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Policy glitch
Increase in minimum area requirement and approval-related charges for residential and commercial projects has virtually derailed the growth of the real estate sector in Amritsar.
Varinder Walia and Ashok Sethi report The golden sheen of the real estate sector boom seems to be losing its radiance in the city of the Golden Temple, courtesy the skewed policies of the SAD-BJP government. The mind-boggling prices of property during the Congress regime that had given a boost to the real estate sector have become a thing of the past. Now several housing and commercial projects are in limbo as developers are finding it difficult to tread the tough path charted out by the state government. Take for example the area around the Rajasansi International Airport. It had been projected as ‘mini Gurgaon’ of Amritsar and developers and buyers vied to get their hands on land in this area a few years ago. But now there are very few takers for property in the area and the prices too have nose-dived. There are only a handful takers for plots in about 15 to 20 authorised colonies in the area which was considered a goldmine just three years ago. At that time a large number of investors had picked up plots here but after the SAD-BJP coalition came to power all their dreams of reaping hefty profits were shattered due to the dwindling number of buyers. The state government’s failure to come up with a clear cut policy on real estate has also played spoil sport as a majority of the investors in the region are confused over the rules and regulations being “churned out” by the administration. The biggest problem being faced by the builders and colonisers in the holy city is the condition of Minimum Area Requirement. According to this a developer has to have a minimum of 75 acres of land to start a residential project. This condition has brought the sale and purchase of property in the city to a virtual standstill. Small-time and local colonizers are the worst sufferers and the general feeling is that the new policy favours only the big players. In fact till date PUDA has not been able to issue a licence for 75 acres in Amritsar. “It is difficult to get 75 acres in old cities like Amritsar. Moreover, when landowners come to know that a developer has to have a minimum of 75 acres, they quote exorbitant prices”, said a harried builder and added that if an acre of land cost Rs 60 lakh, then a developer will have to invest a minimum of Rs 45 crore on land only. Earlier, the minimum area required to set up a housing project was 10 acres, which was within the reach of most of the builders but now only a big player can afford to invest up to Rs 45 crore just to get land for a project. To make the matters worse the Punjab government recently also revised its EDC, Licence fees and Change of Land Use charges. During the previous Congress regime, the total approval related expense was Rs 3.5 lakh per acre, which now is about Rs 35.16 lakh per acre. Thus there is a whopping 10 fold increase in the approval expense only. “How are we expected to provide affordable housing if the government charges 35.16 lakh per acre as approval charges only and on that the minimum cap of 75 acres”, said a local builder. All this clearly indicates that only big players can survive in the state. How can a small, medium or an average developer of Amritsar pay Rs 27 crore as fee for approval after purchasing the land for Rs 45 crore, asks another builder. Similarly for group housing schemes the approval charges are 72.34 lakh per acre according to the new policy. These charges were only Rs 5 lakh per acre during the Congress regime. For commercial projects approval charges are close to Rs 237.12 lakh per acre according to the new policy. The new rules have thus dampened the soaring realty business as no new projects have been sanctioned by the present government and no new developer has applied for licence over the past few months. Even the developers who had purchased land during the Congress regime are sitting pretty on it. As a result hundreds of acres of land are lying vacant with virtually no development activity going on. The projects, which were to start way back have been put on a back burner.
