area watch: patiala
Hanging on hope
Aman Sood

The realty market in Patiala is still recovering from the slowdown that has crippled the sector in almost all major towns in the state over the past two years. However, the situation is likely to improve with investments trickling in slowly now.

The prices of properties, both commercial and residential, in the royal city have witnessed a slow upward trend as end users are giving up their wait-and-watch policy and are checking out properties in and around the city. According to market watchers, the prices in the city have remained stagnant for a long time and are not likely to fall any further and this fact is making genuine buyers come out of their cautious cocoon and finalise deals. Property consultants operating in the city are also hopeful that this renewed buyer interest will give a boost to the market overall.

Though the city never witnessed an unusual property boom like Mohali, Ludhiana or Amritsar, recession did affect property business considerably as investors virtually vanished from the realty scene in the wake of global recession. But now the property sector seems to have heaved a sigh of relief. “We are now able to sell some properties which were being held for the past few months”, echoed property dealers.

Property fortunes in Patiala have remained stunted due to a number of factors. Firstly its proximity to areas like Mohali and Chandigarh has been a great impediment as investors are always partial towards these “happening” cities that promise much better returns. “Someone investing in Patiala will have to wait for a couple of years to get decent returns, while anyone investing in Mohali will expect better returns in a year’s time. The only difference is that the investment in Mohali is bigger as compared to Patiala”, says Madan Bhardwaj of Bhardwaj Properties, near 22 No. Phatak.

Secondly, lack of job generating industry is also a dampener for property prices. “Unlike Ludhiana, there is no industry in Patiala and hence investment in the commercial sector was never much and with the recent slump in the market even the residential property is difficult to sell and only end users are approaching us”, said Palwinder Singh of PS property consultants.

The recent steep hike in the rates of construction material has also added to the woes of buyers and developers as some big-ticket projects on the outsirts of the city have been hit badly due to these factors. Prices in residential colonies in posh areas vary from Rs 15,000 to Rs 40,000 per sq yd. The mushrooming of illegal constructions and colonies has also not helped the cause, with prices in many parts remaining stagnant.

With new construction in full swing, the Patiala Development Authority is expected to complete two projects in the city and fetch good money, though an earlier project by the authority did not find many buyers because of the high reserve price.

Although the prices of commercial property have increased slightly in some areas. These generally range between ~20,000 per sq yd and ~2 lakh per sq yd.

“Though on the whole, the rates have not come down in any part of the city, they are stagnant and those who had invested in property in order to make profit are now feeling the heat”, says Palwinder Singh.

Majority of those dealing in the real estate business said the property business in the city is likely to be back on track in the next few months as they are receiving demand for residential plots and houses, especially after the Parliamentary elections. “A stable government at the Centre will mean more funds for states and we are hoping things would improve in towns like Patiala”, added Bhardwaj.

Young yen for smart homes
Vivek Shukla

When senior TV professionals Satvik and Surekha started their house hunt one of the main consideration was that their dream abode should be equipped with the latest technological capabilities that are an integral part of their lifestyle. In order to find flat of their dreams, this tech-savvy couple is ready to spend more.

Well, the list of such tech savvy buyers is swelling fast and realty players are now going all out to cater to the needs of this section of buyers with deep pockets.

As the age profile of homebuyers has seen a significant change with more younger people buying homes, the type of facilities they look for in a home have also seen a significant change. This new gen of homebuyers has grown up with smart phones, apps, and Google searches. And they want to use technology not only in their search for a home but throughout the home itself.

“This new generation of home buyers is rewriting the rules of home ownership and are re-interpreting traditional norms to fit their values,” says Sanjay Khanna, director of Kailash Nath projects. “Many buyers now prefer high-tech rooms with surround sound, large-screen TV’s. They want all kind of luxury and comforts,” he adds

And imagine being able to remotely control an array of automated home electronic devices by entering a single command through mobile phone or Internet from anywhere. Imagine also being able to manage all devices at home including curtains, TV, video, security system, lighting and air conditioning using a mobile phone or internet from any place around the world. Smart homes have made this a reality.

As more and more companies are encouraging their staff to work from home, a large number of young home buyers instruct their builder to convert their one room as office. Depending on the number of bedrooms, some create a home office with built-in desks, shelving and cabinets. “ I have come across several young buyers who prefer to have one room dedicated to their laptops, printers and other work-related stuff. When any of our customers asks for converting one room into an office, we happily do that without charging any extra money,” informs Nikhil Jain, CEO of Ramprastha Developers.

