Panipat
Haryana's new boom town
Manish Sirhindi

A major industrial hub of the region and in close proximity to the national Capital, Panipat, has always been touted as the next boomtown of Haryana after Gurgaon. As the property prices here have been rising steadily over the past couple of years, the realtors operating in the region call Panipat a virtual goldmine for developers as well as investors.

The city, which is known for its textile, handloom and pickle industries, has been witnessing continuous development on the basis of its upcoming industries.

Commercial property

The city certainly shows a lot of potential in varied aspects and the commercial market happens to be a promising one. With several commercial projects in the pipeline, Panipat promises to provide quality commercial spaces.

It is due to a huge influx of funds that the development of Panipat's commercial property saw top property developers in the country come up with exclusive projects here. These projects have so far received good response and sale volumes.

There is a proposal to develop a textile cluster in Panipat and with the petro-chemical hub already commissioned at the Panipat refinery, the city is witnessing a considerable growth of downstream industries. Panipat city is being perceived to be quite a promising place for investors and those planning to set up new industries.

The mall culture is also growing at a fast pace as far as retail space is concerned and big names are already trooping in the 'handloom capital' of North. DLF is soon to give shape to its forthcoming project - two exclusive shopping malls in Panipat. The group has already acquired land, ranging between 100-200 acres in the city. Besides this among the front runners in mall space are Mittal Mega Mall, which is the first shopping-cum-entertainment venue with world class brands, top notch services, and known names in the world of food chain and clothing associated with it and DAP Angel Prime Mall. The Expo Mall, which has over 3 lakh sq ft space, has the potential to give the textile business a decisive thrust at international level.

Such developments clearly show that there has been an ongoing process of rendering a major face lift to Panipat, which has inspired many real estate developers to invest in real estate here.

Residential property in Panipat

Boom in residential property market in Panipat can't be ignored for the fact that more and more investors are showing interest in the various colonies being developed by private players across the city.

Parsvnath-Paliwal City being promoted by Parsvnath Developers has come up near the Devilal Choudhary Park in Sector 38-39 of Panipat. The township involves an estimated investment of Rs 235 crore and will have group housing as well as plotted development along with all facilities including schools, multiplex, shopping malls.

The Golden Gate township spread over 10 acre of prime land in the city has been built by the BEST Group. It features 15 towers having independent floors with three-bedroom units and blocks of two and three-bedroom units. The other highlights of this township will be its green lawns and the super architecture.

Ansals Sushant City has also come up here. It is a self-contained township targeted to be spread over 250 acres. The infrastructure being provided at the township includes underground electricity cables special vigil system, rain water harvesting and power backups banquet hall, lawns for parties, health restaurant, swimming pool, spa and sauna.

The TDI city, Panipat, is yet another township developed in sectors 38 and 39 spread over 350 acres. It offers independent villas, group housing, exclusive clubs, and even has the provision for an extensively designed shopping malls.

The Government of Haryana had also recently announced to development of a new city in NCR at Samalkha extension of Panipat, therefore, Panipat will soon get transformed into a new and modern mega city.

There has been an ongoing process of developing the city into a hi-tech one, which has inspired many real estate developers to invest in Panipat. The upcoming residential properties, including apartments, bungalows, villas and condominiums will have additional facilities, including swimming pools, gymnasium and club facilities. The demand for residential plots is going through the roof in the elite parts of the city. So with more investors entering the realty market here, industry watchers are confident on Panipat emerging as the next realty hub of Haryana.

tax tips
Karta's gift
S. C. Vasudeva

Q. I am a senior citizen and a government pensioner and karta of an HUF. My son is settled in Delhi and has a three-room house. I have constructed a two-room set on the first floor of the said house. As I and my wife both are unable to climb stairs due to health reasons, I want to gift this portion to my son's HUF so that rent from this portion is treated as HUF income for him. I also want to give a good part of Rs 5 lakh as gift to his HUF. This amount represents my accumulated PPF.

