Tedious official clearance process has made buyers wary of venturing into realty deals in the Kasauli area, reports Ambika Sharma
Dream location, harsh reality

In an era of high-rise buildings and apartments, towns like Kasauli have maintained their pristine and quaint charm. The cantonment town that was established by the British in 1842 has managed to conserve its British ambience still as stringent bylaws have put strict restrictions on fresh construction in the area. The town and its nearby areas, however, blink brightly on the radar of those wanting to own a peaceful abode nestled in the hills. Investors from as far as Delhi, Gujarat, and the nearby Punjab and Haryana have always shown keen interest in property here. "Revenue authorities receive queries from buyers from all over the country. The buyers are ready to offer huge sums to own a property, especially a cottage, in and around Kasauli", confided Kasauli tehsildaar Lalit Sharma.

According to him, a number of old cottages are on sale as many owners are finding it difficult to maintain these. Perched ideally on the Lower and Upper Mall overlooking the green vale, some of these houses that had been constructed during the British Raj come with a price tag of anything between Rs 85 lakh to Rs 2 crore.

There is a huge demand in the residential segment here and because of this the realty sector in the area should be booming and giving good returns, but this is not the case. Stringent government regulations and bureaucratic rigmarole have put a spanner in the upward march of the realty graph here, say industry watchers.

Umesh Sharma, executive engineer of the Himachal Pradesh Housing and Urban Development Authority, observes that apart from a single builder not much interest has been shown by builders to seek licences to build cottages in the area. The reason, however, is not far to seek as the fate of realty market in the adjoining Baddi seems to have deterred builders as well as investors from venturing into this area.

Earlier it was the ban on fresh constructions imposed by the state High Court that had put a cap on new projects. "This ban was, however, lifted earlier this year but despite this the region has failed to witness much commercial activity", says tehsildaar Sharma.

Another crucial factor which has been a major deterrent for realtors is the inordinate delays in securing permissions under Section 118 of the HP Land Reforms and Tenancy Act, which is an essential condition for non-Himachalis to own property in the state. The time period to get the requisite permission at times extends to over six months as a file has to pass through 16 different channels for the required clearance. This tedious procedure has reduced the sale volumes of several projects which are now left without any buyers at all, confided a builder.

With the share of Himachalis in either owning or selling cottages being miniscule, the builders from the plains have emerged as the front runners.

He added that at times investors, who were generally from the plains, failed to choose an ideal site as many of the projects had come up in steep vales adjacent to roads which failed to appeal to a buyer looking for a picturesque view. In a bid to make a quick buck, some builders had bought land at inappropriate sites at lower costs and had failed to fulfill the conditions promised to a buyer within the promised time, thus leading to disputes and controversies. This had disheartened the buyers who are now treading very cautiously. The option of registering property in the name of some local person to avoid the lengthy official procedure of getting clearance, has also backfired for many buyers , making them all the more skeptical about deals here.

The inadequate availability of water is another factor which weighs heavily on the minds of the buyers wanting to opt for property here. Though borewells are being used to provide water, with the implementation of HP Ground Water (Regulation and Control of Development and Management) Act, 2005, users of groundwater would be required to seek registration and would be liable to pay royalty on the quantity of water used. An authority constituted for the purpose is in the process of registering such users and this would put an end to the indiscriminate use of groundwater.

A visit to the area may stir the passion to own a house here but the harsh ground realities make this wish a difficult one to fulfill, and as a result the prospects of the real estate sector remain glum here, for the time being at least.

Options on outskirts

With Kasauli having limited options for buying property, the next best option is the areas lying in its precints. The Kasauli-Garkhal road fetches as high as Rs 80 lakh to Rs 1 crore as it is the closest to Kasauli. Apart from this, a cottage on the Kimmughat-Chakki-ka-Mor is available for anything between Rs 70 lakh, while one on the Kasauli-Jagjitnagar road is priced around Rs 65 lakh. A cottage on the Dharampur-Kasauli road is available for Rs 60 lakh onwards while one on the Kasauli-Jangeshu road, which is closer to Parwanoo, is available for relatively lesser price of Rs 50 lakh.