A TALL ORDER
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Vanishing villages
The price of urbanisation and development around Ludhiana will be paid by 300 villages whose fertile land will be utilised to make room for the burgeoning population by 2020, writes
Jupinderjit Singh
Fertile fields overflowing with bountiful crops of myriad hues that have been representing the agrarian flavour of Punjab may soon come under the shadow of mammoth concrete and mortar structures due to the rapid pace of urbanization in the state. As many as 300 villages located around Ludhiana will be gobbled up by the “great urbanisation drive” by 2020 if the proposed master plan of the ‘Manchester of India’ gets approved. Ludhiana is expected to have a population of 50 lakh by 2020. Under the plan, 12,7122 hectares (3,13,991 acres) have been notified to be included in the city for urban development. While the world is shifting to “vertical growth” to ease pressure on land and save it for agriculture, the powers that be in the state have instead planned to expand the city horizontally on all sides to make room for increased population by 2020. As a result thousands of hectares of fertile land would be sacrificed at the altar of development. Experts like renowned economist Sucha Singh Gill have already warned about the disastrous results of such rapid urbanisation by underlining how expanding cities have gobbled up 20 per cent of agriculture land in Punjab in the past few years only. But instead of formulating a strategy to combat it by saving the land for agriculture, the government has, instead, legalised the consumption of agriculture land. The maps of the master plan have been displayed outside the district town planner’s office in mini secretariat in Ludhiana in order to invite objections from the public. These clearly indicate that rapid urbanisation would engulf the villages turning them into fully developed urban colonies. The swelling city has already eaten up 100 villages in the past couple of decades only. The expansion on south-east and north-east side has seen the emergence colonies with villages like Giaspura, Dhandari, Jugiana, Uchi Mangli, Nichi Mangli, Rampur, Sherpur, Dabba and many others turning into densely populated migrant colonies. On other sides, Jawaddi, Lohara, Barrewal, Ayali Khurd, Ayali Kalan, Thrike, Jamalpur, Jawaddi, Dugri, Lalton, Phulanwal, Dholewal, Jassian and Partap Singh Wala villages too have become urban colonies. Experts reveal that major flaw in planning is evident from the expected density of population of the city as per the estimates. Against the present density of 250 persons per acre in the old city, the city will have a density of less than 25-30 persons only. “How would you feed the increasing population?” asks Gurdial Singh of Issewal village, looking worriedly at 1,000 acres situated in the neighbouring village bought for developing a colony. “Development is fine but not at the cost of agricultural land.” Villages like Issewal, Bhatian, Chak, Lalton, Daad, Mau, Kohara, Koom Kalan, Bahadur ke, Chak Sarwan Nath and many others would turn into urban colonies soon. The impact of taking over agricultural land for urban use is evident on Ludhiana-Jalandhar road, Ferozepur road, Hambran road and Pakhowal road. Instead of mature crop these fields have barbed wires put up by multi-national companies. Although the construction work on various projects is yet to begin, agricultural activity has been stopped for over two years now. Unless the government makes a concerted effort to encourage vertical construction and high-rise buildings, concrete jungles would continue coming up on fertile land.
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Stylish & practical
“Bathroom is a room too”, thus goes the catch line of an ad, and this sums up the present trend for having stylish bathrooms. Fittings, their apt placement, colours, patterns, size and space matter a lot, says Jagvir Goyal
Leak-proofing: Lots of water gets used in a bathroom. A house builder’s first and foremost desire is to keep it leak-proof. Besides keeping the pipe joints water tight (it will be explained separately), give the floors water proofing treatment. On the sunken floors of toilets with Indian seats, apply flexible water proofing membrane instead of traditional bitumen layer. Bitumen layers are often found ineffective and give a psychological satisfaction only. Treatment: To provide water-proofing treatment, first, check the slab surface for any cracks. If any cracks are there then cut them into small ‘V’s and fill them with a polymer like ‘crack fill’. Now mix 1 part of acrylic emulsion (liquid) with 2 parts of polymer modified cement (powder) by weight to form a cream like paste. Apply two coats of it with brush on the slab surface. It can be applied even on a wet slab. Apply it on the walls also and up to a height of 6 inch above the bathroom floor level. On drying, it will form a flexible water proofing film and that is exactly what we need. One litre of this paste covers 7 to 8 sq.ft. area in one coat. Pidifin 2K, Fosroc Hydroproof and Roff Hyguard ex are good products for using here. There are ready synthetic membranes also available in the market which can be used instead of this application. These membranes need to be notched into the walls. Lay the membrane