My queries are:

l Is it correct that a residential set on the first floor of his own house, be called the asset of his HUF from income tax point of view?

l Can I give any (or how much) amount to his HUF as gift?

l Can I as karta give any amount from my HUF to his HUF?

4. What is the effect of the gift? Who will be liable to pay tax? How and where to show this liability and how/where to pay?

—Tarun Kumar

A. The answer to your queries is as under:

l You have not indicated in your query whether your son is having a separate HUF. It is also not indicated whether such HUF owns the house on which the house on the first floor has been constructed by you. It is, therefore, not possible to give a proper advice in this regard.

l As to the amount of gift to be made on behalf of your HUF, it has been held in Kuppayee vs. Raja Gounde (265 ITR 551) (SC) that a gift by a karta within reasonable limits, keeping in view the total extent of the property of the family should be valid provided it is not vitiated by fraud or misrepresentation. As per the provisions of Section 56 of the Act, a gift exceeding a sum of Rs 50,000 in aggregate received by an HUF from a stranger would be taxed as income from other sources in the hands of HUF.

The provisions of Section 56 are somewhat ambiguous on the subject of receipt of gift exceeding Rs 50,000 in aggregate from the karta of an HUF who is related to the karta or other members of the recipient HUF. However, on the basis of a harmonious interpretation, such a gift should not fall within the ambit of the provisions of Section 56 of the Act, if the same has been received from the karta of an HUF, who should be a relative of the karta or other members of the recipient HUF.

l The gift results in an increase in the capital of the donee and decrease in the capital of the donor. Eventually it does lead to the increase or decrease of income of the donor as the donor would have otherwise earned income on such gifted property.

l In accordance with the provisions of the Act, where an aggregate amount which exceeds Rs 50,000 is received without consideration, by an individual or HUF, in any previous year, from any person or persons on or after April 1, 2006, the whole of the aggregate of such an amount would be treated as income from other sources provided the amount has not been received from the specified sources. One of the specified source is the relative of the recipient. The term relative is defined as under by the said Section:

l spouse of the individual;

l brother or sister of the individual;

l brother or sister of the spouse of the individual;

l brother or sister of either of the parents of the individual;

l any lineal ascendant or descendant of the individual;

l any lineal ascendant or descendant of the spouse of the individual;

l spouse of the person referred to in clauses (ii) to (vi).

l The amount so received by the recipient who is not covered within above exception would be treated as his income from other sources and added to his other income, if any. The tax would be payable on the aggregate of the total income.

l The gifted amount should be indicated in the return of income. There is no tax on gifts made but as indicated above the gift which is not exempt under the above provisions would be taxed in the hands of the recipient as income from other sources. The tax would be payable on the total income, including the receipt, which is taxable as income from other sources.

Self-occupation not mandatory to claim rebate

Q. I am a government employee working in Chandigarh. I purchased a duplex home in Kharar in April 2011 for Rs 23 lakh, and paid around Rs 2 lakh as stamp duty and charges. Out of this total Rs 25 lakh, a sum of Rs 7 lakh was paid by my father (who is also a government employee) from his personal savings. For paying the rest of the amount i.e. Rs 18 lakh, I have taken a loan from HDFC bank. As the property is in the joint name of me and my father, so as per the bank policy my father has to become a joint applicant in the loan also. The EMI of Rs 18,000 is solely paid by me from my salary account through ECS.

My first question is that by what percentage of EMI, can I claim tax rebate, as my father is not claiming any tax rebate. Can I claim full tax rebate against the EMIs paid solely by me from my account.

Secondly, is it necessary for me to live in this accommodation to claim tax rebate.

— Anil Kumar Pummy

A. You have not indicated in the query the extent of ownership in the property purchased in the joint name of yourself and your father. Presuming that the property is also owned in the ratio in which the amount has been contributed for the purchase of the residential property, you should be entitled to claim tax rebate on the amount repaid towards the principal amount of loan as well as the amount of interest paid/payable on the loan raised for purchasing the residential house as you have borrowed the entire amount of Rs 18 lakh.