As this is not enough, today’s buyers — both the Gen X and Gen Y generations as well as those who are retired want a gym, even spa or business centers in their buildings. “ Well, If this type of property appeals to you, then remember that you have to spend lot of money on regular basis to avail these services,”said Devinder Gupta, MD of Delhi-based realty advisory Century21 DGS.

State-of-the-art security gadgets are another hot item on the list of these new-age buyers. It goes without saying that security has been immensely helped by automation systems. Godrej has recently launched a range of hi-tech premises security solutions that include blocking bollards, speed gates, tyre-rippers/killers, which can block the unwanted intrusion of a speeding vehicle. A variety of features like touch-panel integrated automation system, CCTV/motion sensor cameras at common areas and parking lots, video streaming of visitors at the main gate, electrical fencing, are some of the features of a secured access to homes that have the techno advantage.

Gaurav Mittal, Managing Director of CHD Developers says, “More customers now prefer security products in their flats. With complete automation and advanced security the smart home provides its residents complete control and the ultimate luxury experience. ”

Realty firms like DLF, Unitech, Avalon, Amrapali and others put sensors in flats,on demand, to display data on energy consumed, water consumed, temperature outside and inside spaces, relative humidity and rainfall. This data gives residents information about their energy expenditure.

Talking about another product that many buyers ask builders to install in their flats, Rajeev Chopra, CEO of Gurgaon-based realty firm ILD Developers, says that LCD Display Panel is a rage now among young buyers. It provides intelligent mobile control at home and in the office. With just a fingertip tap of any Wi-Fi device like Apple’s iPhone, iPod touch, iPad, or any smart phone, PC or netbook, homeowners can control home temperature, ventilation, lighting, curtains, elevator and other home appliances, making life highly convenient and comfortable, while saving energy.

According to Ajay Singhal, Director of Avalon Developers, “While the young and confident youngsters hardly keen on buying sun-facing flat, they ensure that their flat is tech-savvy at any cost.

Ground Realty
Gung ho over glass
Jagvir Goyal

Use of glass in homes has seen a rapid rise over the past few years. Earlier, it was used mainly in the window panes. Now, it adorns a dozen of items. It has, in fact, become a major item of consumption for which the home owner has to do carry out a thorough survey instead of simply assigning the job to a glass supplier on the telephone.

Different type of glass is used in different items of the house. The right choice of glass helps in adding to the 'wow' factor of the house. Let's first have a look at its use in the window panes of the houses:

Window panes: Largest consumption of glass in the house rests with the window panes. The size of windows has increased considerably these days. Most of the houses have windows with sill level just 6 inch above floor level and 8.5 feet as their top level. The glass used in windows is either simple float glass or toughened glass.

Thickness: Thickness of glass used in windows increases with the size of the window panes. Small-sized glass panes may be just 4 or 5 mm thick. For large-sized window panes, 8 mm thickness should be chosen. In houses, 8 mm thick glass panes look quite heavy and sturdy. For window panes of size up to 5 sq ft, one may choose 5 mm thick glass. For panels up to 40 sq ft size, 8 mm thick glass is sufficient. For bigger panes, one should choose 10 to 12 mm thick glass.

Float glass: Float glass used in windows is made by floating molten glass over a bed of molten tin. It is made perfectly flat and uniform in thickness. It has been used in window panes for decades. It is also called clear glass or flat glass. Though it breaks easily, it is used for window panes due to its cost effectiveness.

Cut to size: Whenever toughened glass is chosen for the windows, care has to be taken that the exact sizes of window panes are worked out and physically checked at site before the toughening of glass. Glass once toughened, can’t be cut or altered. Even its grinding is not possible. Therefore, the sizes of various window panes should first be noted from the drawings and then corrected by actual measurement of each window pane at site. No holes can be taken out in toughened glass.

Measurement: While noting down the measurements of glass panes for getting the glass cut to size and toughened, the width is noted first as a standard practice. A window pane of 4 ft width and 6 ft depth is noted as 4'X 6' and not as 6"X4". 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.

