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Monday,
August 19, 2002, Chandigarh, India  
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Chandigarh real estate prices rising
Diversification is safe |
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Interest on loan
Indian Hotels now looks good
Time to deregulate oil companies
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Chandigarh real estate prices rising THE recent amendments in Chandigarh Apartments Act, slashing of stamp duty from 12.5 per cent to 6 per cent and fall in interest rate on home loans to single digit level have collectively given a fillip to the real estate business in Chandigarh over the past six months. The property dealers say that during the same period, the residential property rates in neighbouring Panchkula has drastically come down and in Mohali, it is stagnant. Precautions for buyers * Check real status of property from estate office. * Verify the registration of will. * Check No dues certificate taken from administration. * Loan taken on house from banks or private lenders. * Any dispute over property in the court. * Any dispute with tenants. * Pay amount only through bank draft. The market experts claim that despite highest per capita income in the country, the housing sector in Chandigarh has not kept pace with the increasing demand. The limited area to expand the residential area and strict bylaws are the major reasons for this scenario. The enquires with the registration authorities reveal that 150-200 sale deeds are registered every month in the city, most of them are in the category of power attorney. They agree that the long pending demand of the Chandigarh residents to make the property bylaws more flexible has been met by Lt Gen J F R Jacob, ( Retd.), Administrator of Chandigarh, and he has initiated various steps to legalise the sale and purchase of property in the city. Mr Amarjit Singh Sethi, a leading real estate consultant in Sector 35. He claims, ‘‘During the past six months approximately same number of sale deeds had been signed as during the preceding three years. Undoubtedly, the market has not seen any drastic increase in price that could have attracted speculators to reap quick dividends. However, an increase of 5-7 per cent in property rates has been noticed, probably due to ever-increasing gap between limited supply and rising demand.’’ Since most of the sellers, who wanted to sell their property, had already sold, now the buyers are finding it difficult to locate suitable properties, he adds. Northern sectors The market insiders admit that despite limited good properties at much wanted locales, there is a class of buyers especially big landlords, industrialists, NRIs, doctors and advocates, who are ready to spend any amount varying from Rs 60 lakh to Rs 1.15 crore to get a house in sectors 1 to 5. They say in these sectors a plot of one kanal would cost somewhere between Rs 60 to Rs 65 lakh. Since most of the houses, measuring 1 to 2 kanal, in these sectors had been constructed about 20-25 years ago, the buyers have to spend additional Rs 30-40 lakh on new construction and renovation. A kothi measuring two kanal, which was available at Rs 85-90 lakh about six months ago, they say, is now fetching a price of Rs 1 crore to Rs 1.10 crore. However, they admit the deeds are signed at much lower prices, to save stamp duty and fear of income tax authorities. Mr Sethi points out that amendments in the Apartment Act has not succeeded to achieve all the desired results since the administration has not allowed to increase the covered floor area as per the public demand. Under the new law one has been allowed to cover floor area up to 55 per cent of total area on the ground floor, 35 per cent on the first floor and 25 per cent on the top floor, which makes it difficult to earn good money by the sellers. Rather customers find it more convenient and cheaper to buy independent flats in other areas. Further their is problem of independent parking place on the ground floor, say buyers. For instance, Mr Sethi says, if a buyers could purchase a two kanal house in northern sectors at Rs 80-85 lakh, the owner would find it difficult to sell the same house to three buyers at higher price. The administration should allow more area to be covered under the Apartments Act, he suggests. It would create additional space for buyers and revenue to the state exchequer. The property dealers say that in sector 7,8 and 11 one can purchase a house measuring 150, 250 and 350 square yards. The prices are normally lower than extreme end sectors. The proximity to Sukhna lake, various parks and good educational institutions also attract the buyers to these areas. The prices are anywhere between Rs 50 lakh to Rs 55 lakh in