 |
|
| REAL ESTATE |
|
|
|
|
|
Road a RAGE
The four laning of the Amritsar-Wagah road is pushing up the prices of property in the vicinity, write
Sanjay Bumbroo and P.K. Jaiswar
The rates have increased from Rs 4000-Rs 7000 per square yard to Rs 13,000 per square yard, depending upon the size and location of the land and property. The main pressure is on the front side connected to the road which is likely to be purchased by realtors for setting up commercial establishments. On the ground, however, there has been no single deal as yet as the existing owners are reluctant to sell their properties in the hope that after the completion of the highway, there would be further escalation in the prices. At present, there are a few private residential colonies across the Uppar Bari Doab Canal (UBDC), including the holy city, Guru Amar Dass Avenue, Defense Enclave, Hargobind Avenue, Swiss Land and Swiss City, says Gurnam Singh, a property dealer on the Ajnala Road bypass. The construction of illegal bridges over the UBDC by some colonisers for easy access to their colonies from the main bypass to attract more customers has also contributed to the increase in the property rates during the past one year. Moreover, flyovers are proposed to be constructed on major crossings on various bypass roads at Majitha, Verka, Fatehgarh Churian, Ajnala and Ram Tirath, for which tenders have been floated. These would help in reducing the traffic chaos on these busy roads through which a large number of tourists visit the Attari-Wagah joint checkpost to witness the Beating the Retreat ceremony. This has also resulted in a considerable increase in the real estate prices on both sides of the bypass. Rajan Bedi of Ansal Estate says that they have also witnessed a marginal increase of 5 per cent in the land rates. He says many global residential complexes of international repute are coming up to set up big private colonies in the outer periphery of the city alongside the road. There is a sigh of relief for residents of colonies across the UBDC as most of these areas were illegal and, in fact, the authorities concerned, including the PSEB, had sent them notices about six months ago in this regard. Earlier, the fate of these residential complexes hanged in the balance as there were rumours of action being planned against them. However, Gurjit Aujla of Aujala estate and a municipal councillor says that these colonies had come up about one-and-a-half decade ago and there was no such move by the authorities to take any action against them since it had become a public issue. There has been an increase of at least 20 per cent in the land rates due to the four-laning of the Amritsar-Wagah bypass, he claims.
|
|
|
Falling flat
The real estate business has nosedived in Uttarakhand. After witnessing a boom in the initial years following the formation of the state, the realty business has taken a beating in the past about one-and-a-half year. There are many factors that have led to the recession, but real estate experts feel that the lack of any cohesive urban development policy and the negative message that went out after the present regime took over in March last year have primarily affected the sale of flats and other property. Many of the developers who had invested money for buying land to build residential flats or duplex houses are now putting up their entire projects for sale. "Many of the developers want to sell off their projects, basically due to the absence of any comprehensive policy," says Ashish Mittal, a realty dealer of Dehra Dun. Apart from the geographical constraints due to the state being in a highly seismic zone, the amendments to the land laws, the high stamp duty and circle rates have led to a slowdown in the business. Last year, after taking over the reigns of the government, Uttarakhand chief minister Maj-Gen B.C. Khanduri (retd) amended the land laws to restrict outsiders from buying more than 250 sq m of land in the non-urban areas. The move gave such a negative message that outside investment evaporated despite the fact that the law was only meant to protect agricultural land and did not concern urban properties. But this move brought the thriving real estate business to a near halt. Besides the tough land laws, the government also sharply increased stamp duty and circle rates, again adversely affecting the property business. The rising inflation and ever increasing home loan rates have also put a damper on the business.
The state government did try to do some correction by raising the permissible height of the housing projects from 15 m to 21 m. But this did not satisfy the builders and investors. "Despite raising the heights of buildings, the stipulation of allowing 125 flats on one hectare of land remains the same. So, for practical purposes, this relaxation has no meaning. Moreover, there is no justification for allowing only 40 per cent of the area in the basement for use," says Inder Singh, a pioneer in building multi-storeyed housing in Dehra Dun. The absence of any cohesive policy has also added to the problem of the real estate developers. There are no single-window systems to clear or guide the developers. The masterplan for Dehra Dun has been pending for the past several years, and developers are confused and at the mercy of ruling party politicians or bureaucrats for necessary clearances. State government officials, however, maintain that they are in the process of finalising the masterplan but are tightlipped about the lack of a cohesive policy. The situation is no different in other cities like Haridwar, Haldwani and Nainital in Uttarkhand. But experts are keeping their fingers crossed till any improvement in the global recession. Despite the slowdown, one thing is for sure — the property rates in Uttarakhand have not fallen too much due to the acute shortage of land for construction activities and an escalation in the prices of building material.
|
||
|
Matter of disinterest
The latest hike in loan interest rates will make people disinterested in purchasing houses for the time being and also push developers to look
at other sources for funding, writes S.C. Dhall
The latest twin hike by the RBI — in repo rate and cash reserve ratio — will expectedly
affect the bottom line of the developers directly and also adversely impact the purchasing power of property buyers. The property market which has been witnessing a correction across all verticals is likely to see a further decline in prices. The balance sheets of cash-starved real estate firms which are struggling to deal with slower property sales, higher lending rates and a rise in inputs costs, are expected to weaken further with the RBI increasing the repo rate by 50 basis points and the CRR by
25 basis points. The hike will mean that the flow of money to the sector will be tighter than before. The developers will now have to look towards other sources for funds, which could be on higher rates, thus impacting the cost benefit ratio of each company. In 2003-04, the home loan interest had increased from 7 per cent to 14.25 per cent for floating and 15.50 per cent for fixed rates, respectively. In the 90s, home loan rates were to the tune of 17 per cent. Compared to that, the present hike still makes the home loans more affordable and the average cost of borrowing continues to be lower than what it was six to seven years ago. This is because of the tax break which enables a deduction of up to Rs 1,50,000 on interest payments from the annual income for computing tax liability. For someone in the top tax bracket and paying an interest of up to Rs 1,50,000, this translates into a savings of Rs 50,000 annually. In a way, affordability has increased this year as the incomes have increased and are likely to go up further within the next two months after the announcement of the Sixth Pay Commission. Further, as per data of the RBI, the growth in advances to the housing sector have come down from 25 per cent to 13 per cent in just one-and-a-half year and most of the people have started to defer buying homes. Hence, the demand has begun to drop. Already, the credit crunch is hurting project financing, which is leading to delays in residential
and commercial projects. Projects could now get delayed further. Real estate players are currently grappling with dwindling sales, correction in land prices, tepid demand and rising input costs even as they face a liquidity squeeze. In such a scenario, if banks hike the interest
rates on home loans further, the demand for housing is likely to get hit, says a Chandigarh-based real estate expert. According to Pradeep Jain, chairman of Parsvnath Developers, the increase in the cost of borrowing for developers will escalate the cost of the real estate projects — hence the burden will ultimately be passed on to consumers. The cost of borrowing goes up not only for builders but for all ancillary and input industries as well, leading to a higher price tag for real estate projects. Jain, however, clarifies that foreign direct investment still is a viable option for the players to raise capital. An official from Omaxe says they may not feel a slowdown in the company’s investment and the plans remain as announced earlier. Most of the real estate companies have to adopt a cautious approach in buying land and launching new projects in the light of the tight monetary measures. “We have scaled back some new projects and become cautious about making new commitments,” says Ajith Mittal, president, corporate affairs, Indiabulls group. During the past one month, property transactions in big cities like Mumbai, Delhi, Bangalore, Pune, etc have fallen by over 10 per cent due to high lending rates. Higher lending rates and the resultant increase in EMIs will reduce new property purchases and hurt the sector. Real estate developers, who are already straddled with the stagnant demand for housing and a high cost of construction, now have to reckon with a major
liquidity crunch in the banking system and high interest rates on loans. While developers are optimistic that the current phase is temporary and the market is likely to
rebound after the general election, they are also tapping alternative funding sources, including private equity, for their projects. A real estate consultant of the Tricity, Mangat Rai, however, says the property prices are not likely to come down in Chandigarh as there is virtually no
free land in posh sectors 5, 7 and 21 or along the Madhya Marg. Most of the land there has already been utilised for construction and other real estate development.
He adds that after Chandigarh, it is becoming exceedingly difficult to find freehold land
in Mohali and Panchkula, thus pushing up the demand in nearby areas like Zirakpur,
Dera Bassi, Mani Majra, etc.
|
||
|
SCREEN TEST Satish Narula After a day’s hard work when one comes back, there are two options, either to relax in the confines of the home or outside in the garden. Those who are close to nature prefer to be out. But there, they may have to shield themselves from the prying eyes of Peeping Toms. Since the building bylaws do not permit residents to raise the boundary walls, the only option left is to take the help of vegetation. You have to choose the right kind and the right location. First, mark the locations where you need privacy. The exposed areas in the house are near the front gate that opens many times in a day. The places next to the front and side walls, shared with the neighbours, are in the public glare too. In the present culture of multi-storied flats, the most challenging part is to block the view from those living at levels above you or in parallel galleries. After earmarking the area, you have to work out the height of the screen or blockage required to shut away the gaze. The area near the gate can be blocked by growing low-headed plants or shrubs high enough to block the view from road. For the side walls, there are multiple options like hedges, climbers trained on stretched wires above the front wall or even a bamboo fence for quick but temporary relief. Similar measures can be taken up for the side walls in the neighbourhood. Another effective way is to tie a thick wire (telephone wire) at the far edge, securing it with a nail, and stretching it at an angle to a height of about 10 feet or so on the wall at the other end and allowing a climber to crawl on it. After some time, it forms an oblique curtain. Imagine a flowering screen when it’s bloom time for the creeper! Providing a screen with a tree species is the latest trend. For this purpose, tree species like the columnar Ashok (Polyalthea longifolia pendula) and also the spreading species, Casurina (forms an excellent topiary when clipped) and also certain tall evergreens like Ficus lyrata (see the accompanying picture), etc are being used. Very close planting is done and the growth is trained to give a screen effect. While using tree species for such a purpose, however, the gardener has to keep certain things in mind. The foremost is the spread of strong tree roots. These should not interfere with the walls, the building and underground facilities like sewerage, water pipes and telephone or electric installations. The roots are clipped from time to time to check their wild spread. The writer is a senior horticulturist and can be contacted at satishnarula@yahoo.co.in
|
||
|
Uppals to build new luxury hotels, one in city
Expanding its business in the hospitality sector, real estate firm Uppal Group plans to develop seven luxury hotels by 2010, adding about 1,400 rooms across the country. The group has tied up with global hospitality major Marriott for developing and managing two five-star hotels, each in Gurgaon and Chandigarh, entailing a total investment of over Rs 500 crore. "We have tied up with Marriott for two five-star hotels, which will be ready by next year. We plan to develop another five luxury hotels by 2010, with an addition of about 1,000 rooms," Uppal Group managing director Manish Uppal said in New Delhi recently. Uppal is currently running a hotel in Gurgaon under the brand - Uppal's Orchid. For further expansion, the company has already identified some locations and is scouting for land, he said, without divulging any further detail. "We are looking to tie up with Marriott for our future projects too," Uppal said, adding the company is exploring possibilities with other hotel management firm also. Of the two hotels that Uppal has tied up with Marriott, one would come up in Gurgaon comprising 210 rooms, while other hotel in Chandigarh would have 175 rooms. "We will be investing about Rs 500 crore for developing both properties which will be managed by international chain Marriott Hotel," Uppal said. This would be a revenue-cum-profit sharing agreement with the international hotel chain, he added. Both properties would be operational by 2009, he said.
— PTI
|
||
|
Right returns S.C. Vasudeva Q. We sold our ancestral agricultural land on November 2006 purchased by my grandfather in 1957. The land is within the 10-km municipal limit. To calculate the capital gain we got the price of the land evaluated from a government-approved valuer. We invested a part of the calculated capital gain in purchasing REC bonds and the rest for the agreement. All investments were done before 31.07.2007. Out of six share holders, four of us are in service and filing our income tax returns every year. But we did not show the capital gain in our returns. Now, all share holders have got a notice under Section 142 (1) of the Income Tax Act, 1961 from the office of the deputy commissioner of income tax. Please make it clear: (1) Whether we have to file the revised return or show the same return filed by us last year ? (2) Can we apply for a new PAN for HUF and file separate returns of capital gain from agricultural land and show it? (3) If we have to revise the return then on which form should we apply—ITR-1 OR ITR-2? (4) What is the time limit in which we can file the revised return? (5) I purchased a plot in a residential area of the city on my wife’s name on 30-11-2007. Can I use it for the investment of capital gain (exemption)? (6) Can we show any detail of the capital gain in the return that we have to file of our service income for the assessment year 2008-09? Date on which agri land was sold: 07.11.2006 Date of agreement to purchase the land: 30.06.2007 Date of registry of the plot: 30.11.2007 Date of evaluation: 23.07.2007 — Kulwinder Mann A. The reply based on the facts given in the query is as under: (i) In case you have already filed the return, you can write to the assessing officer from whom the notice has been received that your income tax return stands filed with the department. You should give the complete address of the assessing officer with whom the return has been filed as well as your Permanent Account Number so as to enable the officer issuing the notice to link your return. There is no necessity to file a revised return. (ii) It is presumed that the