How to proceed: Once the exact size of each window pane is available, thickness of various panes should be decided depending upon their size. At the most, two or three thicknesses should be chosen. Most popular thicknesses are 5 mm, 8 mm and 10 mm. Next, the glass brand should be decided. A few very reliable brands are Saint Gobain, Modi guard, AIS and Asahi. Glass should be checked to be free of distortions, holes, cracks and bubbles. Normal glass panes of required sizes and thicknesses should now be drawn and sent to the industry for toughening. Toughening process normally consumes 15 days or so. Action to order for the glass should, therefore, be taken timely to avoid delay in its fixing at site. How to check: Toughened glass, which is so popular these days can't be checked without breaking it. And nobody checks it by breaking it. On breaking, it shatters into small particles instead of creating sharp and cutting angles. More toughened a glass is, the smaller will be the size of particles when it breaks. Toughened glass can withstand impact, shock and high temperatures.

Some physical checks: On toughening, the glass becomes a bit greener than the normal glass. It carries the stamp of 'toughened' and the name of the industry that toughens it in one corner of each pane. The glass toughening industry also furnishes toughening certificate if demanded by the customer. Edges of toughened glass are etched and it has slight warps or impressions in it due to its handling during toughening. These warps or impressions can be noted when viewed closely. Another check of toughened glass is that black lines can be viewed in it when viewed with 3D glasses.

Correct storage: Always keep the glass panes on their edges, in vertical position and resting against a support at a slight angle. These should never be laid flat on the floor or on a bed or any horizontal surface. If done so, these may soon develop cracks as the surface on which these are rested may not be exactly flat and may cause stresses in glass. It is better to let air to circulate between the sheets.

Cost difference: Toughened glass is about Rs 50 per sq ft costlier than the normal glass. If the cost of 8 mm thick normal glass is Rs 70 per sq. feet, the cost of 8 mm thick toughened glass is around Rs 120 per sq ft. Similarly, 5 mm thick toughened glass costs about Rs 80 per sq ft while the normal, 5 mm glass costs around Rs 30 per sq. ft.

Installation: Installation of toughened glass has to be carried out very carefully. Greatest care has to be taken of its edges. Edges of toughened glass have great stress and glass may shatter if the edges get damaged during installation.

Silicone fixing: Silicone is used these days for fixing of glass in window panes. Application of silicone in the window rebate should be uniform and sufficient. Glass panes are fixed in position with the application of silicone and then wooden beading is fixed outside it.

— This column is published fortnightly

Toughened glass

Toughened glass is produced by giving thermal or chemical treatment to the normal float glass. Most of the industries engaged in toughening of glass lots for houses however use thermal treatment only.

Stresses are produced in the surface layers of glass during this treatment and these stresses lend strength to the toughened glass. It is also called tempered glass. On toughening, the strength of glass increases by about five times.

decor trends
Maintain a clean record
Belu Jain Maheshwari

Having and maintaining a clean,tidy and stylish bathroom is no mean task. Bathrooms surely reflect the true style of a homeowner, so extreme care has to be taken on a continuous basis to maintain a “clean” track record. With the amount of choice available in the market regarding different accessories and fittings, there is a lot you can do for this small yet very important space in your home. Sometimes the number of items required in a bathroom is much more than those needed in a room. The planning for all this has to be done at the initial stage, the water pipes, cold and hot pipes, geysers, drains, sewerage line connection, the bathing area where divertors have to be imbedded all have to be carefully looked into.

Basic strengths

Some of the ground rules that should be kept in mind while designing a bathroom include the number of persons who are going to use the bathroom, how many bathrooms are there in the house, do you have a water shortage, do you spend a lot of time there. If too many people are using one bathroom, then it makes sense to have the bathing area separate from the WC, even the wash basin can be separated so that different people can do different activities.

Another point to keep in mind is that the bathing area should have a surface which dries easily, so that the rest of the bathroom does not get slushy, a wet bathroom is a complete no no.

Stick to simple fuss-free design and opt for neutral tones in a small bathroom.

Bath essentials

We all know a bathroom needs a WC with faucet, a jet or a hand jet. The bathing area should normally be enclosed within a glass cubicle or a shower curtain. By enclosing it you leave the rest of the bathroom dry. A bath tub is good but it can usually not replace the shower area, it can be an additional bathing accessory. Now you have loads of bath tub designs to choose from. These can also be custom made with stone and tiles.

