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Chandigarh's periphery emerging as urban slum
Ludhiana’s city centre to be fourth largest in world
Marginal fall in
property prices Transforming
hills into concrete jungles Buzz
on Bourses Global investors
park fund in Goan realty Rising material
prices hit construction costs
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Chandigarh's
periphery emerging as urban slum THE Chandigarh’s periphery is fast emerging as a ‘‘modern urban slum’’ that will be dependent upon the ‘City Beautiful’ for all its infrastructural needs. Competing to attain the status of a ‘Metro’, Chandigarh and its periphery, according to conservative estimates, is likely to witness an investment between Rs 6,000 crore and Rs 7,000 crore over the next two to three years. But most of the money will be sunk into building IT parks, multiplexes, film city, theme park, or multi-storied buildings, each one causing a direct overload on Chandigarh’s hospitals, roads, educational institutions and other exiting infrastructure. With most of the money being pumped into ventures aimed at giving quick financial returns, the area around Chandigarh is already bursting at its seams. Despite the entry of major real estate players, there is little interest in improving infrastructural facilities. The skewed development has already put most of the newly developed areas in the tri-city region of Mohali-Chandigarh and Panchkula in a deplorable situation. This lopsided development is already giving sleepless nights to discerning politicians, policy makers and above all the residents, whose daily lives depend upon the available infrastructure.
Haphazard growth seems to be a norm rather than an exception in all major towns of the region that include the so called ‘‘blue chip’’ investments towns like Zirakpur, Dera Bassi, Kharar, Kurali, Lalru, Banur and Rajpura. Even before the real estate boom has reached its zenith and a lot of developmental activity is yet to take place, the authorities concerned seem to have turned a blind eye towards this ‘‘developmental disaster’’ most peripheral towns are headed for. The integrated development of the periphery, it seems, is last on the agenda of the government agencies too. The lack of facilities at
these towns will, in turn, burden the already stretched infrastructure in the
tri-city which already caters to a population of about 15 lakh, over three
times that was envisaged by the city planners like Le Corbusier. This would
simply mean that the coming years would see the existing facilities, including
hospitals, educational institutions and roads, being used by thousands of
people living in the periphery, thus leading to a virtual collapse of the
already stretched resources.
No laid out rule is either being followed by individuals nor are the authorities showing any will to strictly enforce them. Zirakpur, which has emerged as a favourite haunt of the big builders for the construction of thousands of apartments, besides at least seven shopping mall-cum-multiplexes, is a case in point. After dilly-dallying for years, the Punjab Government has announced the master plan for the township. However, the implementation of the master plan leaves much to be desired and haphazard construction would virtually render the master plan useless in certain parts of the town where construction has already taken place, says Mr Baldev Goel, a leading Zirakpur-based property consultant. Moreover, other strategic towns such as Dera Bassi and Lalru have no master plan to check the haphazard growth. To top it all, the Zirakpur-Dera Bassi-Lalru belt seem to be at the wrong side of the ruling regime. Represented by the Shiromani Akali Dal (SAD) stalwart, Capt Kanwaljit Singh, there are allegations of its neglect by the Amarinder Singh-led Congress regime. In fact, Capt Kanwaljit Singh has gone on record alleging that the Banur Assembly segment comprising the above-mentioned areas is being given a ‘‘step-motherly’’ treatment by the Congress Government — an allegation the Congress denies. With the Municipal Committees in most peripheral towns facing an acute resource crunch, providing adequate civic amenities would prove to be an uphill task for them. ‘‘The municipal committee has just enough resources to provide basic amenities to its original residents. The promoters of the mega housing projects would have to provide for basic amenities themselves as the municipality has neither the resources nor the requisite staff to provide amenities to these colonies,’’ Mr Amritpal Singh, President of the Dera Bassi Municipal Council, said. He has demanded that the Punjab Government should announce special economic packages for the fast-developing townships like Dera Bassi to cope up with the ever-increasing demand for the provision of civic amenities. In fact the point most people make is that such grants would ultimately go a long way in saving the tri-city from a ‘‘overload’’. Infrastructure to support the demands of the growing population in these areas remains a far cry, even as there are squabbles over providing of minimum amenities like the laying of sewerage, water and electricity lines between developers and the civic bodies. Sources say that the provision of connected facilities, including an outfall for the water and sewerage would pose practical problems when these new projects are completed. Commenting on the harmonious development in
the periphery, observers feel that integrated development must be ensured.