these sectors. Manimajra complex Another property dealer, Mr Manpreet Singh, however, feels that the real estate prices have remained almost constant over the past few months due to low availability of houses and slackened demand. Those who cannot afford highly priced houses, he says, should purchase a decent flat in Manimajra complex, at a cost of Rs 12 to Rs 15 lakh. The ground floor prices are generally higher by about Rs 1 lakh to Rs 2 lakh against first and upper floor flats. The property rates in this area, are often influenced by the Panchkula property prices. Since the Haryana government has imposed stamp duty of 15.5 per cent on sale of property, and the law and order situation has also deteriorated in this area, some people have rather shifted to Manimajra complex. The increasing traffic, and lack of direct link roads like Mohali have affected the sale of residential property in Panchkula, thus creating a demand in the city. Southern sectors The market experts agree that property rates in defence sectors, from Sector 32 to Sector 37 are relatively lower than the northern sectors. An average house of one kanal in these sectors could be purchased at around Rs 45 lakh to Rs 50 lakh. In Sectors 42, 43 and up to Sector 47, the prices are slightly on the lower side. Number of sales have also been seen in Sector 38 west, says Mr Sethi. The houses in this sector are quite good as far as construction material is concerned. But the quality of construction in Pushpac complex, Rajhdhani Apartments, Advocates Society and Chandigarh Dealers Society in Sector 48A and Sector 49 B is relatively better than flats in other areas. However, most of the houses available for sale, have been already sold in this area. A flat of three bed room, constructed at an average price of Rs 15-16 lakh is fetching a premium of Rs 2 lakh to Rs 3 lakh. Precautions for buyers Cautioning the new buyers, Mr Sethi says, ‘‘Before entering into any purchase agreement or giving any advance money, the customers should check the antecedents of the seller. The buyers should be wary of those sellers, who had taken loans from different banks or might have mortgaged their property for loans, and would claim that the original papers are missing. Mr H.R. Nagra, Head Tehsildar, feels that the buyers should be very particular to check all the records especially in case of power of attorney deeds and disputed properties, where the original property might be in other persons' names, but the seller may try to attract by offering lower price. |
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Diversification is safe Ludhiana Look for various options Survey indicated late planning Starting early a must Rental income my favourite Keep recurring liabilities in mind Diversification makes it safe As told to Navean Garewal |
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by R.N. Lakhotia Interest on loan Q: I and my wife are both Government servants. We had constructed our house by taking loan from a bank. Title deed of the house stands by my name. Lending bank has made my wife as co-borrower. Guide me whether we both can take tax rebate? If yes, them what will be the ratio in which can we divide our interest payments and principal? If no then whole of the interest payments and principal can be adjusted in my return?
— Shakti K. Mahindru, Nawanshahr. Ans: As your wife is not the owner of the house property because it stands in your name, no rebate or deduction would be permissible to her. You would also not be able to obtain deduction in respect of payments by your wife. However, if you treat the payments by your wife as loan taker from your wife, then you would be eligible for the deduction and rebate in your name.
Senior citizen Q: I am (retired) pensioner, with date of birth 1.4.1938. Shall I be eligible for tax rebate as a senior citizen, u/s 88B to the extent of Rs 15,000 during the Financial Year 2002-2003? — Gurdev Singh,
Ludhiana Ans: As you would have completed 65 years of age at the close of the financial year 2002-2003, you would be eligible to claim the tax rebate of Rs 15,000 available to senior citizens under Section 88B of the Income-tax Act, 1961.
Unsecured loan Q:
Whether we can do cash sale above Rs 20000 or not. 2. Whether we can receive cash above Rs 20000 from outside as unsecured loan or not. 3. If we cannot do this, then please tell us, that under which section it is disallowed. — Sunder Lal, Ambala
Cantt. Ans: You can do cash sale of over Rs 20,000 at a time. There is no restriction on doing a cash sale. You should not receive cash loan of Rs 20,000 and above as per restrictions to this effect contained in S.269SS of the Income-tax Act, 1961. In case, cash loan of Rs 20,000 or more is taken, then the loan amount is added as income.