A three-bedroom flat on the outskirts of the town costs around Rs 60 to Rs 75 lakh.

Bonanza for common man
Neeraj Bagga

Acute need for affordable housing in India is a well known fact but private real estate players seem to be shying away from this segment. In order to partially fill this gap between demand and supply, the Central and state governments have chipped in now to provide affordable housing to low income group buyers. The Punjab Government, under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), patronised by the Ministry of Urban Development, is all set to raise approximately 5,000 dwellings for the Economically Weaker Sections (EWS), Lower Income Group (LIG) and Middle Income Group (MIG) in two cities of Punjab — Amritsar and Ludhiana.

Post free market economy, the country witnessed urbanisation like never before, and as a result of this there was a major spurt in real estate prices. At present, the prices are hovering at a record high due to massive real estate activity in the country.

This growth story, however, has eluded the marginal sections so far. Thus owning a house of their own remains a distant dream for a vast majority of people in this segment. A Central Government study has estimated the shortage of 24.71 million houses, with more than 98 per cent accounting for the economically weaker sections, at the beginning of the 11th Five Year Plan.

Himanshu Pant, National Head, Sales and Marketing, AIPL Ambuja Housing and Urban Infrastructure Limited, said private developers invariably work for higher margins. Given the government support in the form of subsidy, hassle free and swift paper work, they can get into constructing dwellings for low-income families.

He said as far as the massive demand for houses was concerned almost 50 per cent demand was for houses in the price range between Rs 5 lakh and Rs 10 lakh; 15 per cent between Rs 10 lakh and Rs 15 lakh; 15 per cent between 15 lakh and Rs 25 lakh; and 20 per cent demand was for houses priced between Rs 25 lakh and Rs 30 lakh.

The Punjab Government has entrusted the task of raising the dwellings to the Punjab Municipal Infrastructure Development Company (PMIDC), a unit of the Local Government.

Chief Engineer, Local Government, Manmohan Singh, said a private consultant has been preparing the Detail Project Reports (DPR) which would soon be handed over to the Central authorities. The total cost of the project would be known once the DPR was finished.

According to him, the actual ground work would initiate within three months and the flats would be constructed in the next one-and-a-half years.

These dwellings would be allotted following a draw of lots and the final cost would be worked out after the implementation of the plan. Of the approximately 5,000 flats, 2,200 dwellings would be constructed in Amritsar. Proportion in these residential colonies would be 25 per cent units for EWS, 30 per cent for LIG and 45 per cent for MIG.

The Dr Manmohan Singh Government had incorporated this sector for assistance for providing affordable houses to slum dwellers, urban poor, EWS and LIG categories under the Sub-Mission Directorate for Basic Services to the Urban Poor in 2009. The move then was also aimed at salvaging the real estate industry from the economic crisis.

As per the assistance norms laid down by the Centre, a subsidy of minimum of Rs 50,000 to maximum Rs 1 lakh per flat will be offered. Besides, the government will also bear the 25 per cent cost of providing the internal and external civic facilities.

Nevertheless, the government's subsidy varies depending upon the built-up area for the EWS and LIG flats in a given project.

As per the norms, Rs 60,000 per unit would be offered for the projects which have built-up area of 25 per cent for the EWS and LIG dwellings. If the area for the two categories is between 25 and 30 per cent then Rs 70,000 would be given. For built-up area between 30 and 35 per cent subsidy would be Rs 80,000, and for between 35 and 40 per cent the grant would be Rs 90,000. The project covering 45 per cent of built-up area for EWS and LIG families would get a maximum of Rs 1 lakh per unit.

The guidelines mention that strictly a project must be constructed on a no-profit-no-loss basis. It advocates that as much as possible the EWS and LIG units must be allotted in the names of women. Besides, it ensures that the area under the EWS category should at least be 300 sq ft, 500 sq ft for LIG, and within 600 to 1200 sq yd for MIG.