‘‘If the unplanned development was allowed to go unchecked the area would
head for a serious ecological disaster. Already the polluting industries were
playing havoc with the human and animal life," says Mr Nirmail Singh
Malik, Chairman of the Anti-Pollution Society of the Dera Bassi sub-division.
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Ludhiana’s
city centre to be fourth largest in world THE
fourth biggest city centre project of the world, with a helipad and a mini golf
course on its rooftop besides parking for 8000 cars, is all set to bring
Ludhiana on the international map.
Spread over an area of 26 acres, the project, that would have a city within Ludhiana city, is coming up at a cost of Rs 2000 crore in Shaheed Bhagat Singh Nagar. A long wait for the residents of the colony for the project is finally over. Years ago, they had bought land in the colony only on the attraction of the city centre project. No wonder land prices in the neighbourhood increased manifold with the beginning of the construction of the city centre project. The price of plots worth Rs 10 lakh have shot up to Rs 30 lakh already even as the project takes shape. The reputation of the
government is at stake not only because of the promises made to the residents
but also as it is the only project among the scores of privately owned multiple
complexes, where the government is involved.
Being developed by the Ludhiana Improvement Trust in collaboration with Today Homes and Infrastructure Private Limited, the mega project being popularised as Ludhiana 's dream as well as the nation's dream, will be completed by February next year. If the developers are to be believed, the city centre project will change the landscape of Ludhiana and the surrounding areas by providing the biggest mega shopping malls in the country, the biggest atrium, 12 multiplexes with a seating capacity of 2500 people, a food court, residential apartments, healthcare, library, museums, parks and office space and above all a basement parking for 8,000 cars, the biggest parking lot in the country. Besides, the centre will have a 200- room five-star hotel with a helipad on the terrace to allow VIPs to land in the city and spare themselves from the traffic blues. Giving details of the project, Mr G.K. Gambhir, Managing Director, Today Homes, said the expertise of one of the world's leading architectural firms - HOK, the architects of globally acclaimed Dubai Festival City, UAE, and Marina Town Centre, Japan, has brought the vision behind the Ludhiana City Centre to life. The project also has the involvement of India's largest construction company, Larsen and Toubro. The first development of its kind in India, this 26- acre modern day marvel has five major constituents - The Mall, The Height, The Forum, The Podium and the five-star hotel. Located right in the heart of the city at Shaheed Bhagat Singh Nagar, the Ludhiana City Centre would have a great locational advantage. It would be easily accessible and directly connected to the airport, the bus terminal and the railway station through a well laid out road network. The Mall is conceived as the hub of the City Centre with retail outlets, food and beverage joints, entertainment zones and a state-of-the-art multiplex. It would have the biggest floor plate in any Indian mall and would be home to the nation's largest multiplex with 12 screens and a large food court. The Height would include a series of multi-storeyed towers with dedicated space for offices and a business centre. Ample greenery would be interwoven with the structures to give a refreshing feel to the ambience. A civic centre of the City Centre, the Forum would be home to trade centres, art gallery, convention centre, exhibition hall, city museum, recreation centre and food plaza. Retail and food outlets would surround the Forum besides giving a dynamic presence to provide a night and day venue for the city. The Podium has been planned keeping in mind the future needs of the residents and shoppers of the City Centre. There are adequate provisions for IT centre, health club, banks and institutes. Yet another attraction of the mega project would be a five star hotel with a helipad. The world's largest chain of hotels, Inter Continental, would be managing the hotel. According to the developers, water and trees would weave their way through the development, merging parks and buildings. There would be an imposing waterfall to provide a refreshing delight. One would be able to walk through it, hear it, feel the spray and experience real bliss. ‘‘The mall would provide employment to
15,000 persons and a capacity for 25,000 people who could be present there at
any given time,’’ added Mr Gambhir. |
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Marginal fall
