REAL ESTATE |
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Realtors may go under scanner
The government has proposed to bring the real estate industry, property dealers and builders under the scanner of a Real Estate Regulator through a Real Estate Management Bill that is likely to be brought into the Parliament in the next winter session. Concerned with increasing complaints against real estate agents, the Ministry of Urban Development is planning to create a statuary regulator for the real estate sector. A real estate commission will be set up to frame guidelines and a code of conduct for property dealers. Although officials in the ministry are still silent on the issue, but sources said that property dealers and architects would also have to get themselves registered before doing business The commission is likely to be formed as part of the proposed real estate Bill, which would institute a series of strict regulations for dealers and agents as well as developers. However, keeping in view the strong opposition of a section of lobby of builders and property agents, it remains to be seen whether the government would be able to push forward the proposed Bill. The Finance Ministry has expressed concerns about the exponential growth in the highly unorganised sector, which is also supposed to be one of the most corrupt sectors of the economy. “Although property dealers are charging between 2 and 4 per cent commission of the total value of property deal from the clients, yet they are neither legally accountable to the customers nor pay income tax or service tax on this commission, leading to tax evasion of hundreds of crores,” an official said. Admitting black sheeps in the industry, Mr Amol Arora, Executive Director, Emgreen Projects Ltd. said: “Unscrupulous brokers promise too much, hide or misrepresent the details, forcing buyers to sign executive contract while charging hefty guarantee fees. They would bad mouth property in which they are not getting any commission and hype up properties on which they are promised more commission.” All this affects investors’ and consumers’ confidence and to add on, is also not good for the image of the industry. In fact, a section of builders have also supported the government’s move, as it would bring transparency in the industry and an assurance to the customers. Once confidence level improves, the quantum of foreign investment coming into the sector could rise substantially leading to growth in the sector. As per an estimate, the real estate sector is expected to get an investment of over $50 billion in next 5 years. Some are still proposing self-regulation by the industry. Mr Arora said: “The industry should set up a self-regulatory watchdog on the basis of the dealer performance and give ratings based on these facts. This will put some pressure on unscrupulous agents to stop unethical practices, and good agents will thrive as people would easily be able to foresee their track records.” However, under the proposed Bill, neighbourhood property dealers will have to compulsorily seek licence from the proposed commission for practising in specific catchment areas. To further protect the interest of consumers, the commission will also entertain complaints against dealers and will be empowered to take punitive action. There are also plans for setting up an assistance window at the proposed commission, where prospective buyers will be able to thoroughly check the antecedents and other details of the property. In fact, in case of any fraud by the property dealer or builders, consumers can approach the courts or consumer courts, where they could spend months and years without getting justice. The proposed commission is expected to fill this gap, while helping the government to collect more revenue as well. Insiders told that a strong lobby of builders and property dealers is opposing the move to enact an act to regulate the sector, claiming that this sector was under the purview of state governments. Keeping in view that a large number of builders are diverting the funds to other projects, the government has proposed that builders should provide bank guarantees for both construction and utilities in a project. The ministry has also proposed to renew licences of the agents every five years. If the developer’s work is not up to the promised standard, the authority can cancel his licence. The authority can also take over the project, encash the bank guarantee, and complete the work itself. Developers will have to file regular progress reports. Developers will be responsible for maintaining the project till a Resident Welfare Association (RWA) is formed and takes charge. Formation of the RWA will also be the builder’s responsibility.
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North India drives up burglar alarm sales Electronic anti-theft buzzers at homes are supplementing the jobs of guard dogs and watchmen. If the trend, put forward by electronics security equipment industry — most of which is south India based — is to be believed, north India is leading the sales demand. Affordable rates of home-specific burglar alarm, which can be had anywhere between Rs 6,000 and Rs 25,000, coupled with a rise in crime rate and market awareness, is making home-segment consumers scramble for these anti-theft devices. “I have a touring job and my wife is also employed with a local school. Even though we have a round-the-clock security guard in our group housing society, burglar alarm may come in handy in case of any eventuality,” says Panchkula-based Anil Saraswat, a senior manager with a textiles firm, who recently got upmarket equipment installed at home. North India is becoming a major consumer of home-installed burglar alarm, one of the components of Rs 700-crore surveillance equipment industry, which has, of late, witnessed a 30 per cent plus upswing in sales. “Sales are taking place in the following order (in India) — north, west, and south followed by east,” says Santonu Choudhury, CEO, Consumer Service Group, Zicom Electronics Security Systems Ltd. “Incidences of crime are on the upward curve. There is an element of insecurity, which is building up in the minds of the residents, shop owners, corporate and others. Growth of nuclear families, per capita income, good infrastructure facilities, retail boom, are the main drivers behind the demand for electronics home security surveillance,” he explains. The security industry in India can broadly be divided into two parts — one, the industrial, corporate and government segment and the second the home and small business segment. Research has shown that there is an increased awareness and curiosity for electronics security systems for all segments, including homes. Nee Shanmugam, Manager, Operations, Active Total Security Systems, a Chennai-based firm, says that bulk of the orders are pouring in from New Delhi and other northern parts of India. Lending a more monetised angle to the reason behind the spurt in demand, he says: “The product, which now starts from Rs 6,000 onwards has become more affordable, of late.” Coimbatore-based anti-theft device manufacturer Alphatronics has witnessed a surge in sales pan-India and Managing Partner Satyanarayan says that there has been more than 20 per cent rise in the sales order from north India. “North India is leading in realty as well as lifestyle. It is affluence, which is, ironically keeping people on the tenterhooks. We have witnessed high sales over the past two years. A lot of queries come in from National Capital Region and Punjab,” says another Chennai-based manufacturer of anti-theft devices.
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‘Hottest city’ that caters to bourgeoisie Suddenly Ghaziabad, which seems to be touching the sky in the matter of residential colonies, has attracted world notice. The shopping malls set up in Ghaziabad have also attracted notice despite having lesser facilities as compared to other NCR towns like Gurgaon and Noida. Ghaziabad has made a place for itself among world’s top 10 cities from the point of view of living standard and style. Ghaziabad figured sixth in Newsweek’s list of 10 most dynamic cities in the world. It has also been billed as the India’s hottest city. Other nine are — Las Vegas (US), Fukuoka (Japan), Toulouse (France), Nanchang (China), Moscow (Russia), Goyang (South Korea), Florianspolis, (Brazil), Munich (Germany) and London (UK) in that order. Observers feel Ghaziabad may surpass Noida in the matter of hike in property prices and the boom is likely to continue for a long time. Currently, the land on the sides of NH24 is ‘pure gold’ from the point of view of housing colonies. Over half-a-dozen residential township are being developed along NH24. Besides, in the top residential areas of Ghaziabad viz. Indirapuram, Vaishali, Vasundhra, construction work of societies is in full swing. Some 50,000 flats of different sizes will shortly dot the skyline. A few builders are churning out flats at cheaper rates. An HIG flat in Ghaziabad may be available for Rs 25 lakh while the rates of similar flats are in no case less than Rs 30 to 35 lakh. Still maximum development in Ghaziabad can be seen in the areas adjoining Delhi and Noida. Shopping malls have played a major role in the success story of Ghaziabad. Due to proximity to malls, people prefer to buy flats in Ghaziabad. Direct link of NH24 with Delhi has played a major role in attracting builders to this area and excellent connectivity and smooth commuting facilities have attracted people to buy flats. It takes only 30 minutes to reach Delhi from here. NH24 has indeed given a new impetus to development in Ghaziabad.
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Zee Business Realty Awards
New Delhi: Zee Business, a Hindi business news channel, has announced the Zee Business M-Tech Pinnacle Awards, the first national level initiative to institutionalise and recognize excellence in the real estate and construction industry. The annual award will honour the best professionals in the construction, building and allied industries. The awards will have 23 categories from the construction, building and allied industries in real estate. It will recognise talents for their contribution in technical, creative and individual achievements. The last date of receiving entries is September 10, while the entries will be judged on October 3. — TNS DHFL office in Dubai
Chandigarh: Dewan Housing Finance Corporation Ltd (DHFL), a private housing finance company, has opened its first representative office in Dubai. This office will provide housing loans and advisory services to UAE-based NRIs for purchase of houses and plots in India. DHFL will also provide unique home loan linked insurance policies to its customers.
— TNS
Parsvnath pact with Movietime
New Delhi: Capital based real estate company Parsvnath Developers has tied up with South America-based film exhibitor Movietime Cineplex. Under the tie-up, Movietime would manage the multiplexes built by Parsvnath as part of its retail project, a press note said. Parsvanath will lease out to Movietime 100 cinema screens being developed in various towns across the country, it said.
— PTI
Madhucon to raise FII limit
Mumbai: Construction company Madhucon Projects Ltd has decided to increase the limit of investment by Foreign Institutional Investors (FIIs) to 40 per cent. The company informed the Bombay Stock Exchange that the AGM held recently approved the proposal to raise the FII limit to 40 per cent. A borrowing limit of upto Rs 2,000 crore and investment limit of upto Rs 500 crore was also approved by the shareholders at the meeting, the company said.
— PTI
Unitech, Pioneer join hands
New Delhi: Real estate firm Unitech Ltd has said it would develop a residential complex spread over 10.57 acres at Gurgaon in joint venture with Pioneer Urban Land and Infrastructure Ltd. The new residential block — Harmony — would be a part of its 320-acre residential township, Nirvana Country, at Gurgaon, and would comprise of high-rise apartments block upto 19 floors, the company said in a statement.
— PTI
Vatika to invest Rs 140 cr
New Delhi: Real estate firm, Vatika Group plans to invest Rs 140 crore in next 2-3 years to develop a housing complex at Jaipur in Rajasthan. The residential complex — Urban Woods — spread over 17.33 acres would be a part of Vatika Infotech City, which is being developed in 808 acres, the company said in a press note.
— PTI
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Selling ‘spontaneously-grown’ trees on farmland By S.C. Vasudeva
Q. I have bought an agricultural
land on which there are forest trees, fruits, flowers, which have grown
naturally and spontaneously without the intervention of a human agency.
Can the income from sale of such trees, fruits and flowers be treated as
an agricultural income? — Raj Kumar, Panchkula A. Rental
arrearsQ. I had given my residential house on rent to an employee of a
limited company. As per the rent deed, the tenancy in favour of the person
concerned would terminate in case the person to whom it was let out is
transferred to other place or ceased to be an employee of the company. The
person concerned left his job with the company of which he was the employee
when the property was let and joined another company. The property was not
vacated in spite of my best efforts for a period of two years 2002-03 and
2003-04. The rent for the aforesaid period was also not paid and was realised
later in 2006. What would be the position of the taxability of such arrears? —
Harinder Singh, Ropar A. On the basis of facts given in the query it is
not clear as to whether the rental income was declared on the basis of rent due
from the employee. In case the annual letting value of the property was
declared by taking the rent due and no deduction for unrealised amount had been
claimed, there will be no tax liability in respect of such arrears. However, in
case the income was not declared on the basis of rent receivable or the
deduction of unrealised rent was claimed and allowed, the amount of such
arrears now received would become taxable in the assessment year 2007-08
(financial year 2006-07) as income from house property without deduction under
Section 23 and 24 of the IT Act, 1961, (the Act). Five
instalmentsQ. I understand that interest paid on a loan borrowed for
the construction of house paid for the period during which the construction was
in progress is also allowable as deduction under the provisions of the Act. Is
it correct and if so what are the provisions in this regard? — Dinesh
Prakash, Patiala A. Interest payable by an assessee in respect of funds
borrowed for the construction of a house property and pertaining to the period
prior to the previous year in which such property has been constructed (to the
extent it is not allowed as a deduction under any other provisions of the Act)
is allowed as deduction in five equal annual instalment commencing from the
previous year in which the house is constructed. For example, if you have taken
a loan of Rs.1 lakh on which interest in January 2003 and the construction of
the house is completed in June 2006, the interest payable for the period
January 2003 to March 31, 2006, would be allowed for the said period in five
equal annual instalments. Presuming that interest payable for such period is Rs
10,000, the amount deductible for each year would be Rs 2,000. Section
80CQ. I was a bank employee during financial year 2005-06. I got my
leave encashed for Rs 30,000 and received a lump sum amount (as per my
entitlement) of Rs 18,000 on account of LTC. No actual journey was performed.
Leave encashment is taxable, but is the amount received on account of LTC (Rs
18,000), without spending any money on fare, taxable or not? I have paid the
principal amount of my housing loan but the interest accrued on housing loan is
still outstanding. Please clarify whether the repayment of the interest of
housing loan earns rebate under Section 80C. — Sharan Pal, Ludhiana A.
The answers to your queries are as under: The interest paid in respect of
housing loan is deductible from income from house property under the Section 24
of the Act. The deduction under Section 80C of the Act is available in respect
of repayment of principal amount of loan obtained for construction or
acquisition of the house. The amount received in respect of LTC which has not
been spent will become taxable as part of the salary. Rent
from shopsQ. Kindly clarify certain points to help us (we the senior
citizens) to file Income Tax returns correctly and in time. 1. About rebate
and rate on pension income. 2. About rebate tax rate on rental income i.e.
income being derived by renting out residential and shop buildings. 3. About
rebate on income of interest on FDRS 4. Suppose I have invested amount in bank
F.D. on February 13, 2006, for a period of 91 days. It will be due on May
14/15, 2006. How and in which year interest income will have to be accounted
for in year 2005-06 and 2006-07, as investment in FD was made in 2005-06.
Maturity date will fall in 2006-07. Bank people say that entire interest
income will have to be accounted in 2005-06 whereas I will get benefit in
2006-07 i.e. on maturity of FD. — M.S. Dewan, Ambala Cantt A. The
answers to your queries are as under: The rental income is to be clubbed with
the other income. I may add that statutory deduction of 30 per cent is
allowable from the annual letting value, which is computed after deducting the
house tax paid in respect of the residential and/or commercial property. The
pension income is to be clubbed with the other income and there is no separate
rate of tax chargeable only in respect of pension income. Further, there is no
standard deduction allowable in respect of income from pension. Such a
deduction was withdrawn by the Finance Act, 2005, in view of the higher limit
of Rs 1,85,000 specified for senior citizens. The interest earned on fixed
deposit receipt is taxable. It can be taxed either on due basis or on receipt
basis. You can adopt the cash method of accounting (i.e. on receipt basis) and
on that basis the interest earned in the case of example given by you would
become taxable in the assessment year 2007-08 (i.e. financial year 2006-07). In
case you chose to adopt accrual basis, then the interest earned for the period
February 13, 2006, to March 31, 2006, would become taxable for assessment year
2006-07 and the interest earned for the period April 1, 2006, to May 14-15,
2006, would become taxable for assessment year 2007-08.
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