Another necessity is a wash basin, these also come in varied materials, from stone to glass, steel, brass, acrylic , ceramic etc.

Smart storage

Provision for proper or smart storage is another important component of a modern bathroom. Depending on the space an interesting space enhancing trick is to use niches in the walls for additional storage. Even mirrored storage can be used to visually expand the space and lend a sense of openness to the bathroom.

Use unused areas, behind a counter, behind cabinet doors to keep hand washes, cleaning supplies etc. Open shelves can be used to keep towels; wasted corners can be used to put chest to keep soaps, shampoo, toothpaste, toilet rolls etc.

Do not clutter the counter tops, keeping your toiletries on top looks untidy. Adjustable glass shelves in the wall allow you to customise your storage. If you do not have space to keep a basket for dirty laundry, use empty wall space. A handy tilt-out bin could be another option. Be innovative and try out different things to add a special touch to your bathroom. For example an old wooden ladder can be painted and used to hang towels, or an old matka can be used to keep toiletry.

Smell fresh

A big problem in bathrooms is of bad odour or smell. This is normally, handled by putting an exhaust fan. There are new ones in the market which do not make earth shattering noise. There are many other ways to clean the air these include air filters, good ventilation, dehumidifiers.

But a good way is to use plants. They act as natural filters by transmitting oxygen and absorbing carbon dioxide. Tropical house plants are perfect for bathrooms. Use pebble trays for humidifying the air. Different plants absorb different gases, Aloe Vera absorbs formaldehyde and gives out oxygen. Bamboo, helps control interior pollutant . Boston fern removes benzene.

Accessory magic

Accessories add to the functionality and beauty of a bathroom. Again the market is flooded with them, their are great designs in mirrors, bath set utility holder, towel rings, soap dishes, bathrobe hooks, soap dispensers, Italian jars to keep cotton buds, dried flowers.

A trend which has caught on in a big way is of baskets. They come in different shapes and sizes. These can be coloured or in the natural straw colour. Besides wicker and grass one can also get leather and wooden baskets also.

Faucets make a huge difference to a bathroom. The market is flooded with choices here and the price range starts from a few hundred rupees to several thousands. What has to be kept in mind is that they should be from a standard company with a warranty of at least a couple of years, for replacement.

As far as possible use bath mats matching the colour scheme of the bathroom. These should be washed and dried frequently. Do not use carpets as any drop of water makes them smell.

Right illumination

Lights are an integral part of bathroom design. There should be a light on the mirror in a small bathroom and two lights on the side of a mirror in a big bathroom.

Light points should be easily accessible , even in the dark.

There needs to be a light in the bathing area and one on top of the WC, rest depends on the space, a badly lighted area gives a dingy appearance.

Annual housing demand in Chennai to be over 35k units

Housing demand in Chennai is expected to be 35,000-40,000 units annually and property prices are expected to remain “firm” in the industrial corridors, a report prepared by the Mumbai-based ASK Property Investment Advisors has said. “The growth of automobile hub and IT and ITES and the banking and financial services industry has defined the growth of Chennai in last decade and will continue to drive migration and need for houses,” ASK Group Managing Director and CEO Sunil Rohokale said.

Chennai accounts for a major share of investments in the state and it would lead a steady growth in jobs and rising need for houses, he added.

Based on demographic growth and growth in office space and manufacturing sectors, requirement of houses is expected to be in the range of 30,000-35,000 houses annually,” ASK Property Investment Advisors CEO and MD Amit Bhagat said.

“We expect the prices to remain firm due to balanced demand-supply, while growth corridors are expected to witness upward bias in prices,” he said.

On the demand for office space by IT and ITES and banking and financial services sector, the need for houses is estimated to be at 22,000 to 25,000 units annually.

“Chennai residential sector has exhibited steady supply-absorption trend over the past three years and it is likely to continue in 2013,” the report said.

South Chennai leads the housing demand due to the growing presence of IT and BFSI companies, while south-west Chennai emerging as auto and manufacturing sector provides demand for affordable houses.

In Chennai West, the rise in demand was expected to keep the prices firm, while places like Korattur and Ambattur would witness new project launches.