in property prices HIGH-time is almost over. Following the crash of the sensex and the reverse witnessed by gold, the much-hyped property bubble is all set to burst with buyers fleeing the scene and sellers holding their lots with the hope of hitting the goldmine once again. On the face of it there has been a marginal decline in the "artificially inflated" property prices. The fall has been barely 15 per cent in certain major pockets like Jalandhar, Phagwara, Kapurthala, Goraya, Hoshiarpur, Ludhiana and Ropar. But the writing on the wall appears loud and clear — property will follow the footsteps of gold and sensex. Going back two months, property prices in Punjab had surpassed all previous limits. The growth touched a record 125 per cent. Reasons were manifold. But the biggest one was that of NRIs dumping most of their money in Punjab and surrounding areas with the hope that property would enable them earn rich dividends. Secondly, since Capt Amarinder Singh had announced the setting up of a number of mega projects in the state, businessmen had jumped in, laying their hands on whatever property was available. The hike scaled such heights, that property became a distant dream for the common man. The reverse was inevitable — and it is almost there. The new modified personal income tax return form too, has played its role. "Since, the new form is a virtual balance sheet of each and every detail pertaining to an individual, people have started realising that they won't be able to conceal their assets. The new form has created a scare and has had an effect on property prices," said Mr Ashwani Kohli, a Phagwara-based property observer. "Yes, property has become stable now. Though it will take some time for property prices to come down, but, ample indications like absence of buyers are there. Of course, there has not been any effect on the prices of plots in approved colonies," said Mr Charanjit Channi, a Jalandhar-based property dealer. According to Dr Balraj Gupta, another curious property observer at Jalandhar, the situation has come to such a pass that there is hardly anyone nowadays, who, wants to invest in property. This situation is a complete reverse of what was prevailing two months back when every person wanted to invest in property. "The market is not stable. I think the bubble is going to burst in the region," said Dr Gupta. "People, who, were playing to make a quick buck by adopting the time-tested method of advancing marginal money, making agreements and were selling such lands at a high profit within a few days of purchase, have started pulling their hands off such deals," observed Mr Harbans Lal Kapoor, a property dealer of Hoshiarpur.
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Transforming hills into concrete jungles Granting exemption under the Himachal Land Reforms and Tenancy Act will hasten the transformation of verdant hills into a concrete jungle, writes Rakesh Lohumi Implementation of the State Apartments and Property Regulation Act to encourage private builders has indeed given the much-needed boost to the housing sector in Himachal Pradesh. However, the environmentalists feel that opening the floodgates for private builders by granting exemption under the Land Reforms and Tenancy Act, which debars non-agriculturists from acquiring property in the state, will only lead to mushrooming of high-rise structures and hasten the transformation of verdant hills into a concrete jungle. The private colonisers have been more than keen to make an entry into the hill state is evident from the fact that as many as 110 of them have applied for registration since the implementation of the Apartments and Property Regulation Act about ten months ago. The Himachal Urban Development Authority (HIMUDA), which is the nodal agency under the Act, has already registered 53 companies. However, so far only five licences for construction of colonies have been granted under which about 3,000 flats are coming up in the Baddi area. Another ten cases for grant of licences are pending approval. The Land Reform and Tenancy Act had been a roadblock in development, particularly in the industrial sector, but at the same time it has to a large extent had proved effective in protecting the fragile hill environment and the local culture. However, the large-scale permissions being granted to outsiders to acquire land of late will make the Act redundant. It is already causing resentment among the non-agriculturists bona fide Himachalis who have been relegated to second grade citizens in their home state. On the other hand non-Himachalis who have agricultural land in the state can acquire land. The non-agriculturists Himachalis increasingly see the Act as an instrument to harass them. They have to run from pillar to post to obtain permission for purchasing a small plot for construction of house, while the private builders and other influential persons get permission to acquire huge chunks of land without any hassles. Worse, the government proposes to further relax the land law to enable the builders to sell flats to outsiders. A case had already been sent to the Centre to seek its consent to amend the Act. Similar exemption was sought for the Himalayan Ski Village Project but the government did not oblige. In recent years most of the property has been acquired by outsiders who have influence to obtain permission, besides money to invest. The non-agriculturists Himachalis want the government to scrap the Tenancy Act altogether instead of granting exemptions to private builders. Mr Harsh Mahajan, the Minister for Housing,