agricultural land was being held as an HUF property and, therefore, in case the investment had been made in accordance with the provisions of Section 54-EC and 54-B of the Income Tax Act 1961, there is no legal requirement to file the IT return of the HUF. However, it would have been better to file the same so as to enable the department to examine the claim for exemption. (iii) It is not possible to advise on the particular form number in which the return is to be filed as you have not indicated your other sources of income. (iv) The revised return can be filed within one year of the end of the assessment year for which the revised return is required to be filed. For example, a revised return for assessment year 2007-08 can be filed up to March 31, 2009. It may be added that a revised return can be filed only if the original return had been filed within the stipulated time. (v) In case the property was that of HUF, you cannot claim the exemption from the taxability of capital gain earned on the sale of agricultural land. In any case, even if it were an individual property the exemption can be claimed if the residential house is acquired in the name of the person who has transferred the property. The capital gain being in respect of HUF property it can not be reflected in your return. Plot payments
The allotment letter was issued in our favour on 28.02.05. We did not take the possession nor was the conveyance deed executed (PUDA had announced the plot to be a corner one at the time of auction but it was not found to be so later, so I have filed a case which is pending in court). The allotment letter issued to us has a clause regarding possession as under: "Possession of plot shall be handed over to the allottee ... If possession is not taken by the allottee within stipulated period, it shall be deemed to have been handed over on the expiry of said period." Now, I want to sell the plot. My queries are: 1. Is their any bar in selling the plot under such circumstances? 2. Is the 3-year period needed for LTCG over from the date or/and date of allotment. 3. Is it correct that LTCG will be in the hand of my wife, who made 100 per cent payment in spite of the fact that the allotment letter carries the name of both? 4. Is it correct that despite our not having taken the physical possession of the plot from PUDA, we are deemed to be in possession of the plot and correctly entitled to claim LTCG benefits. 5. Is it correct that the sale value minus plot cost and interest paid thereon (to the banker) is the amount on which indexing is to be worked out and finally, the balance of sale price minus indexed value is the LTCG. 6. Is it correct that only the LTCG earned is to be invested in bonds for 3 years’ lock-in vide tax and indexed value can be retained w/o any tax liability? — Man Mohan Singh, Ludhiana A.
The answer to your queries is under: (i) The facts given in the query do not explain whether the plot purchased by your wife is a freehold or a leasehold property. If it is freehold property, there should not be any bar in selling the same, provided there is no injunction of the court against selling the same. (ii) There is a difference in judicial opinion whether the date of allotment or the date of possession has to be taken for the purpose of computing the period of three years. (iii) The long-term capital gain will be deemed to have been earned by a person who is the owner of the capital asset and has made the full payment towards the acquisition thereof. On that basis your wife should be taken as the owner of the plot for the purpose. (iv) In case the terms of the allotment letter provide for the deemed possession on the date specified in it, and the terms of allotment have been accepted by you, the possession will be deemed to have been taken by you on that date. (v) Interest on monies borrowed for the purchase of the capital asset is taken as part of the cost of the capital asset and, therefore, the capital gain should be computed after taking into account the indexed cost price (inclusive of interest). Yes, it is correct that the amount of long-term capital gain can be invested in tax -saving bonds for the purpose of availing an exemption from the taxability of capital gains. Such bonds have a lock-in period of three years.
Farm fresh
Q. I am a farmer by profession. I sold my agricultural land for Rs120 lakh in May 2008. I am to purchase, again, agricultural land. Kindly enlighten: (a) How much amount should I invest to save myself from the payment of income tax? (b) What should be the time limit for the purchase of new land? (c) Can I purchase the land in the name of my adult son? Relevant provisions of the income tax law may kindly be quoted for my future guidance. — Gurdev Singh, Jalandhar A. The answers to your queries are as under: (i) You are required to invest the amount of capital gain in the acquisition of the agricultural land. (ii) The time limit for such an acquisition is a period of two years from the date of transfer of the agricultural land. (iii) The agricultural land will have to purchased by you in your own name so as to claim the exemption under Section 54B of the Act.
Foreign land
Q. Please clarify capital gain tax law for Canadian Citizens. I bought a plot at Amritsar in 1986. Now if I sell it, can I buy residential real estate in Canada to avoid paying tax on it. — Kulbir Kahlon A. The purchase of property in Canada may not enable you to claim the exemption from capital gains tax in view of difference in judicial opinion on the subject. The writer can be contacted
at sc@scvasudeva.com
|
||
| HOME PAGE |
|
With the commencement of the four-laning of the Amritsar-Wagah bypass road, the prices of real estate alongside this 35-km-long stretch have almost doubled within a few weeks.
Q. My wife and I jointly bid for a residential plot of PUDA on 15.12.2004 in a public auction. Being successful bidder/s, we had deposited 10 per cent at the fall of the hammer and balance of 90 per cent was paid by 15.01.05 by availing the discount, as per PUDA rules. The entire 100 per cent payment was made by my wife from her a/c (she borrowed some money from a bank also) and the interest paid on borrowed fund is being capitalised in the plot cost.