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Full House
Letting is the new game in town. Over 1,000 buildings housing flats and apartments have already come up in the Pink City & more are in
the pipeline. To-let signs are coming up faster than you can say Hawa Mahal, writes
JUPINDERJIT SINGH
GONE are the days when residents and traders of this Pink City eagerly awaited the September to February tourist season for making moolah to last through the year. Instead, they now have a new round-the-year business: Renting out commercial and residential building for whopping sums. Thanks to encouraging government policies and a boom in real estate business after 2004-05, the business of renting out property, especially residential, has witnessed a major fillip. Space booking in to-let columns of a leading morning newspaper is over as early as 10 a.m.! The phenomenal growth in rental business has taken place in the last two years specifically after rentals witnessed a three to five times sudden spurt. The opening up of telecom sector brought with it an influx of technicians, engineers and executives. Besides new job opportunities, new courses were started to fill up vacancies in the sector. Later, the entry of big malls and multiplexes opened up a plethora of openings for job seekers who migrated to Jaipur in droves. As malls became functional, even more job seekers arrived. At the same time, rapid computerisation in private and government circle brought hordes of qualified executives, engineers and also students who enrolled in courses started for placements in such companies. If on one hand it has brought over 1,000 mega flats and apartments projects all over the city, on the other it has become major source of income for old constructed houses in C-scheme, Ram Nagar, Civil Lines and similar areas. House owners in these areas, especially near Rajasthan University and educational institutes, have modified their houses in such a way so as to provide accommodation to hundreds of paying guests. They did not take long to shed the taboos also. Many people with grown-up daughters, who were earlier wary of renting out portions to bachelors and single men, did a quick rethink. “Why shouldn’t we? We only rent out our house to persons we know would not misbehave with our daughters. If at all they do, we know how to handle them,” said Sudeshna Shekhawat, a widow, who lives with her two daughters and rents out five rooms to students every year. For her, renting out is a way of earning her livelihood. “The city already had a sizeable number of engineering, medical, commerce and languages course students. The telecom sector opened new vistas. Malls provided employment to thousands. The hotel industry also witnessed a boom concurrently,” said Shekhar Jain, who runs a rental as well as insurance business here. With so many persons coming from outside, existing colonies in and around the walled city fell short of space. This brought mega housing projects, especially flats and apartments, which could house many in small portion of land owing to its vertical construction. It was not only mega housing companies that provided housing facility. Locals cashed in on the boom. People vacated parts of their houses to give on rent. Some renovated to make space for executives. Car, scooter garages turned into one-room tenements. “A portion available for a rent of Rs 2,000-3,000 rose to Rs 4,000-6,000 within months. Executives do not want to live in old houses even if they are in posh localities. They prefer new and modern construction and flats and apartments are the obvious choice,” said Umesh, who runs a to-let agency. In terms of the rental business, Jaipur can be divided into three categories. Firstly, houses in C-scheme and Civil Lines areas that have old construction. Students mainly occupy these. Secondly, new areas like Malvia Nagar, Tilak Nagar, Mansarovar and colonies on the outskirts that are occupied partly by students but mainly by professionals and their families. Lastly, flats and apartments scattered across the city but concentrated around the city centre. Residents of these flats prefer living in style close to their workplaces, which are MNC-run malls like INOX and MGF. New concepts are also catching up — studio apartments being one such favourite among bachelors or those living without their families. These one room, fully furnished houses with a small kitchen could set you back by Rs 4,000-7,000 a month. Their USP: These come furnished with a bed, AC and a fridge among other things. There seems to be a house for everyone in Jaipur! It remains to be seen how much more the city can take.
Tenants at ransom?
ACUTE shortage of residential space may have made house owners residents very innovative but with few options, tenants have no choice but to buckle under exorbitant residents. A single bedroom with a shared lobby costs between Rs 5,000 and 8,000 in the central C-scheme and Civil Lines areas.
Sky is the limit
JAIPUR is undoubtedly bursting at its seams. Pressure on space for first caused horizontal expansion but soon vertical construction was the only solution. Flanked by the Aravallis on three sides, there is not much room for expansion. While big apartments, like Akash Ganga in the de-notified 22-Godaam Industrial Area came up, many raised multi-storey apartments and flats in plots measuring 1,000 sq yards or even less.
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SEZs may get local governance bodies
THE Government of India is in the process of preparing guidelines for setting up local governance bodies for Special Economic Zones. These guidelines are likely to by announced very shortly to delegate greater financial autonomy to the office of the development commissioner. The new rules would also give more powers to the chief executive officer while ensuring that the rents collected from the SEZs should be available for improvement of infrastructure. These bodies will work on the lines of municipal corporations. According to some senior officials, governance bodies will be established only in large SEZs, especially multi- product zones. A minimum area of 1,000 hectares is required to establish such a zone. In SEZs, half the land area is of non-processing nature including living quarters for employees of SEZs units, malls and multiplexes and schools. Some zones are likely to have a population of above 50,000 and are likely to take at least five years to come up. Recommendations for setting up local bodies were submitted by a parliamentary standing committee on commerce headed by BJP leader Murli Manohar Joshi. The committee had recommended that SEZs should get the status of representative local governments like panchayats and municipal The Special Economic Zones Act, 2005, along with SEZ Rules, 2006, came into effect on February 10, 2006. Over 253 new SEZs have been notified which have established 343 units and provide over one lakh jobs. Once notified, it takes at least two years to lay the initial infrastructure. Of the 253 notified SEZs, a little less than 100 are functional. The system
CORPORATE India prefers the multiple subsidiary route as it also helps keep costs down by masking the identity of the parent company. Direct entry by a large industrial group would invariable push up land prices dramatically in the area. State land ceiling laws typically allow a single corporate entity to acquire 5-25 acres. So, in the case of a state with a 25-acre cap, a company developing an SEZ of 10,000 acre would need to form at least 400 subsidiaries. Some states like Maharashtra have a more liberal policy, providing land ceiling exemption based on the Centre’s in-principle approval to an SEZ project while Karnataka, Haryana and Uttar Pradesh insist on a formal consent. As developers have to buy land first, subject to state ceiling, in certain states the biggest SEZ is only of 200 to 300 acre. In Maharashtra, the biggest SEZ is a 1220-hectare multiproduct of Mukesh Ambani in Navi Mumbai.
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Salary Boom According to industry estimates, while salaries for manufacturing and automobiles graduates from reputed schools can go up to Rs 6 lakh a year, real estate firms do not mind paying between Rs 12 and 15 lakh a year! Everyone in this business seems to be earning more. Vice-presidents in the companies earn Rs 50-60 lakh a year whereas senior managers in the automotive business earn between Rs 18 and 30 lakh a year. And to top it all, the sector offers a slew of incentives. The Ma Foi Employment Trends Survey (METS), conducted by Ma Foi, one of India’s largest HR consultancy firm, has predicted a 3 per cent increase in employment in 2008. The largest chunk of new jobs, according to the survey, would be generated by the Real Estate and hospitality sector, riding high with the tourism boom in the country.
Interestingly, even within the sector, there are surprises because it’s not always the top firms that pay most. Mid-tier and not-so-established real estate developers established tend to offer higher salaries, as it is tougher for these companies to attract experienced professionals. “The main attraction for joining realty sector is the tempting incentives that are offered on striking a deal. Eventually, your incentives could outrun the regular salary!” says Sanjeev Kumar, HR officer with real estate company, Ramaprastha. The boom in salaries arises from the fact that the sector itself is changing with several builders trying to become more organised and projecting themselves as well-run professional businesses. Unlike relatively more mature industries such as manufacturing, the real estate business has been essentially entrepreneur-driven. “Earlier, a majority of real estate developers did not have a corporate structure,” observes Sidhant Gupta Director JTPL Townships Private Limited, “but now with a large number of companies raising money to fund future growth, it has become extremely lucrative in terms of market, manpower and, of course, salaries.” The result is a war between developers, private equity players and real estate consultancy firms. Companies are open to hiring good and intelligent people from the other sectors. Everybody is scouting for fresh talent. Attrition levels in the industry stand at 30-40 per cent, according to industry estimates. It’s well established now that the real estate industry pays handsomely. “We can say that real estate industry has become more organized and focussed and is not restricted to building towers, hotels or IT parks. Investment is taking place in the infrastructure segment as a whole. The result is that this sector is more paying at present and is set to become a more serious career option,” says Veenu Puri, HR head, JTPL Townships.
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HRA exemption S.C. Vasudeva
— Joginder Singh A. The exemption of HRA is regulated by Rule 2A of Income-tax Rules, 1962. The least of the following amounts is exempted:
The facts in the query do not indicate the amount actually paid by you. However, you can compute the amount by applying the above tests. Salary for the above purpose includes basic salary plus dearness allowance, if terms of employment so provide.
Owner is payer
— A.K. Sharma A. In case a person has purchased a property by satisfying the following conditions, then he is deemed to be a deemed owner of such property:
Since you satisfy the above conditions, you have become a deemed owner. You are therefore liable to
pay tax on the rent received from letting out the property.
Calculating capital gain
Q. This is with reference to your advice published in Tax Tips on January 19, 2008. My sister was allotted a residential plot at Panchkula by HUDA on February 28, 1995. The physical possession of the plot was given on February 8, 2000. She paid an amount of Rs 6.9 lakh (approx) including installments starting from March 22, 1995 to April 7, 2007. This includes installments, enhanced compensation, interest on late payment and extension charges with regard to construction. She sold the plot on April 11, 2008 for Rs 28.6 lakh and purchased a residential house in Mohali on April 16, 2008 for Rs 18 lakh. Will you be please kind enough to give advice on the following?