Thus you can claim deduction for the entire amount of Rs 18,000 bifurcating the same into components of the interest and the principal repayment. It is not essential for you to live in the residential house in order to claim the deduction in respect of the amount repaid towards loan raised for purchasing a residential house and the amount of interest paid/payable in respect of such a loan.

Capital gain 

Q My wife booked a one bedroom flat with the Shimla Development Authority and made payments as per details given below.

Sept 1993 Rs 50,000 for booking and registration

Dec 93 Rs 25,000 as installment to be paid every Qr

Mar 94 Rs 25000

Jun 94 Rs 25000

Sept 94 Rs 25000

Dec 94 Rs 25000

Mar 95 Rs25000

Jun 95 Rs 25000

Jul 95 Rs 15000 for preferential flat facing valley

Mar 96 Rs 32591 final payment

Total Rs 2,72,591

The flat was registered in name of my wife in May 1996. The flat is now sold for Rs 12 lakh in September 2011. Please let me know if she is required to pay any Capital Gains tax. She had spent Rs 1 lakh on woodwork and flooring of the said flat.

— Kulwant Singh Mann

A. Your queries are replied hereunder:

l The indexed cost of the flat purchased by your wife would work out at Rs 10,84,977. This indexed cost has been computed on the presumption that Rs 1 lakh on woodwork and flooring was spent in May 1996.

l On the basis of the above indexed cost the amount of long-term capital gain would work out at Rs 1,15,023. She is liable to pay tax on the amount of such capital gain at the rate of 20% plus applicable education cess. In case she does not have any other income, the amount of long-term capital gain being less than Rs 1,90,000, (the maximum limit up to which tax is not payable by a woman) she would not be liable to pay any tax thereon.

Correct definition

Q. I read with interest your reply to the query "Categorising self-lease" in The Real Estate (August 13, 2011). My case is similar. My company, a private company, also allows me self lease. However, it does not consider it as a perk. The amount is shown as income from house property in the tax calculations for TDS by the company. But as per the published letter that company treats the same enumeration as perk. Which definition is correct? I deliberated with my colleagues and we feel that treating this income as income from house property makes calculations simple. If it is treated as perk, separate calculations for rebate on repair and maintenance etc. will have to be made, making calculations for return unnecessarily complicated. Kindly guide as to what is the correct course?

— Brahmanand Verma

A. The amount paid by the company towards the house provided to you as free accommodation is in the nature of a pre-requisite which would be taxable in accordance with the provisions of the Income-tax Act, 1961 (The Act). Further the amount of rent received from the company would be taxable as income from house property in your hands. In case the company is not including the pre-requisite of the free accommodation provided to you, the company can be penalised for not deducting the correct amount of tax from your salary income.

estate world 2011
On road to trust and transparency
Geetu Vaid

SURAJKUND: "The realty sector of each region in our country has its unique personality and thus it is very difficult to generalise about the growth and price graph and very important for developers, brokers as well as investors to be aware of the various peculiar regional factors", says Franchise India's President Gaurav Marya while talking about the key focus area of the second annual global convention for property brokers and developers, which was organised by Franchise India Holdings Limited and Bloomberg UTV in association with landlordindia.com at Surajkund earlier this week.

The growth potential of the real estate sector in North India was the focus of the convention which showcased products, strategies, personalities and leading companies that comprise the Indian real estate marketplace. Shedding light on the major problem areas of the industry, Marya said, "Only 10% of the real estate players in the country stand in the organised category today.

Formalisation of best practices in the areas of brokerage, commissioning, licensing and code of ethics are yet to be formatted in a legally abiding structure. Another factor which keeps the Indian real estate players behind their western counterparts is that the India real estate eco-system lacks mature appraisal and expert guidance. Through Estate World 2011, we have tried to unite the industry and initiate a dialogue on understanding this gap."

Industry mavens presented their views on the key issues concerning the sector and the main players, including the developers, brokers, and investors. The B2B convention witnessed deliberations, interactions and knowledge sharing on How, Where and When to buy or sell a real estate with emphasis on topics like the ‘Current Picture of the Real Estate Sector in North India’, ‘Construction Finance on Real Estate Projects’, ‘Changing Role of Real Estate Brokers’, ‘Regaining Customer Confidence in Underdeveloped Projects’, ‘Taxation in Real Estate Sector’, and ‘Northern Realty-the Road Ahead’.

Speaking on the vital issue of regaining customer confidence in under-developed projects, Ms Ananta Raghuvanshi, Director, DLF India Ltd, said uninterrupted communication with customers through regular construction status updates, events at site, assurance regarding delayed construction penalty and option to shift to other ready-to-move properties were some of ways in which developers can gain the confidence of customers.

Sam Chopra, MD, Remax India, dwelled on the changing role of brokers in the tech driven world. He said as the buyer profile has become younger and more tech savvy, the new age brokers, too, should provide holistic services rather than just introducing the two parties in a real estate deal. Multi-level services, exclusive mandates and use of internet should define the role of new age brokers, he added. PSN Rao (Chairman, NAR - India), Manish Kashyap, MD-Transaction Services (South Asia), CB Richard Ellis), Vineet Singh (EVP and Business Head, 99Acres.Com), Mousumi Roy, Director, Real Estate/Urban Infrastructure/ Urban Planning/Advertising & Marketing, FICCI, Navin Raheja, Chairman, Raheja Developers were among the other eminent speakers on the occasion.

The occasion also witnessed the release of North India Real Estate Report 2011, covering end-to-end data and position of Indian real estate sector, along with the launch of Estate World, a monthly magazine catering to varied requirements of the real estate sector. Commending the contribution of the companies and individuals who have contributed to the growth and development of this resurgent sector in North India Estate World Awards were also presented in almost 27 categories. In the professional of the year category Sonica Malhotra, MBD Group, bagged the female professional of the year award. While Silver City, CHD Developers and DLF got the developer of the year award for Punjab, Haryana and Delhi, NCR regions respectively, Jaypee Greens was given the Developer of the Year Award for North India. Subhash Mangat & Co. bagged the most innovative broker of the year (Haryana, Punjab & J&K) award at the glittering function.

Ground Realty
Get cornered
Jagvir Goyal

Many queries about the preference for corner plots keep landing in my inbox often. The buyers generally want to know whether the extra cost or premium added to a corner plot is justified and what are the benefits of buying these? The corner residential plots are usually sold at a higher price than the normal plots of the same size. All development authorities and bodies, be it HUDA, PUDA, Improvement trusts or Municipal Corporations, follow this practice. Normally, a corner plot is kept under the 'preferential plots category' and sold at 10 per cent higher price.

Why preferential

The basic reason for the higher cost of corner plots is not the larger area of corner plots. There are chances that in a row of 250 sq yd plots, the corner plot may be having 5 to 10 per cent larger area. But the cost of this extra area gets automatically paid as the plots are sold on per sq yd rate basis. Corner plots are priced higher because these are considered to have an advantage over other plots, particularly in small-size plot category having common walls on both sides.

All plots below 300 sq yd size normally have common walls on both sides. In such cases, one has to make many compromises while preparing the plan of his house. On the other hand, a corner plot helps in avoiding these advantages and offers the solution on a platter.

The side passage advantage: A side passage in the house plan has its own advantages. Everyone desires to have a through and through passage to the back courtyard of his house. The advantages of the passage are:

Independent entry: Any workers or house maids can go to the back courtyard of the house to do the washing of clothes and other chores without entering the house. If the kitchen is located at the back, the maid can enter the kitchen directly from the back side.

Entry for the tenants: These days, the lounge is provided with double height ceiling and the stairs to the first floor are accommodated in the lounge area. In case one wants to give some area of the first floor on rent, an independent stair entry has to be given to the tenants. In smaller size plots, it is not possible to provide a staircase in the front courtyard as it is ill neither look good and will spoil the front elevation nor will be permitted by the byelaws. A staircase if provided in the back courtyard can serve the purpose. The side passage provides the freedom to the tenants to go up and down this staircase without entering the owner's house.