Meanwhile, the Centre would not finance land cost except for acquisition of private land for schemes and projects in the North Eastern and hill states, namely Himachal Pradesh, Uttaranchal and Jammu and Kashmir under it.

TAX TIPS
Nominee’s tax liability

Q. My mother hassold the property of my late elder brother. Kindly clear the tax related issues in the case after going through the details given hereunder:

n My mother, a senior citizen, has a 2BHK house allotted by the state housing board registered in her name, while my elder brother had a 3BHK house allotted, but not registered in his name. He had started making payments in installments after the allotment of the house. He took possession of the house in February 1999. My elder brother and his wife passed away in 1999. As per the application of 1988, my brother had nominated his wife, his son and my mother as nominees. They were blessed with a second son subsequently.

n In 2010 it was decided to dispose off the property of my elder brother. The disposal of the property entailed transferring the property in the name of any one of the nominees followed by the registry of the said property. My brother’s both sons gave a ‘No Objection Certificate’ to get the property transferred in the name of my mother. Registration was completed on September 7, 2010. The cost of the house as assessed by the housing board at the time of registration was Rs 5.78 lakh, which did not include a sum of Rs 1 lakh spent on account of payment of lease money and an additional Rs 50,000 paid for Commission and Registration.

A sale deed was executed on September 15, 2010 for Rs 16 lakh — the prevailing gvernment rate. Payment was received both by cheque and in cash by my mother. The proceeds are planned to be distributed between my mother and her two grandsons.

Queries

n What is the Capital Gain? Who is liable to pay the CG tax — my mother or her grandsons?

n To save on tax, can the CG be invested in mutual funds, shares, policies or be given in donation?

n Can my mother invest her share of the CG for purchasing property in the name of my unmarried sister? Will she have any tax liability?

n If the CG amount is not invested in purchasing another property (house/land) or in government bonds during the current financial year, then is the amount required to be deposited only in SBI? If yes, then within what time frame?

— Hardev

A. The facts in the query indicate that your brother died intestate and that the residential house allotted to your brother, of which the possession was taken in 1999, has been inherited by your sister-in-law, his two sons and your mother. In case your sister-in-law also died intestate her share would be inherited by her two sons. This would imply that your mother had only one fourth share in the house property.

The registration of the property in your mother’s name on the basis of no objection by your nephews can create a problem as the Income-Tax department may hold that it is a case of short-term capital gain. This is because the house property has been registered in your mother’s name. The issue may, therefore, have to be looked into from the recitals made in the deed executed by the Housing Board in favour of your mother. In case it is so held by the department, she will be liable to pay tax on the normal slab rate on a sum of Rs 9.72 lakh being the amount of short- term capital gain (Rs 16 lakh - 5.78 + .50 lakh). This is in view of the fact that lease amount paid to Housing Board cannot be appropriated towards the cost of the house. In case you are able to convince the department that the registration was a stop gap arrangement for the purpose of sale of property as your nephews were minors, the long-term capital gain would work out at Rs 3.28 lakh after taking into account the indexed cost of Rs 12.72 lakh. Legally your mother should be liable to pay tax on the capital gain as the property has been registered in her name and she is the transferee for passing the title to purchaser.

The amount of tax leviable on capital gain can be saved either by utilising the amount of capital gain towards the purchase or construction of a residential house in the name of the transferee within the specified period or can be utilised by purchasing tax-saving bonds within six months of the date of sale of the house property. In case the amount is not utilised for purchase or construction of a house within the specified period the capital gain is required to be deposited with a bank under capital scheme account for being utilised for purchase or construction within the specified period. In case the capital gain is not utilised for either of the purposes referred to herein above, the amount of capital gain can be deposited in any bank and utilised for any purpose. It may be added that in case the amount is not so utilised, tax on capital gain would be exigible.

Indexation issues

Q. I had inherited a residential house from my father in 2001. The said property had been built by my father from his own sources in 1974. For the purpose of computing capital gain, I have indexed the fair market as on April 1, 1981 at the time of sale of the said property in 2007, but the assessing officer is insisting that the indexation would be allowable from the year in which the property was inherited by me. Is the contention of the assessing officer correct?