In North Chennai, the report said, due to high inventory prices are expected to remain stable in 2013. “Regions like Washermenpet amd Tondiarpet will attract new projects due to improvement in road access, metro rail. The prices are expected to remain stable in 2013”, it said. — PTI

launch pad
Sikka Kartavya Greens

Real estate developer Sikka group launched 'Sikka Kartavya Greens residential project at GH-01, Sector 7, Pocket B, Vedvyas Puri, Meerut, earlier this week. According to company spokesperson this is going to be the tallest residential tower in Meerut at 76 m and will have S1+S2+25 floors. Top two floors of all towers will have glass-covered penthouses. The total area of the project is more than 3,00,000 sq. ft. which comprises 2&3 BHK in 995 sq. ft. to 1360 sq. ft size. The penthouses are available in 3 BHK & 4 BHK with features like, gym, servant room, lounge area, home theatre and terrace garden. The 2 BHK apartments will cost between ~24 lakh and ~30 lakh, while 3 BHK are priced in the range of ~34 to 41 lakh. Penthouses will cost between ~62 lakh and 1 crore. The project is likly to be completed within 42 months.

Service apartments in Shirdi

Assotech Realty will invest about Rs 100 crore to develop a service apartment project at Shirdi in Maharashtra.

The company would develop 125 serviced apartments in the 2.5-acre project ‘Sandal Suites’.

In a statement, Assotech Realty said it has launched premier service residences at Shirdi “at an approximate cost of Rs 100 crore”. These apartment would cater to the needs of pilgrims travelling to Shirdi. Just walking distance from Shirdi Shrine, the project will have a small Sai Temple and Satsang Hall along with Pooja area and meditation centres, it added.

“This is an opportunity to not only own a home in the spiritual town but alsoto earn from it. The investment is meant to bring recurring returns to the tune of 18–20 per cent Y-o-Y basis with expected daily rental between ~5,000-6,000 approximately,” Assotech Realty Managing Director Neeraj Gulati said.

The NCR-based company plans to launch service residences in three segments -- business, leisure and pilgrimage.

L'Artista in Pune

Mahindra Lifespace Developers Ltd., the real estate and infrastructure development arm of the $16.2 billion Mahindra Group, announced the launch of L'Artista, its first luxury residential project in Pune. Speaking on the launch Anita Arjundas, Managing Director & CEO, Mahindra Lifespace Developers Ltd. & Member of the Group Executive Board, Mahindra & Mahindra Ltd. said, "L'Artista, heralds the entry of Mahindra Lifespaces into the luxury space, with its very first boutique residential offering in the heart of Pune in Sopanbaug. The property will have only 21 homes and two apartments per floor, each with sprawling bedrooms, fashionable bathrooms, large balconies and a chic kitchen".

Godrej Prakriti in Kolkata

Godrej Properties Ltd. (GPL) recently launched Phase 5 of Godrej Prakriti, its residential project in Kolkata. The 19-storey new tower will offer 3 BHK apartments measuring between 1,100 sq. ft. and 1,400 sq. ft. Spread over 22 acres the project will have facilities such as a community hall with indoor games, playground, clubhouse, swimming pool, library, gym, party hall, etc. In addition to Godrej Prakriti, GPL is also developing two commercial projects in Kolkata – Godrej Waterside and Godrej Genesis in Salt Lake Sector 5 and a super luxury residential project, Godrej Platinum, in Alipore.

— Based on information provided by the developer

realty bites
NAREDCO welcomes new guidelines for high-rise buildings

The National Real Estate Development Council (NAREDCO) has welcomed the new guidelines issued by the Union Ministry of Environment and Forest in respect of high-rise buildings. The guidelines would now allow greater flexibility for state governments and local bodies, to decide on high-rise buildings based on issues such as population density, pressure on land etc. NAREDCO said the new guidelines would help in the completion of stalled projects and also encourage slum rehabilitation projects.

The new guidelines are a result of suggestions taken by the ministry from various state governments and the industry. The MOEF had also examined the representations and recommendations of the committee constituted under the chairmanship of Dr. K. Kasturirangan, Member of Planning Commission, before deciding on the issue.