— Rakesh Sharda A. The answer to your queries is as under:
Loan pre-payment
Q. I am a Punjab government employee with a gross salary of Rs 2.88 lakh. I had taken a home loan of Rs10 lakh, the monthly EMI of which comes to Rs 12,266. I want to pay a sum of Rs 1 lakh as part pre-payment to the bank. I have taken this money from my father in the form of cheque and sale of gold. Please advise me if I will have any problem in filing income tax return for 2008-09. Also is it necessary for a government employee to carry home 40% of his or her salary? Please clarify. — Rakesh Kumar Banga A. The answer to your queries is as under:
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Space no bar
Shrubs provide both flowers & foliage. If you live in a small house, all the more reason to befriend them, suggests Satish Narula
Shrub plants are suitable for all situations and locations. The advantages of having shrubs are unlimited. One of the major advantages is that out of the varied range there are specimens that bloom at a time when there is no other flower available in the garden — the intervening time between summer and winter flowering annuals. Most shrubs allow even repeated pruning and thus could be kept under control. It is because of this character that various species of shrub plants like Duranta are used as ground cover. Another big advantage is growing nature of shrubs. When allowed to grow on their own, they become miniature trees. This aspect is best utilised by residents of small dwellings where space does not permit growing big trees. Here, shrubs like Cassia glauca, Kaner, Chandni and lagerstroemia are most suited. They even accommodate the parking of a vehicle or two under their canopy. To enjoy them the best, they should be allowed to grow to eye level. Some shrubs bear extremely scented flowers like Gardenia, Raat Ki Rani, Motia and Kaner. A few like Clerodendron thompsonii, Bougainvillea and Allamanda are weak stemmed and could be trained on a trellis. In fact, some gardeners think these belong to the ‘climbers’ category!
Shrubs like Clerodendron inermii, Aliar, Hibiscus and bougainvillea are used as hedges. When pruned repeatedly, they form an excellent screen. However, raising bougainvillea and hibiscus as hedges is tricky and needs careful handling. Repeated cutting and pruning does not let them flower as flowering takes place only on terminals which get cut when it is time to flower. Variegated forms of shrubs unlike their simple forms not only put forth a profusion of blooms but their foliage beauty is an added bonus. Some of the choicest kinds are Exocaria, Duranta, Hibiscus, Bougainvillea and Poinsettia (colourful bracts). Shrubs like Nandina domestica change colour of foliage from green to red as winter approaches whereas in case of Hydrangea, the colour of blooms changes with change in soil nutrient status. Shrubs like Calliandra (see accompanying picture) and Clerodendron thompsonii are valued for their excellent blooms. Some shrubs seem to be repeating nature in its miniature form. There are the Liliput brethren of Gulmohur, Lagerstroemia and Pride of India. Even amongst shrubs, there are small stature replicas like that of Chandni, Lagerstroemia and Bougainvillea. Some of these are also used by Bonsai buffs taking advantage of their miniature foliage and form. This column appears fortnightly The writer is a senior horticulturist and can be contacted at satishnarula@yahoo.co.in
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Mahagun Developers deposits Rs 30 crore tax
Real estate company Mahagun Developers deposited Rs 30 crore with the Income Tax Department after I-T sleuths detected alleged irregularities in paying taxes. “The company has surrendered Rs 30 crore as taxes after we detected anomalies in their accounts following searches on their premises yesterday,” an I-T official said. The I-T sleuths seized a large number of documents, computers, hard disk drives, ledgers and other records during the searche. The Noida-based company has an annual turnover of about Rs 160 crore, I-T officials said. Mahagun is developing malls, mansions, penthouses, manors, villas and other residential projects in and around the national capital. “Mahagun has 40 years of engineering excellence in construction and was created to bring a new way of doing business in construction industry,” according to the company website.
— PTI
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YOU’VE heard this one before: Real estate is big money. Till now true only for speculators, investors and realtors, the segment is now hot property for job seekers too. 
Despite the downslide, realty firms are doling out big bucks to employees & the scenario is poised to get only better
Q. I am receiving a house rent allowance of Rs 10,000 a month. Can I claim exemption of the said amount from income tax? 
Q. I had entered into a written agreement to purchase a house property from someone for a sum of Rs 50 lakh. I have since paid the above amount and taken possession of the house. The sale deed is yet to be registered in my favour. I have given the house property on rent. Am I liable to pay tax on the rent so received?
IF you have a passion for gardening, then any given space is a constraint. Those living in small houses or flats may feel the pinch, but let that not stop you from going green. 