— S.K. Khurana

A. On the basis of literal interpretation of the provisions of Section 48 of the Act, the interpretation placed by the assessing officer is correct. However, there is decision of the Hon’ble Tribunal which has agreed with the view of the assessee that the indexation benefit should be allowed from the year in which the previous owner had held the capital asset or from the financial year 1981-82 whichever is later. The decision is not reported. The name of the case and appeal No. are as under:

“Aftab Seth Vs Deputy Director of Income-tax (International Taxation) Circle 2(2) (2009) TIOL-566-ITAT-DEL”

This decision is of Delhi Benches of Hon’ble ITAT. You may, therefore, give reference of this decision to the assessing officer before he completes the assessment.

LTCG on inherited property
S.C. Vasudeva

Q. I sold a plot of about 300 sq yd in 2007 within a residential area of my town for Rs 12 lakh. This is an ancestral property bequeathed to us by our forefathers. There is no information about its purchase date or the price paid at that time. Kindly inform me about LTCG arising thereon.

— Aashim

A. In accordance with the provisions of Section 48 of the Act, the income under head ‘capital gain’ is computed by deducting the cost of acquisition of the capital asset, cost of any improvement thereto and the expenditure incurred wholly and exclusively in connection with such transfer from the sale price of the capital asset. In case of inherited assets, the cost is deemed to be cost for which the previous owner acquired it. It seems the asset became the property of your forefathers before April 1, 1981, and, therefore, you have an option to get the deduction from the sale price for the fair market value of the capital asset as on April 1, 1981. If that be so, it will be essential for you to get such fair market value ascertained from an approved valuer. The same will be indexed for the purposes of calculating capital gains. The indexed period would be computed by taking the year of acquisition of the capital asset by you and the year of sale of the asset. Long term capital gain would thus be computed by deducting such indexed cost from the amount of Rs 12 lakh being the sale price of the plot. It is not possible to compute the amount of capital gain as the details of fair market value as on April 1, 1981 and the period of holding of the plot by you have not been given in the query. 

REAL TALK
It pays to be eco-conscious
Geetu Vaid

Gone are the days when development was the antithesis of responsibility towards environment. Business interests and profit margins now go hand in hand with sensitivity towards eco concerns. Realty scene, too, is reciting the green mantra more and more as almost every developer is making endeavours to incorporate maximum elements to reduce the carbon footprint of a project. The 3C company which is the winner of Best Developer – Commercial, at the Realty Plus Excellence Awards 2010, is hailed as a pioneer in conceiving and executing green developments in Delhi -NCR. The group has already delivered 12 million sq ft of niche developements in its energy-efficient buildings. Vidur Bharadwaj, Director of the group that is driven by the motto of “Creating, Caring and Conserving”, talks about the importance of green tech in their projects. Chairman of Indian Green Building Council (IGBC), Delhi Chapter, Vidur is also the Advisor for Hong Kong Development Group on “Sustainable Architecture in Urban Cities”. He is also the Managing Partner of Design and Development, the only architectural firm in India, which is in the process of being awarded carbon credits for Green Buildings

You specialise in green buildings. What was the motivation to move to this type of construction and how far you have been successful in spreading the message and setting up a trend in this field?

We have spearheaded the green developments in Delhi NCR. The challenge came in early 2000 when Azim Premji wanted the Wipro campus to be designed as a 100 per cent green building. It was then that I realised that this proposal can be converted into a business model. On meeting my other like-minded partners, Nirmal Singh and Surpreet Suri, who shared a similar vision, we decided to enter into this noble, untapped business of green development. With a common conviction of responsibility towards the environment, we took the business with an outlook that green is the need of the hour. As a developer we take extreme pride in the fact that three of our coveted creations, namely, Wipro Campus, Gurgaon and Patni Campus and Green Boulevard, Noida, are rated amongst the top 10 green buildings in world.