Welcoming the development, Sunil Mantri, Vice President of NAREDCO, said, “We are glad that the anomalies within earlier guidelines have been removed. The new guidelines will help more than 100 projects to complete construction. Our estimate is that nearly Rs 10,000 crore have been blocked in such projects. Road width versus building’s height was the greatest challenge in congested cities like Mumbai where high-rise apartments are the only option available, irrespective of the road width. Indeed, allowing local planning authority and the state government to follow the local rules and regulations is the most practical solution to the issue”. — TNS

Wave Group awards 900 cr contract to L&T for Noida project

Construction major Larsen & Tourbo (L&T) has bagged a Rs 900-crore contract from Wave Group’s realty arm Wave Infratech to build residential towers in Noida.

Wave Infratech is developing a mixed-use project — Wave City Center — spread across 152 acres, which the company had bagged through an auction for about Rs 6,500 crore.

The total size of the township is 40 million sq ft and of that 9.5 million sq ft will be constructed in the first phase. Sources said that Wave Infratech has awarded a contract, valued at over Rs 900 crore, to L&T for construction of residential towers at Wave City Center for the first phase of the project. L&T will soon start construction of the first phase that is slated for delivery by 2016.

Recently, Wave Infratech gave a construction contract of Rs 282 crore to BE Billimoria & Co for commercial tower of Wave City Center.

In the first phase, Wave would develop 1,400 flats, 900 studio apartments, 370 high street shop condominiums, two hotels comprising 400 rooms, a shopping mall having two million sq ft and 1.8 million sq ft of office space. Wave Infratech is developing other realty projects in Noida, Ghaziabad and Mohali. Wave Group is also engaged in sugar, liquor and entertainment businesses.

TAX TIPS
S. C. Vasudeva

Can I buy agricultural land in India?

Q. I have been working with a foreign merchant navy company for the past 15 years. I have been informed by my colleagues that NRIs can't buy agricultural land in India without RBI approval. I visit India once in two/three years but my stay in India is not more than 30 days. I hold a British passport and my family is living in the UK. Do merchant navy personnel fall in NRI category for buying agricultural land in India and am I eligible to buy agricultural land?
— Surinder Pal Singh

A. The Foreign Exchange Management Act 1999 defines a person resident in India as under:

• a person residing in India for more than 182 days during the course of the preceding financial year but does not include -
• a person who has gone out of India or who stays outside India, in either case -
• for or on taking up employment outside India, or
• for carrying on outside India a business or vocation outside India, or
• for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;
• a person who has come to or stays in India, in either case, otherwise than -
• for or on taking up employment in India, or
• for carrying on in India a business or vocation in India, or
• for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period;
• any person or body corporate registered or incorporated in India,
• an office, branch or agency in India owned or controlled by a person resident outside India,
• an office, branch or agency outside India owned or controlled by a person resident in India;

It would thus be observed that primarily an Indian would become a non-resident Indian if he has gone out of India for (a) taking up employment outside India; (b) for carrying on a business or vocation outside India; or (c) any other purposes as would indicate his intention to stay outside India for an uncertain period. In case you come in any of the above categories, you will be treated as a non-resident Indian and will not be able to buy an agricultural land in India. The facts given in the query do indicate that you are settled abroad and have no intentions of settling in India. You are, therefore, a person who is not a resident of India. In my opinion you cannot buy an agricultural land in India.

Is interest amount part of the cost of a plot?

Q. I acquired a plot for Rs 1 lakh in 1981. I had borrowed money for buying the plot from office. Simple interest was payable @ 9 per cent p.a. The amount was repaid along with interest of Rs 27,000 by 31.3.1985. Interest paid year was as under:

Financial year 1982-83 9,000

Financial year 1983-84 9,000

Financial year 1984-85 9,000 27,000

The plot was sold for a sum of Rs 40 lakh in FY 2012-2013.

My queries are:

Will the amount of interest be taken as part of the cost and whether indexation benefit would be allowed if it is so treated what would be the amount of capital gain? What should I do to save tax? — Ram Gopal

A. Your queries are replied hereunder. According to the figures given in the query,

• Interest would be taken as part of the cost
• Indexation benefit should be allowed in case it is treated as part of the cost
• The amount of capital gain would work out as under:
• The indexed cost of plot would be:1,00,000 x 852/100 = 8,52,000
• Indexed cost of interest would be:27,000 x 852/125 = 1,84,032
• Total indexed cost: 8,52,000+1,84,032=10,36,032
• Amount of capital gain:40,00,000+10,36,032=29,63,968

You can buy tax-saving bonds within six months of the date of sale of the plot. You can also save the tax payable on long-term capital gain by utilising the amount of Rs 40 lakh for purchase or construction of a residential house. The purchase should be effected within two years after the sale of the plot. The construction should be completed within three years after the date of sale of the plot.