Entry to the servant quarter: In small sized plots, the only option to have a servant quarter is to plan it on the first floor. Again, it will need an independent entry as the owners, for obvious reasons, don't want to leave the full house open to the servant as and when going out and want to isolate his quarter cum room. Here again, the side passage and back courtyard staircase prove useful and planning can be done to provide independent entry to the servant quarters.

Gas supply: LPG cylinders are regularly required in the kitchen. A side passage will enable the delivery of gas cylinder right in the back courtyard where you may most likely plan to have an arrangement to safely accommodate the extra cylinders.

Though everyone will like to have the above advantages of side passage in his house but it is not possible to leave the same in plots of 300 sq yd or lesser area as the plot widths are small and leaving a side passage to the backyard shrinks the available width to accommodate the front rooms and the main entry. A 300 sq yd normally has a plot width of 36 ft while a 250 sq yd plot has about 32 ft plot width. If a side passage is cut out of this width, the three planned components of drawing room, bedroom or kitchen and the house entry can't be accommodated in the remaining width. Here, the corner plot enjoys the distinct advantage of availing all the above noted advantages without leaving a side passage but by leaving a small gate in the side boundary wall of back courtyard which provides independent entry to the back courtyard and the staircase.

Lighting and ventilation advantage

A corner plot also has the advantage of inviting extra light and ventilation of the house through the side wall. Provide windows in the side wall, in the front room, lounge or back room as per your desire and let fresh air and light flow into your house. East or west facing corner plots may further have the advantage of north light, if located on the northern end of the row of the houses. In the lounge, if the stairs to the first floor are located along the end wall, provision of a window in the end wall will keep the steps well lighted during the day.

Bright basement

Wherever the residential plot lies in low lying area, the best solution to tackle the low lying area is to build a basement. Excessive earth filling under the floors is likely to settle after sometime, causing settlement of floors. While building basements, the challenge lies in their ventilation and lighting. In the mid row plots, the space available for this is only at the front and back, for a small height below the plinth level. However, in a corner plot, ventilators can be provided to the basement for the full side wall length, illuminating and ventilating it well.

Side balcony advantage

In case the building bylaws permit, the side walls of the first floor rooms can have balconies which will not only lend more ventilation of upper rooms but will add a royal touch to them. The side elevation also looks much attractive. In such cases, even a 250 sq. yd house looks much bigger than its actual size.

A corner plot, therefore, has advantages valuing much more than the extra cost paid for the plot. Further, while choosing a corner plot, the best choice is an east facing plot on the northern end of the row of plots. Corner plot owners should, therefore, feel lucky and avail of the above advantages.

(This column appears fortnightly)

Living with vaastu
Madan Gupta Spatu

Vaastu Shastra is an ancient Indian architectural science that evolved some 5,000 years ago with roots in the sacred Vedic texts. Its principles of building planning and construction seek to bring about an ideal and harmonious balance between humans and the environment. And as a balanced existence generally paves the way for a happy, fulfilled one, following the principles of Vaastu Shastra can result in a life well-lived.

In doing Vaastu of any place — home, workplace, building, factory, land or plot we try to harmonise the place with respect to the five basic elements called as Panchbhoota namely air, water, fire, earth and space. Here are some broad principles that should be kept in mind by house owners for a balanced, healthy and happy life:

Selecting a plot

Plots should be square or rectangular in shape – never triangular, circular, hexagonal, elliptical or zig-zag — and preferably sloping towards north, east and north-east.The soil should not be sandy, infertile or marshy. The ground level should be higher in south and west rather than north and east. Plots facing north or east are better than those facing south or west. A canal, a lake, river, nallah, a big well or pond should be in north or east. Heavy construction or mountains should be in west or south of the plot There should not be any big tree in north or east of the plot.

l There should not be any pit or well in south or west direction.

l All four corners should be at 90 degree (set square). If only north east is extended i.e. if it is less than 90 degree, it will do.

l All rain water should ideally flow from south to north and west to east.

l South west should be highest and north east should be the lowest in level. If all the corners are not at 90 degres then we should correct it before starting the construction.

l If the deadend of a road is coming in the plot then it should be taken care of. There should not be any hills or mountains in east or north side of your plot.

l At the time of purchasing the adjacent plot purchase only in east, north or north-east plots. Never purchase adjacent plot in south or west or accept if even if offered for free.