With encouragement from our customers who sought a similar eco-friendly environment at their home, we forayed into the residential segment. So far we have been quite successful in spreading the ‘Think Green Live Green’ message and have received a phenomenal response from our customers for all our residential projects. But we believe that there is still a long way to go as many misconceptions about green buildings still exist which need to be addressed and clarified. At the 3C Company we have been working consistently on creating awareness and addressing these misconceptions.

How helpful or otherwise are government policies in this regard?

The Indian Government has shown some level of interest and has appreciated the green building initiative but still an effective government policy would certainly help. The recent rise in FAR for green buildings is well acknowledged. However, we would need further support to help this initiative right at the grassroot level. If we may suggest a subsidy in the loan rates for a green building, it would attract the end-users and more people can have access to eco-friendly living.

How has the customer response been to your projects and to the concept?

The customer today is highly aware of the green buildings and their various tangible and intangible benefits. Over the past one year we have launched three green residential projects in Noida. The response to each of these projects has been overwhelming. The increased sales volume does not only signify our unparalleled growth but also re-establishes the fact that green makes business sense in today’s time.

What is the future and scope of green architecture?

With growing awareness about green buildings and higher demand for the same, the market for such eco-friendly structures is expected to reach an all time high.  The day is not very far, when going green and constructing green buildings will be the norm of the day and green buildings will play a catalytic role in addressing issues of climate change. In fact over 1,000 green buildings have been registered with the Indian Green Building Council (IGBC), till date.

Any plans about having NCR-type projects in Punjab, Haryana etc.

As of now we are executing projects over Rs 15,000 crore across Delhi NCR, and would like to continue concentrating on the projects in hand rather than launching multicity projects and spreading ourselves thin. As a responsible corporate we aim to excel the expectations of our customers through timely delivery of our projects.

GREEN HOUSE
Speed up growth
Satish Narula

The trend now is to buy a chunk of land, develop it into a colony, sell and move ahead. One of the most impressive ways to show the development is to create passages with ‘mature’ plantation, develop landscape besides some sewerage, road and street lights. One of the main factors, however, remains the development of roadside plantation that looks ‘grown up’.

An oft repeated query in this regard is about the trees that should be chosen to get a green cover in the minimum possible time. Let me make one thing very clear that almost all the avenue trees that are recommended have almost same pace of growth. Some feel moulsary is a bit slow growing but it is not completely accurate. There is a reason for slow growth of this tree. In fact, avenue trees are usually planted during the monsoon season and once the sapling is put in place and it establishes roots we forget about it and leave it to brave the ever-changing weather. Extreme winter and summer weather conditions are actually stress periods for the trees and proper care is needed for their healthy growth. The argument put forward generally is that trees grow in the forests too and there no one waters these. But always remember that the trees used in forests and urban planting are absolutely different. The ones in the city limits need tremendous care as these are exposed to all kinds of extreme conditions.

When you use trees in avenues in developing colonies the first need is to give them sufficient space to spread roots. The trees should get regular watering and feed if you want quick results. Many times a number of trees are grown close together just to show a thick green cover. But this is not the right thing to do as the growth of such trees remains stunted. It is also a very expensive option. If trees are planted at a proper distance and package of practices are followed, then a good green cover can be achieved in no time.

Not every tree should be included as an avenue tree. Keeping in view the space available below and above, some of the suitable trees to choose from are moulsary, kadam, alstonia, lagerstroemia, amaltas, silver oak, mahogany etc. Never use fruit trees like jamun and mango as avenue trees. The trees like millingtonia and Cassia nodosa that shed branches with even a little change in wind velocity should be avoided. Where the streets are narrow, trees like amaltas, lagerstroemia, Buddha’s coconut etc should be planted.

Fortnightly alert

This is the time to give manure and fertiliser to plants. Make sure you give the required quantity only as an excess of it may lead to more of vegetative growth and less of flowering and fruiting. For this, you can contact experts or else consult the package of practices. Each species need a different amount of manure, e.g. a 10-year-old mango tree will require 100 kg of well-rotten farmyard manure, but a peach of the same age will require one fourth of it i.e. 25 kg only.