What are the formalities regarding joint loan?

Q. I am planning to buy a house and get it financed by a bank. I would like to take a joint loan as my wife is also a government employee. As the total tax rebate is Rs 1.50 lakh in case of housing loan, if both of us want to take rebate in the income tax, what should be the formalities as far as joint loan case is concerned? — Raj Gupta

A. Your queries are replied hereunder:

• The maximum deduction allowable under section 80C of the Income-tax Act 1961 (the Act) is Rs.1,00,000. The deduction as allowable covers contributions towards certain specified schemes as well as the repayment of installment towards the principal amount of loan borrowed for purchase or construction of a residential house. The deduction of Rs 1.50 lakh is allowable against house property income in respect of interest paid/payable on loan raised for purchase or construction of a house which is self occupied.
• The formalities with regard to raising of loan would be dependent on the requirements of the bank from where finance is being raised.
• It would be advisable to execute documents which would indicate that both you and your wife have borrowed the amount for purchase of the house. It would therefore be essential that the property is acquired in joint names. Further amount borrowed by each one of you and the repayment of the interest and principal should be fixed separately. The instalments should be paid by each one of you from respective bank accounts. This would enable both of you to claim the deduction under Section 80C of the Act as well as under Section 24 of the Act in respect of principal and interest paid/payable in respect of the loan so raised.

What are the tax implications of reverse mortgage?

Q. The Income-tax Act, I am informed, contains some provisions with regard to reverse mortgage. As I understand that on the basis of these provisions the amount received under the Reverse Mortgage Scheme would be chargeable to tax as the income of the recipient. Is my understanding correct? Please clarify. — H.R. Gupta

A. Section 47 of the Act provides that transfer of a capital asset in a transaction of reverse mortgage under a scheme notified by the Central Government shall not be treated as a transfer of a capital asset. Under the same scheme any payment received in respect of reverse mortgage of a house property whether in instalments or lump sum will not be taxable. Tax leviable on capital gain will be payable by the owner only if and when the property is eventually sold by the mortgagee to recover the loan.

Your understanding is, thus, not correct. The provisions as contained in the Act in fact clarify that no tax would be payable in respect of the money received under the Reverse Mortgage Scheme but tax will be payable in respect of capital gain as and when the property is sold to recover the loan.

Legal formalities for surrendering one's share

Q. What are the legal formalities for surrendering one's share in ancestral, joint family and father's self-earned properties? Can such surrendering be withdrawn? If so then when and how? Partition in respect of ancestral property was carried out on 1-10-1980. Will the married daughters get the equal share in this case? — Ashima

A. Your queries are replied hereunder:

• The person surrendering his share in a property can do so by executing a Relinquishment Deed. It should be possible to withdraw the same before an effect is given to such a deed.
• The Hindu Succession Act 1956 was amended w.e.f. September 9, 2005 to provide for a daughter to be considered as a co-parcener and thus entitled to a share in the ancestral property equivalent to a son. As per facts given in the query the partition of the ancestral property has taken place much before the amendment, so in my opinion the amended law would not be applicable retrospectively and the law prevailing as on the date of partition will have to be applied. On that basis married daughters were not entitled to get a share in ancestral property as per the provisions of the Act as it stood at that time. It may be added that in some states, law on this particular issue had been amended earlier than September 9, 2005, to give a share to women in such a property. You may, therefore, have to consult the state law on the subject before taking any action in this regard.

Can GPA holder get sale money in his name?

Q. I had purchased a plot in 1989 in the urban area of Jalandhar for Rs 2 lakh in the name of my son. However, after marriage he moved to USA and got US citizenship after some time. Before going abroad he executed a GPA duly registered by the competent authority in respect of the said plot in my favour. If sold now, the plot can fetch about Rs 20 lakh. I want to know that if I sell the said plot is it mandatory that the draft/cheque for the sale price will have to be issued in the name of my NRI son or can I have it issued in my own name being the holder of Power of Attorney. Before leaving for USA he had opened a savings bank account in a local bank jointly with me. If the draft/cheque of the sale amount is issued in his name, can I withdraw the money for any purpose being the joint A/c holder?