Tips for construction of house

l The central space of the home, known as the Brahmasthan, should remain vacant. In ancient India and in many existing old palaces and havelis, rooms were built around a central courtyard. The purpose of this central courtyard is to create a breathing space inside the home and to attract beneficial cosmic energies.

l Kitchen should be in the south-east, the dining room in the west, the living room and the master bedroom in the south-west, the guest bedroom in the north-west, the bath room in the East or the North, the prayer room in the North-East and so also the well and water supply.Sleep with your head towards the east or the south.

Avoid clutter in your home. Keep only those things that are useful, aesthetically pleasing or personally significant. Doors and windows should face east. This ensures the maximum benefit of morning sunlight, which, as we all know, contains the life-sustaining Vitamin D. Limit the number of openings to the west and south as afternoon sunlight isn’t as beneficial. Doors and windows should also allow for maximum natural ventilation and light.

The writer is a city-based Vaastu consultant

Realty bytes
SBI to enter UK mortgage market 

Country's largest public sector lender State Bank of India (SBI) has decided to expand its retail division in the UK by entering mortgage market for the first time. The bank is beginning with mortgages for landlords, best known as buy-to-let mortgages, with amounts ranging from 50,000 to 1.5 million pounds, and loan to value of ratios of up to 60 per cent.

Next year, the bank will roll out residential mortgages by which time it plans to add intermediaries such as IFAs and mortgage brokers to its distribution network. The bank launched the expansion of its consumer banking business in the UK last year. In the early days the bank had focused on Britain's Indian community, but this time round its target appears more mass market.

Recently, SBI has introduced a state-of-the-art technology platform for financing its supply chain partners by using SBI's internet banking platform. With this platform a corporate can upload the details of invoices raised by their suppliers and the details of invoices covering the supplies made to the dealers on SBI's internet banking platform, effecting real time transfer and automated settlement of funds target market of SBI is all UK property investors, not just the Indian community.

The bank attributed the timing of its decision to the change in culture: that in the bullish market environment of the past, the prudent terms on which the bank was willing to lend would simply not have been competitive.

SBI has decided to launch this project now as the mortgage market has changed and our more prudent lending criteria can be competitive. A 60 per cent LTV buy-to-let would not have been able to compete three-four years ago.

Britain's mortgage market has undergone dramatic changes over the past few years, with the collapse of banks such as Northern Rock partly blamed on a lax regulatory system, which allowed mortgages of up to 125 per cent, and 100 per cent mortgages to be the norm.

Loan to value ratios have fallen sharply since: falling to an average of 69 per cent in July, according to the Council for Mortgage Lenders (CML). The market remains muted, with lenders remaining wary: the total value of mortgages in July was down 13 per cent on the same period a year before, according to the CML.

Sobha Developers to invest 250 cr in Chennai

Real estate company Sobha Developers will invest Rs 250 crore to develop its property in Chennai.

“We will be launching in new areas. We will be launching in Chennai, where the property will be spread over 1 million sq ft. The investment cost for this is Rs 250 crore,” Sobha Developers Managing Director J.C. Sharma told reporters on the sidelines of the Real Estate Investment Forum and Business Spaces 2011.

The Bangalore-based company said its total debt stood at Rs 1,300 crore and it will repay close to 35 per cent of the same this year. “Our total debt is Rs 1,300 crore. In FY’ 12, we have to repay Rs 450 crore.” The debt to equity ratio of the company is 0.65:1, the best it has ever had, Sharma said.

Asked how the company will finance the debt repayment, Sharma said all the necessary provisions were made to fulfil its obligations.

— Agencies