on the slab in the manner prescribed by the supplier. Apply a ½ inch thick 1:3 cement sand plaster layer over the membrane. Now, fill the sunken area with clinker or foam concrete fill till you get the screed level. Now, lay the floor like other floors. Size matters: A small sized bathroom demands more application of mind for arranging the fittings for their best use. In small bathrooms, omit the flushing cistern and try flush valve directly connected to tank instead of cistern to save space. Provide maximum fittings as cantilevers. These will leave more of floor area open giving the bathroom a spacious look. Keep even the WC as cantilever, corbelling out of the wall. Don’t use a counter wash basin in a small bathroom. It demands more space. Otherwise, don’t put it along the long wall. For example, in a bathroom of 8’x 4’ size, put counter wash basin along shorter wall. Putting it along long wall will leave no space in front of it to stand up. Fix it as a cantilever, leaving the space below it open to eye to avoid the feeling of a congested bathroom. At the most, get a few drawers fixed on one side below the counter. Fixture location: Choose smaller sized WC and wash basin for a small bathroom. Omit the bidet and bathtub. When your bathroom has enough space, plan provision of WC, bidet, wash basin, shower or shower cubicle, bathtub and storage cabinets inside it in such a manner that the running length of water supply pipes is minimum. Ideal will be to keep WC, wash basin and shower along one wall but many times it is practically not possible. Next best option is to use adjacent walls. Prefer shower-wash basin-seat arrangement instead of the standard shower-seat-wash basin arrangement. And always give priority to utility over beauty. Space sense: Provide ample space around every sanitary provision for its convenient use. An English WC will require a space of at least 800 mm x 800 mm or 700 mm in front and 200 mm on each side. A wash basin requires minimum 200 mm elbow space on either side and 700 mm in front of it. Similarly a minimum space of 750 mm x 750 mm should be available below a shower. Bathroom shelves: Use the space above the WC, wash basin and bath tub (if provided) for fixing cabinets and chromium plated steel shelves. Convert the backside of the bathroom door into a 6 inch deep cupboard. Nightwear hanging behind the door looks ugly. Sometimes, it gets wet also. Conceal it by providing this shallow and lightweight cupboard behind the door. Provide sliding shutters of laminated or sunmica clad plywood or acrylic sheet to this cupboard. Don’t use glass. If this cupboard is to be created, see that the door is fixed by leaving at least 9” space from the corner so that it may open fully and cupboard doesn’t obstruct its opening. It is always preferable to have a regular cupboard in bathroom. Electrical fittings: Position lights in bathrooms in a manner that these shine over the face and not on the mirrors. Prefer recessed or flat electric lights if the ceiling is low. If you are in the habit of reading in bathroom, get a spot light provided but ensure that it is well away from the shower area. Provide pull cords for switching on or off all bathroom electric fittings. This is a must to avoid touching switches and fittings with wet hands. If you plan to provide an usual on/off switch, locate it outside the bathroom, near the door. Don’t provide a socket in the bathrooms. If you wish to have a heater in the bathroom, choose a ceiling fitting model that combines light and a circular heater. Always provide an exhaust fan in each bathroom and make it operational by a pull cord switch. Flooring: In bathrooms and toilets, use anti-skid ceramic tiles. Though many people like to choose marble flooring, it should be avoided. Marble is a much porous material than tiles. Tiles other than anti-skid ones turn very slippery if soap solution falls on them. So choose no other tiles. Don’t choose white coloured flooring tiles. Footmarks are easily visible on them and bathrooms look dirty. On bathroom walls, provide imported or Indian glazed ceramic tiles. Keep the height of tiles on walls as 7 feet above the floor. There is an increased trend for providing tiles up to the ceiling. Prefer to keep the height as 7 feet only. These look better than tiles provided for the full height of bathrooms. Go ahead. Happy building! The writer is Director, Estates, PSEB and can be contacted at www.jagvirgoyal.com
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Mantri to pump in 500 cr in Gwalior projects
Real estate firm Mantri Realty plans to invest Rs 500 crore at Gwalior in Madhya Pradesh to set up a residential township and an IT SEZ. Mantri Realty’s Chairman Sunil Mantri said, “We plan an outlay of around Rs 500 crore for the development of the new Gwalior city. This is just a start and we are open to more investment in Madhya Pradesh.” The township, christened Mantri City, would comprise of 10,000 houses on 16 million sq ft, while the IT SEZ would cover 5-million sq ft. Mantri has already acquired 375-acres from SADA, a special planning authority of the Madhya Pradesh government. The project is expected to be launched by September. Mantri is also developing a mall, M-Square, spread over 5-acres of land (2-lakh sq ft area), which is expected to be completed by August next year.