however, asserts that the State Apartments and Property Regulation Act will not
lead to indiscriminate construction over hills as it has been enacted
specifically to supplement housing in the industrial areas which are witnessing
unprecedented growth in the wake of the industrial package granted by the
Centre. |
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Buzz
on Bourses Ahmedabad: Max Retail of the Landmark Group (Dubai), a foremost retailer in West Asia, is all set to tap the Indian retail market with an investment of Rs 100 crore in the next few years, says Mr Vasanth Kumar, President of the group. Talking to reporters here at the launch of the second Max Retail Store in India, located at India’s first designer mall ‘Gallop’ on the Sarkhej-Gandhinagar highway in the posh satellite area of the city, Mr Vasanth Kumar said the store was launched with an objective to offer contemporary fashion at affordable prices. Max will create a new segment of ‘value retail’ in India. — UNI Growth predicted Singapore: Urbanisation along with the emergence of Real Estate Investment Trusts (REITS) will drive Asia’s long-term property market, the credit ratings agency Standard and Poor’s has said. "Growth in urbanisation will be one of the defining characteristics of the property sector in Asia over the long term," S and P said in its 2006 Asia Property Review. "Migration to the traditional urban areas and newly established regional economic centres will lead to a significant expansion of the urban population and create very strong demand for housing." Looking at other regional real estate markets, S and P said Japan is recovering after many years of decline; South Korea has "started to come off the boil" as the government tries to cool property pices and rising interet rates, Malaysia’s REIT market is growing while Indonesia and India offer great poential but are still at an early stage of development. — AFP Ansal to invest Rs 2,000 cr New Delhi: Real estate player Ansal Housing and Construction Ltd (AHCL), said it plans to pump in Rs 2,000 crore in the next four month, to build residential townships in seven Tier II and Tier III cities across the country. Having made a strong impact on the Delhi NCR region already, AHCL will now be expanding to Agra, Indore, Jammu, Rewari, Karnal, Meerut and Ghaziabad. The first town will come up in Agra next month across 130 acres. It will have total dwellings of 1250 and is valued at Rs 200 crore. This will be followed by a town in Indore by August at Rs 250 crore across 60 acres. The Jammu town will be up by September and is valued at Rs 200 crore across 125 acres. — UNI Highway contract Mumbai: Engineering and construction major, Larsen & Toubro Ltd (L&T) has received an order valued at around Rs 750 crore for the six laning of NH-8 from Vadodara to Bharuch in Gujarat. Announcing this to BSE, the company said the
contract was awarded by the National Highway Authority of India on
build-operate-transfer basis through international competitive bidding. The
83.3 km stretch on NH-8 between Vadodara and Baruch forms part of the golden
quadrilateral and is an important link in the high-density corridor connecting
Mumbai and Delhi. — UNI
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Global investors
park fund in Goan realty While the real estate trade around the country fears a bear hug following the meltdown of the stock markets, its still time to strike a few good bargains in Goa. Grand villas by the sea, for less than a crore to modest apartments near the main cities of Panjim and Margao that cost a few lakhs, Goa has something for everyone. The priciest of all properties in Goa today is a clutch of villas coming up near the Colva beach priced at a little below `A31,00,000. Yes, it is being offered mainly to foreigners from the UK and other parts of Europe though even Indians may be taken in if the promoters like their face. Apart from 24-hour security, the promoters promise to have property taken care of by trained real estate managers. At present, much of the area is abandoned paddy, though. According to a brochure published in the website, www.goanplaces.co.uk, the property at Sirvoi Quepem comes complete with a golf course, swimming pools, and even an aero-flying club which promises to transport guests for a visit to the Taj Mahal at a short notice. Prices begin from less than `A312,000 for an unbuilt plot and goes up to `A348,000 for a villa. While local politicians and NGOs break their heads over the legalities of foreigners buying property in Goa, more such projects are coming up catering to well-heeled baby boomers from the West looking for a nice nest to retire in. It helps that there is little visible poverty in Goa. Almost no beggars in Goa’s main towns except for the occasional tribal Lamani women and children badgering the white-skinned tourist for alms. Goa has excellent road connectivity though public transport is patchy. But a Kinetic Honda hired for Rs 250 per day should get an occasional visitor around the place at any hour of the day or night. Though urban Goa sleeps early, the coastal belt is alive with the sound of music till the wee hours, the Supreme Court strictures notwithstanding. Not surprisingly, the Calangute-Candolim-Baga-Anjuna belt of North Goa is seeing an unprecedented property boom. Tiny one-bedroom apartment go for a whopping Rs 25 lakh. And the uniquely Goan system of ‘rent-back’ arrangements ensure that investors earn a neat packet eight months a year even while the value of the property keeps appreciating. The system works like this: builders construct whole buildings targeted at investors or non-resident Goans who drop once in a blue moon. The promoters then rent back the houses from the buyers and lease them to charter tour operators who ferry in tourists on a shoestring budget. In the past six years the system has caught on with upmarket property buyers as well and spacious villas and bungalows are also being hired by charter operators. While the foreigners throng the beach belt, Indians are finding value in the interiors of Goa. Businessmen and professionals from Delhi and North India have emerged as big buyers of old Portuguese-style houses, which are then restored with great care. Apart from the snob value, investors can savour a truly rural life in Goa without the rigours of accompanying poverty common to other parts of India. The rush for property in Goa has not left even the suburbs of towns like Panjim and Margao untouched. Houses in Caranzalem on the outskirts of Panjim and the interiors of Majorda village near Margao may still be had for a few lakhs. Those seeking to recreate Goa’s hippy days of the ’70s will have to go farther. Near the Maharashtra border to Palolem where dolphins frolic and the village of Morjim where hundreds of Olive Ridley turtles come ashore every year to nest and the placid Mandrem village near the beach. Also the village of Canacona on Goa’s border with Karnataka border, which is fast becoming a favourite with investors what with the Seabird naval base coming up in Karwar just a few hours away. But be warned: there is a downside to the bullish property market. Local residents known for their laidback attitude are developing a backlash against visitors. Political parties in Goa are coming out against long-staying tourists who buy properties in Goa’s coastal belt. With reports of the Russian drug mafia elbowing out other European migrants to parts of the coastal belt, the local population is afraid of being caught in someone else’s war. Nationalist Congress Party activists recently used the Right to Information Act to reveal that 50 plots were bought by foreigners in Bardez taluka alone. Those buying land include nationals of Italy, Israel, Holland, France, Switzerland, Austria, Spain and even the UAE. Pressure is now building up on
the state government to act against foreigners taking advantage of new foreign
investment laws to set up companies only to buy property in Goa. Pushed by
rising labour costs following the influx of well-heeled out-of-towners, local
industry particularly the mining lobby is quietly fanning sentiments against
outsiders buying properties in the state. |
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Rising material prices hit construction costs With the cost of steel, cement and bricks going up, the cost of construction is seeing a sharp rise writes Manoj Kumar After hike in interest rate on home loans, spurt in cement, steel, brick and other building material costs has affected the construction industry and consumers drastically. The prices of the raw material have gone up by 10 per cent to 30 per cent over the past one year. In fact, the cost of construction material, including copper and plastic pipes, have gone up substantially with pressure building up on supply thanks to the continuing boom in the housing sector in the Asia, West Asia and the US. Says Kunal Banerji, Vice-President, Ansal API: " The prices of raw material have substantially increased over the past one year. Though builders have tried to absorb a part of the hike in prices, but at one stage they have to pass it on to the consumers." The price of cement has risen from Rs 140 per bag (50 kg) to over Rs 200 per bag in the past 12 months and steel has risen from Rs. 19,500 to Rs. 27,000 per metric tonne in the same period, reflecting an overall rise of over 30 per cent in both material. In Delhi, the cement prices are hovering around Rs 210 a bag and in Mumbai the price has gone up to Rs 275 per bag. Mr Anurag Gupta, MD, Majestic Properties, a leading group in the construction sector, said: "Since the cost of building material, including cement, steel and bricks constitute about 33 per cent of the total construction cost, with the rise in their prices, the builders have been forced to revise their budget and partly pass on the costs to customers." Brick prices too have taken an upward swing from Rs 1800 per 1000 to around Rs 2200 per 1000, and sand which is an important ingredient for making concrete are costing dearer by 30 per cent to 40 per cent. Even labour rates, said builders, had increased by 20 per cent to 30 per cent in the recent past. Interestingly faced with rising costs of building material, a large number of builders in the national capital region are stocking the material, assuming that the prices could further go up by the monsoon period. "Usually, during the July-August period, we find it difficult to get the required supply of bricks due to closure of brick kilns," said another builder. Further, copper, which is extensively used in electric wiring, prices in the domestic and international market have gone up by over 50 per cent between April 2005 and April this year. Mr Gupta said these developments would trigger an overall increase in real estate prices by 10 per cent to 15 per cent. Market indications suggest that the price of raw materials is likely to further increase by up to 30 per cent from the original levels in a very short period. Builders including Majestic Properties which is coming up with Highway Malls near Meerut and Pune have revised their rates. Their spokesman, Mr Gupta, said: "The increase in prices of cement and steel in such an abnormal and extraordinary manner has been caused due to rise in the international market and import prices of raw material going into the manufacturing of steel and cement." Typically any housing construction requires 40 to 45 bags of cement per 100 sq ft. and 3 kg to 3.5 kg of steel per sq ft which translates into Rs 70 a sq ft (cement) and Rs. 100 per sq ft for steel. Therefore, every 50 per cent escalation in the price will increase the cost of an apartment by Rs. 75 to Rs. 100 per sq ft. ‘‘This is huge by any standard," said another builder. Mr Gupta further added: "This rise in raw material prices will drastically impact over 250 industries with backward and forward linkages with the real estate sector. Today the industry provides employment to over 3.2 crores people, and contributes 5.1 per cent in the GDP growth. The total turnover of the industry is around Rs 2,47,000 crore." On top of this the end user who is the backbone of the whole industry will feel the pinch the most. Already, the increase in housing loan rates has made buying a home very difficult and if we add up the effect of increase in rates of raw materials then owning a house will soon be a pipedream for the common man. The housing industry has requested the
government to reduce custom duty from 25 per cent to 10 per cent and
deletion of 16 per cent countervailing duty as well as 4 per cent
special duty, in order to make steel bars and rods affordable. |
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TAX tips No rebate on interest paid on increased cost of land Q. I am an employee of Coal India Ltd. (Public sector undertaking of GoI) working at Chandigarh. I owned a plot in Sector-26, Panchkula and constructed a house upon it. House was completed on 07.09.2004 by taking loan of Rs 4,17,692 from the SBI, Chandigarh. The house is self-occupied since September, 2004. Now, HUDA has increased the cost of said plot by Rs 36,155 and advised to pay it by 16.02.2006 or in 5 instalments of Rs 7,631 with 15 pc interest thereon. Now my question is: - Whether I will get the deduction of Rs 7,631 along with interest paid to HUDA on 11.02.2006 such as bank loan repayment? If yes, please mention the section. — A.C. SHARMA, PANCHKULA A. The interest on amount borrowed for the construction of the house is allowable as deduction against income from property under Section 24 of the Act. In my opinion, the said section does not entitle you to claim the deduction of interest paid/payable on the increased cost of the land. Transfer of agricultural land Q. We own 100 acres of agricultural land in Tehsil Mohali, which is located at a distance of 8 km from Sector 69 of Mohali. We have given this land to a private builder for the development of a residential/commercial colony thereon. As per agreement, the builder will develop this colony at his own cost after getting the land used changed and obtaining the licence for the proposed colony from the competent authority i.e. Punjab Government through PUDA and the Industries Department. We shall be entitled to receive from the builder 1,000 sq yds of developed residential plot (each of 500 square yard) along with 121 sq yds of developed commercial plots per acre. Some of us intend to sell the residential and commercial plots after allotment i.e. after 2-3 years from now. Will the sale proceeds become taxable and what will be the tax limit. — HARI OM, MOHALI A. It is not evident from your query as to whether the agricultural land is situated within the specified distance of the Municipal Corporation/Committee of Mohali. The notification no. SO10 (E) dated 06.01.1994 issued by the government specifies the following distance in respect of Mohali (SAS Nagar). "Areas falling within 1 km on either side of Mohali-Kharar road up to a distance of 6 km. from municipal limits on that road". In case the agricultural land owned by you falls within above distance, the capital gain on the transfer of such land would be exigible to tax. Further, it will have to be ascertained as to when the land has been transferred to the builder. The definition of ‘transfer’ as given the Income-tax Act 1961 (The Act) is pretty wide and if it is construed that the transfer has taken place when the agreement was entered into with builder, the owners of the land will be liable to pay capital gain tax for the assessment year relevant to provisions from in which agreement has been entered into. The consideration for the transfer would be the estimated value of developed residential and the commercial plots to be given to you free of cost. The capital gains for the transfer of agricultural land tax payable would also depend on the period holding of the agricultural land. If such land has been held for a period of 3 years or more the capital gains tax would be charged @ 20 pc plus education cess of 2 pc. In case the capital gain is more than 10,00,000 a surcharge @ 10 pc would also be payable. In case the period of holding is less than 3 years, the capital gain would be charged at the normal tax rate. The sale of developed plots will also be exigible to capital gain tax after taking into account the period of holding the capital asset. The applicable rates would be as indicated hereinabove. Capital gain tax Q. I have purchased a house in July, 2002 for Rs 4,00,000. I have purchased second house in January, 2005 for Rs 7,50,000. I have sold the first house in August, 2005 for Rs 4,90,000. Please advise me whether I will be eligible for capital gain on the sale of first house as I have sold the first house after 3 years from the date of its purchase and within one year from the date I have purchased second house. If yes, then how much capital gain I will get. — HARISH SHARMA A. On the basis of facts explained in the query, you should be entitled to the exemption from payment of capital gain tax on the capital gain earned on the sale of first house. You seem to fulfil the condition prescribed under Section 54 of the Act which enable an assessee to claim such exemption. Short-term capital gain Q. I purchased a shop for Rs 4,10,000 whereas the stamp authority valued it as 5,00,000 for stamp duty in May 2004. On this shop, I did repair work and spent Rs 25,000 in September 2004. This shop was sold by me for Rs 5,30,000 in November 2005, but the value adopted by the stamp authority is Rs 6,25,000 for stamp duty. Beside this, I have a interest income of Rs 90,000. I want to know what will be my short-term capital gain and my tax liability on my total income, including short-term capital gain. — BRIJ MOHAN, JAGADHRI A. The short-term capital gain will be computed by adding to the cost of the shop (Rs 4,10,000) the stamp duty charges paid on the acquisition of the shop. The above amount will be deducted from the value adopted by stamp valuation authority i.e. 6,25,000 in accordance with the provisions of Section 50C of the Act. The stamp duty on the sale of shop has not been considered on the presumption that the said duty has been paid by the buyer. The balance amount would be the capital gain. The repair charges of Rs 25000, in my opinion would not to be deductible from the sale price as the repairs cannot be construed as cost of improvement to the shop which is permitted to be added to the cost and allowed as deduction against the sale price along. It is not possible to compute your tax liability as stamp duty charges have not been indicated in the query. It is, therefore, not possible to compute the short-term capital gain. Cost of acquisition Q. I have sold a property situated in cantonment board area in financial year 2005-06. The above property was purchased by my father in 1959. He expired in 1985. The ownership in property was transferred in my name in 1994 through a will in my favour by my late father. The property situated in cantonment areas are leasehold properties and not freehold properties. The sale deed contains only the sale of structure built up on the land and not the land. The cantonment board levys the house tax & water tax on the said properties and makes its assessement on every three-year basis and determines the fair market value/fair market rent to decide house tax etc. My question in regard to capital gain tax are as under: - 1. Which financial year should I take to decide cost of acquisition year 1981 or 1985 (The year in which my father expired) or 1994 (The year in which ownership of property transferred in my favour)? 2. Whether land value should be taken as not to determine the cost of acquisition. Different views prevail in this regard. Some valuer says there should be some land value to be taken (though less than market value for freehold property) as construction is done on a particular land earmarked in favour of owner and taxes are levied on the same and mutation is also done. — RAKESH GUPTA A. The replies to your queries are as under: - 1. The year of acquisition of property being 1959, the cost of acquisition shall be deemed to be the cost for which your father had acquired the property. The market value as on 1st April, 1981 will have to be ascertained and thereafter such market value would be indexed to the present date so as to arrive at the indexed cost which will be deductible from the sale price. 2. The question whether
land value has to be considered for working out the cost of the
property, will have to be decided on the basis of provisions contained
in the lease deed. In case the land leased to your father is not
transferable, the value of land should be taken as the amount of premium
paid for such allotment on the basis of principle laid down in the
decision of Commissioner of Wealth tax vs. Promila Bali (141 ITR 942)
(Delhi). |
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Changing lifestyles With an increasing number of working couples setting houses in Gurgaon and the middle upper class gradually joining the mall bandwagon, the mall culture appears to be expanding its sweep, writes Ravi S. Singh THE coming up of malls has contributed in pushing up the value of land on the one hand and change in the lifestyle of a good chunk of the residents on the other. With an increasing number of working couples setting houses in the city and the middle upper class gradually joining the mall bandwagon, the mall culture appears to be expanding its sweep. There are about two dozen malls, both existing and those coming up, in Gurgaon city alone. Just venture out in the evening and one finds a maddening crowd in and around the malls.What is striking is that while those who can afford to visit them are in the party, those from the nearby villages,which have nearly become part of the city urban estate go to the area to marvel the evening scene of florescent and sodium lights. All the same the builders and mall developers are preparing to up the bar in this sector. Project developers are in the process of completing the construction works on a mall spread over an area of a square kilometre along National Highway No 8 (Delhi-Jaipur highway). As per the claims, the mall would have an area of about 10 lakh sq feet. So far this would be the biggest mall to become operational. If you thought dizzy heights had been achieved,you are proved wrong as the DLF group has plans to come up with the biggest: a mall on 35 lakh sq feet along the highway. The sweeping culture of malls can be fathomed from the fact that it all started in new Gurgaon area on the Mehrauli-Gurgaon road, but two more malls are coming up on the other side of the highway with their catchment areas being the old city area. Gurgaon Central mall is being set on the site where Jai Cinema stood in Sector 4 and its developers claim that its focus would be the populace of the old city area. One mall is coming up in Palam Vihar area and its developers argue that it wants to build bridges between the residents of the old and new city areas. With regards the malls on the Mehrauli-Gurgaon road about half a dozen of them have surfaced on just about 1 km stretch-all on the same road. The new malls that are being proposed and which are coming up are categorised by many as the second phase of mall development.This phase is called "highway malls". The second phase also takes into account the malls now coming up right in residential pockets penetrating virtually right next to your doorsteps. However,the underbelly of the mall is also getting exposed after the initial hype and hoopla.The seamy side exposes the earlier Haryana Government's bankruptcy of planning and vision and the money mindedness of the private builders who developed the malls.The first phase of the malls witnessed the builders selling the shops and floors in the malls on freehold basis.This allowed the speculators and jumpy investors to treat the entire business as real estate business.The builders and the buyers of retail shops did not appear to be serious in the entire concept of mall business.The government for reasons best known to it did not delve in the matter and went on a binge issuing licenses to set up the malls with scant regard for parking place.The entire Mehrauli-Gurgaon road remained choked with the increasing footfalls in the malls during the initial days. On weekends the road was a no-no to the commuters.A senior officer of the district on condition of not being quoted, did aver the lack of holistic thought on the part of the government in granting licences for setting up the first phase of the malls.The cumulative result was that the footfalls started declining give a rude shock to the one and all. However, corrective measures appear to
be injected for the malls now coming up. Some of them include adequate
parking places for the visitors and providing more mix in the malls to
takes care of hospitality, entertainment and other value additions in a
big way. |