Sale of plot Q: I have got a small plot of 210 sq.
mt. area. This plot is situated on National Highway and falls in panchayat area. I purchased this in 1994 and now I want to sell it. After selling it I may get a handsome amount. This plot is located within 1/2 km of Municipal area. Please intimate if I have to pay any capital gains or any other taxes in this respect. —
R.C. Singla, Solan (HP) Ans: Yes, you would be required to pay Capital gains tax on selling your plot which falls in the panchayat area. You will, however, be eligible to claim the benefit of cost inflation index. |
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by Lalit Batra Indian Hotels now looks good A person’s strength is put to test in tough times when his character comes up for greater scrutiny. Only then that the person needs to set himself apart and demonstrate his uniqueness. The same holds good for companies. One such company whose strength is being put to test is Indian Hotels Company Ltd (IHCL). Amidst extremely unfavourable environment for the hotel industry, Indian Hotels Company has done reasonably well during the quarter ended June 2002. Financials Indian Hotel’s total turnover during the first quarter fell by 14.4 per cent to Rs 117.8 crore and its net profit by 79 per cent to Rs 2 crore. The operating profit margin fell to 18.1 per cent (22.6 per cent, previous year). The company suffered a double whammy — a severe drop in the occupancy rate and a drop in room rentals. While the occupancy rate dropped by 10-12 per cent and room rentals declined by 15 per cent. The 9/11 episode and the border tension had neutralised the gains of political stability and economic recovery seen earlier. The lifting of two month long ban, on travelling to India, by the USA and the UK should provide a breather to the beleaguered hospitality business.
Business potential India has emerged as a strong performer on the world scene in the last couple of financial years. With the Budget for 2002-2003 focusing on second generation reforms, the process of liberation is expected to gain further momentum in the coming year. As a result Foreign Direct Investment (FDI) has been on the rise in the last few years. The total FDI last year stood at $ 4.8 billion, a marginal increase over the previous year. The trend is expected to continue this year and should be a big stimulus for the hotel industry and other infrastructure sectors. Moreover, the Indian economy has been performing consistently well and has shown a lot of stability over the years. With inflation at an all time low, the disposable income of the consumers is on the rise and bound to make India an attractive destination for investments and boost business and tourist traffic.
Markets last week Attractive share prices of the blue chip companies, revival of the monsoon in several parts of the country, a majority of US companies meeting the SEC-certification deadline as well as the reports that the Indian government would provide more financial assistance to the beleaguered UTI, aided the market recovery last week. The 30-share BSE Sensex surged by 89.56 points or 3 per cent for the week of settle at 3,065.90, from the previous week’s close of 2,976.34. The recent revival of the monsoon in Maharashtra and a large part of northern India including Punjab and Haryana, triggered buying in some battered stocks on the reckoning that a good rainfall could limit the damage done to the economy by the drought. The bourses also got some respite on reports that the government might provide all financial assistance to the Unit Trust of India (UTI), which has been facing liquidity problems. The government on Monday announced a Rs 500-crore financial assistance to the UTI, in addition to Rs 500 crore it has already announced earlier for the institution to meet its redemption requirements. The UTI’s selling spree had led to supply overhang, which also contributed to the depressed conditions on the bourses.
Coming fortnight In the short term, the Sensex should face stiff resistance from the 40-day exponential moving average at 3125. The weekly closing on the Sensex on Friday shows an engulfing bull pattern which means that the index can continue its up-trend at least upto early next week. But “have we hit a bear market bottom” to remain unanswered. The market has made a very important bottom at 2930. But the end of the bear market can only be confirmed once the Sensex surpasses 3210. Long-term investors can start “accumulating” blue chips at the current levels.