— PTI
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Tax liability on loan S.C. Vasudeva Q. I am in the process of buying a residential flat (being constructed by development authority) from original allottee (say Mr X). I want some tax clarifications regarding this. Fifty per cent of the allotment price has been paid by X till date and I will repay that to him on the date of agreement along with some decided premium. The balance 50 per cent is payable in instalments to the development authority which will be paid by me. I will take loan of the exact amount at market rate of interest from my mother to pay to X on the date of agreement. As already mentioned above, this flat is under construction for the past two years and will take one more year to be ready for possession. So, although I have acquired the flat now, construction will be completed next year only. Now the question is, whether interest payable to my mother on loan taken to acquire flat will be deductible from the date of acquisition or from the date of possession of flat and whether interest from the date of acquisition to date of possession will be pre-construction period interest for the purpose of deduction under Section 24 of the Income Tax Act. And whether re-payment of the said loan to my mother will qualify for deduction under Section 80C of the Act. Next, regarding the loan which is repayable to the development authority in instalments. If I take housing loan from some bank to repay this loan in one time, will the interest and re-payment of this housing loan qualify for deduction under Section 24 and 80 C, respectively. Same question is there when I take housing loan to repay to my mother. Please elaborate and advise on the same. — Neeraj Gupta, Ludhiana A. The interest payable to your mother would be deductible in five equal instalments under Section 24 of the Act payable for the period prior to acquisition of the residential flat. This is because the words used in the Explanation to the proviso to Section 24 of the Act cover both Pre-acquisition and Pre-construction period. The amount paid to your mother towards the repayment of loan would not be allowable as deduction under Section 80C of the Act. The amount paid towards the repayment of loan to bank would be an allowable deduction under Section 80C of the Act. Capital gains tax rate
Q. Is the CGT rate (after indexation and expenses) the same if the HUF asset is disposed of (a) before total partition; and (b) after total partition? Are the CGT rates in each of the two cases above the same for Indian citizens and also for NRIs? What provisions are available for rollover relief on the gain again for (a) Indian citizens; and (b) NRIs? — Daman Singh A. The rate of tax on long-term capital gain for a property owned by HUF is presently 20 per cent plus applicable surcharge. Such a tax is leviable and payable by the HUF. However, after partition the tax would be leviable and payable by the co-parceners to whom the property has been allotted by virtue of the partition. The tax rate and surcharge would remain same as applicable to HUF. The tax rate chargeable on long-term capital gain is the same for resident and non-resident individuals. Both resident and non-resident individuals can avail the benefits of exemption from the chargeability of capital gains tax if the capital gain arising on the sale of a residential house is invested in the acquisition or construction of a residential house within the specified period of the date of sale. The specified period for acquisition of a residential house is one year before or two years after the date of sale and the period for construction of a residential house is within three years of the date of sale. For saving capital gains tax the benefit of buying the capital gains tax saving bonds within a period of six month of the date of sale is also available to residents and non-residents individuals.
Rebate on
capital gains tax
Q. I have purchased a plot on June 14, 2007 for Rs 1,83,000 and will sell it in July 2008 for Rs 3,65, 000. Kindly let me know how much will be the capital gain tax and whether I can save it by donating/ gifting the amount to my wife for purchasing a plot. — P.S. Jaswal, Amritsar A. The amount of capital gain on the transfer of plot would be Rs 1,82,000. It would be treated as a short term capital gain as the plot was held by you for a period of less than three years and taxed at the rate of 30 per cent plus applicable surcharge if any. This being a short term capital gain there is no way to save capital gains tax. Had the capital gain been a long term capital gain, it would have been possible for you to buy capital gain tax saving bonds within the specified period to save payment of the capital gains tax. The capital gains tax cannot be saved by making a gift to your wife. I may add that any income arising from the amount gifted to your wife would be treated as your income and taxed accordingly.
The writer can be contacted at sc@scvasudeva.com
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Here are a few tips on how to plan best bathrooms for your house: