
— Prem Dutt A.
Your query refers to the cost of sale deed. I assume that the amount of Rs 6 lakh referred to as the ‘cost of sale deed’ is the sale consideration. The reply to your query is therefore based on this assumption. The tax on the capital gain arising on the sale of flat on the basis of the figures given in the query would work out at Rs 56,663 as per details given hereunder:
Tax on income from property overseas
Q. I am living in India for the past four years. I have a property in UK. The same has been let out and the rent is being deposited in London in my bank account that I am still maintaining. Is the income from such property taxable in India and if so how the income thereof will be computed for the purposes of charging tax in India? — S.K. Khurana A.
A resident assessee is taxable in respect of annual value of a property that is situated in a foreign country. In such a case the annual value will be computed as if the property is situated in India. The annual value of the property is to be determined in accordance with the provisions of Section 23(1) of the Act. Accordingly, fair rent of the property and the rent actually received or receivable will have to be determined. Higher of the two will be the amount of gross annual value. The annual value would be worked out after deducting house tax actually paid from such gross annual value. You would be entitled to claim deduction under Section 24 of the Act for computing the income from house property. The income from such property should also be taxable in the UK. The amount of tax paid there would be allowable as a deduction against the tax paid in India.
Deed of
declaration
— Vijay Vig A.
The facts given in the query are not clear. I assume that the conveyance deed is to be executed for the allotment of a flat in your favour by the society. If that is the case, the registration charges, including the stamp duty, would be applicable in accordance with the rates applicable in a particular state. You should therefore approach the sub-registrar’s office or consult a lawyer based in a city situated in the state where the conveyance deed is to be executed for obtaining the desired information.
Investing LTCG
Q. Please guide me on following
tax queries: Whether capital gains tax can be saved by investing LTCG from sale of a residential plot by investing the LTCG in a house or not? If yes, then how? Whether the LTCG arising out of the sale of a residential plot can also be deposited in Capital Gains Scheme or not? Is this account meant for LTCG from sale of a residential house only and not from the sale of a plot?If reply to a & b is positive, then does one have to invest the “total proceeds” or the “net long term capital gain amount” in the house or capital gains account? — Sushma Goyal, Patiala A.
Your queries are replied hereunder: The tax on long-term capital gain arising from the sale of a residential plot can be saved by utilising the amount of net sale consideration towards the construction or purchase of a residential house. Net sale consideration means the sale consideration minus the expenditure incurred wholly and exclusively in connection with the sale of the plot. The construction of the residential house will have to be completed within three years of the date of the sale of plot. The purchase of the residential house can be made within one year before or two years after the date of sale of the plot. In case the residential house is not purchased or constructed before the due date of filing the tax return, the amount of net consideration arising on the sale of the plot is required to be deposited by the said date in a bank under Capital Gains Scheme account. The amount so deposited is to be utilised for the purchase/construction of the residential house. The reply to your next question stands covered in (a) and (b) above. This column appears weekly. The writer can be contacted at sc@scvasudeva.com
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Gurgaon, which has come a long way from being a sleepy town in the backwaters of south Haryana to one of the most hip ’n’ happening cities of the country, is in an expansion-cum-extension mode yet again.
Christened as the “millennium city”, “cyber city” and so on, this cosmopolitan urban settlement located in the vicinity of the national capital has 57 residential, industrial and institutional sectors so far.
We have been discussing regulatory reforms in our previous issues. One very important aspect that needs attention is how to invest in the real estate sector. Buyers need to be extra-cautious!
First and foremost is the reputation of the developer/builder. Buyers must
make sure that they have technical and financial expertise to undertake the project so that it does not get delayed. There should be no compromise on
quality.
Location of the project is very important. Following are certain factors to be kept in mind while making a decision:
REAL TALK
Connectivity of the location to public transport system.
Q. Please inform whether a person has to invest 'total proceeds' or only the 'long capital gain income' in purchase of a house/flat if a land plot held for more than three years has been sold by him? (Suppose the total proceeds are Rs 40 lakhs and long term capital gain is 20 lakhs. Whether the house/flat purchased is to be of more than 20 lakhs or 40 lakhs?)
Q. Can one get income tax benefit on taking home loan on a second flat after about 10 years in a different state after availing tax benefits on home loan for first flat? 
Q.
I am asking you a question regarding Capital Gains. My wife bought a HUDA residential plot for Rs 3,47,625 in May 1998 and sold it for Rs 6,00,000 in May 2009. What will be total tax imposed? Last time when you had answered this question it was incomplete as you were not sure about some aspect of
2009-2010.
Q.
I had purchased a flat in February 2000 for Rs 2 lakh. Now I want to sell it in February 2010 and the cost of sale deed is Rs 6 lakh. What is the capital gain tax on this amount? 
Q. I am a member of a society since March 2006. The society declaration deed was done in 2007. I am not an original member of the society but my name is in deed of declaration and 'L' form. Also at what rate the conveyance deed should be done?