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by Pushpa Girimaji Time to deregulate oil companies THE unfolding petrol pump dealership scam only reinforces what consumers have been saying all along — that without political patronage, there cannot be such large scale malpractices in the petrol retail trade. On the face of it, the Marketing Discipline Guidelines of oil companies are adequate to terminate a dealership contract if a dealer is found indulging in irregularities and malpractices. Yet, adulteration of motor fuel and rigging of petrol dispensing units continue. Ask oil companies and they will tell you how they cannot take action against such dealers because of their “high political connections”. And in all this, it is the consumer interest that is sacrificed. When a person pays a bribe and uses political influence to get a dealership, it is eventually the consumer who is going to suffer because obviously the person who has paid the bribe will resort to unscrupulous practices to recover the money as quickly as possible. And he also knows that even if there are consumer complaints against him, the same “money power” and political connections will protect him. Interestingly, about four and a half years ago, such allegations of political interference in the due process of law had come from none other than a politician himself. Unlike many other states, Gujarat had at that time launched a massive drive against adulteration of groundnut oil and diversion of kerosene from the public distribution system to petrol pumps for adulteration of petrol and diesel. And Mr Jaspal Singh, the then Minister for Consumer Affairs in the Gujarat Government, had openly criticised politicians for protecting those who indulged in such anti-consumer activities. In fact at a meeting of the Central Consumer Protection Council in New Delhi, he had commented that the summary manner in which some detentions ordered by the state were revoked by the Centre without a word of explanation had made him wonder whose interest the Central Government was protecting. The Gujarat Government’s crackdown on those adulterating petrol and diesel had also given an insight into the enormity of the problem. Subsequently, a Minister for Food and Civil Supplies in the Gujarat Government had told a meeting called by the centre a few years ago that as a direct consequence of the government’s efforts at curbing adulteration of petrol, the sale of petrol in the state had gone up in one year by 19 per cent! This in fact matched the results of a study conducted by Tata Economic Consultancy Services in 1995 for the Indianoil Corporation, which had said that on an average 20-30 per cent of kerosene meant for PDS was diverted for adulteration of petrol and diesel at petrol pumps for industrial use and for sale in the blackmarket. The Gujarat Minister had also informed the meeting at that time that eight petrochemical units were found to have supplied 3.14 crore litres of solvent worth Rs 42.9 crore to various petrol pumps in the state for adulteration purposes! Obviously, adulteration is big business. There is no dearth of laws, rules and regulations to prevent such adulteration and other malpractices at petrol pumps. Besides the guidelines of the oil companies, the state governments are vested with powers to tackle adulteration of motor spirit and high speed diesel under different quality control orders issued under the Essential Commodities Act. To these have been added two more orders to tackle adulteration of petrol and diesel with naptha, solvent, raffinate and slop. In addition, the department of weights and measures can haul up dealers for inaccuracy in the meters of dispensing units and for tampering with its seal, under the Standards of Weights and Measures Rules. Yet, if malpractices have not been eliminated, one has to look elsewhere to root out the problem: the selection process of dealers. The Standing Committee on Petroleum and Chemicals, in its 22nd report on “Evaluation Guidelines of dealer selection boards” had in December, 2001, recommended that in the deregulated market, public sector oil companies should be given real functional autonomy, including the selection of dealers, particularly because they will now have to deal with competition from the private sector. At that time, the government had argued that the present system served the government’s “social objective” of reserving certain percentage of distributorship for different sections of the society! We now know whose interest it served! Even now, the entire dealership can be reserved for physically challenged persons , families of armed forces and police personnel who have died in action and those belonging to scheduled castes and tribes. However, the selection should be left entirely to oil companies and there should not be any political interference. And the entire process should be absolutely transparent and so also the enforcement of the Marketing Discipline Guidelines by the oil companies. Today, public sector oil companies are aware that to compete with the private sector, they have to ensure the right quality and quantity at petrol pumps or else they will lose consumer patronage. It’s time the political class, too, realised this and left the oil companies alone. |
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“There is no one single investment that can ensure a safe and comfortable retirement. The nature of retirement one plans depends from person to person, but because one cannot afford to take any chances with one’s retirement plans, investments must be made in diverse areas so that even if there is a setback from one area, there is a backup plan”, says Mr Treman S. Ahluwalia, Chief Marketing Officer Om Kotak Mahindra Life Insurance.