About the capital gain tax, it is learnt that if the amount of gain accrued on the sale of the plot is invested in purchasing some bonds known as NHAI, there will be no income tax liability and the gain tax amount can be utilised for any purpose after the lock-in period of three years of these bonds ends.

Kindly do suggest any other solution to save the capital gains tax and to allow me to utilise the sale amount myself. — K. Jerath

A. Your queries are replied hereunder:

• GPA executed by your son in your favour cannot be equated with a conveyance deed/ sale deed which has the effect of transferring the title of immovable property from the seller to the purchaser. Therefore, in case the plot is sold by you on the basis of the GPA, the amount of consideration will have to be paid to the owner of the plot which in this case is your son.
• You can deposit the cheque in the joint account and thereafter withdraw the amount from the said account as one of the signatories to the said account.
• Your information that tax on long-term capital gain can be saved by investing the amount of such capital gain in the bonds of National Highway Authority of India is correct. The amount realised on the maturity of such bonds after the lock-in period can be utilised for any purpose. It may be added that you can purchase such bonds for a maximum amount of Rs 50,00,000 in a financial year.

REALTY GUIDE
B K Sanghi

Q. My son is an NRI. He had booked a flat with a reputed builder in Bangalore in August 2012, in an under construction project. The cost of the flat is Rs 60 lakh (including Rs 3 lakh for parking space).

He paid Rs 12 lakh in August 2012 and the remaining amount of Rs 48 lakh is to be paid in equated instalments from June 2013 to October 2016. The builder has promised to handover possession sometime in 2016.

Aggrement has not been signed so far in between my son and the developer.

Kindly advise on the following points:

1. Is a buyer required to deduct the TDS of 1 per cent on the under construction flat booked in August, 2012.

2. If so, whether the TDS has to be recovered by the buyer from each equated instalment and or this could be recovered in lump sum before the offer of possession of the flat.

3. Whether the TDS is restricted to the total cost inclusive of car parking and or this is applicable to the the other payments also which have to be paid to the developer before the completion of the project.

4. Since the payments will be made by me from my account on behalf of my son, can I deduct the amount of TDS while making the payments to the builder. — V.D. Pathak

A. TDS will be applicable on every instalment as total cost exceeding Rs 50 lakh overall which is max limit of deduction of TDS @1%. Every payment will attract TDS so whenever an instalment is paid they are liable to deduct TDS @1% and recover from buyer.

Since your deal of the flat is Rs 60 lakh you need to deposit TDS at the rate of 1% to the appropriate authority in near future.

Q. Kindly clarify following points regarding Will:

What is the difference between a registered and unregistered Will?

How can a Will be changed? — H.C. Singh

A. The registration of instruments is governed by the provisions of the Indian Registration Act. That statute makes a distinction between two kinds of instruments; (a) documents for which registration is compulsory and (b) documents for which registration is optional.

If a document falls into the (a) category, that is to say, its registration is compulsory and if it is not registered, then, there are two consequences. Firstly, the document does not take effect at all in respect of the property over which it purports to take effect, and secondly, no court of law can receive the document as a piece of evidence in proof of the transaction which it purports to give effect to. Examples of such documents are: Instruments of Sale, Instruments of Mortgage, Instruments of Gift, Release and Settlement, Instruments of Lease, where the period is in excess of one year, and so on.

If a document falls into the (b) category, then, whether it is registered or not makes no difference to the validity of the document.

When a court is called upon to decide if a particular Will is genuine or not, it will sometimes attach greater credence to a plea that a Will has been duly executed and attested, if it has been registered. Please note that the issue of whether the Will is invalid for reasons such as insanity or coercion still remain important, and the registration of a Will makes no difference.

Even the issue of proof of execution and attestation will still remain the primary job of the person depending upon the Will to establish his case, but there is no doubt that in practice, his job is made somewhat easier by the fact of the Will’s registration.

A Will, which requires probate, is of no effect unless probated. The mere fact of its registration makes no difference. Thus, a court called upon to probate a Will would look into the fact of its registration only as one of the several circumstances when deciding whether to grant probate or not. Nothing more and nothing less.

• Yes, the unregistered Will is as forceful as the registered one.
• A person who executes the Will has the right to change it during his lifetime