Dec 13, 2009
Taxation is a power of the political sovereign authority
and realization of taxes is essential for meeting State
expenses which is meant for governance, of defence,
development science and technology, health, education,
food, shelter, healthier environment, irrigation, roads,
transport and facilities for employment.
As India continues its scorching pace of economic growth,
both Centre and States are trying to find out new means
and ways to generate more revenue within the existing legal
framework. During the last one decade, the real estate and
construction sector has grown so rapidly that both the Centre
and the State made efforts to realize some more revenue from
this sector. The Union tried to levy service tax and the States
started levying sales tax. The real estate services were taken
as a significant source of revenue collection by both the Union
and the States.
Under the present legal framework, sale or transfer of immovable
property is governed under the Transfer of Property Act, 1882 and
the sale of movable property is governed under the Sale of Goods
Act, 1930 and hence liable to paysales tax.
46th amendment of the constitution
Before the 46th Amendment of the Constitution, composite contracts,
such as works contracts were not assessable to sales tax, as sales tax
could be imposed only upon transfer of property in goods from one
person to another. Consequently sales tax could not be imposed upon
transactions which might have resembled sale but in fact were composite
contracts of supply and services. Because of this, States were losingsales
tax revenue to a large extent and this led to the 46th amendment of the
Constitution which brought changes in the definition of the word ‘sale’
as given in Article 366 (29A) of the Constitution of India by incorporating
those transactions which might have resemblance to sale but did not fall
within the traditional concept of sale and judicially held to be not
exigible tosales tax . The idea behind this amendment was to create a
concept of ‘deemed sale’ by treating, with the help of a legal fiction,
such a transaction as a ‘sale’ even if the same did not fall within the
ambit ofthe definition of ‘sale’ as defined in the Sale of Goods Act.
In other words, by bringing various transactions within the purview of
the definition of ‘sale’, a transaction which was otherwise not a sale
has been deemed to be a sale. After the 46th Amendment of the Constitution,
the works contract which was indivisible one, by a legal fiction has been
altered into a contract which is divisible, one for sale of goods and other
for supply of labour and services. After the 46th Amendment of the Constitution,
it was possible for a State to levysales tax on the value of the goods involved
in the execution of works contracts in the same way in which sales tax was
leviable on the price of goods and the material supplied in a building contract
which has entered into two distinct and separate parts. The properties that are
transferred to the owner are the goods in the execution of works contract and not
the conglomerates i.e. the building actually constructed. The 46th Amendment
has done nothing more than making it possible for the State to levysales
tax on the price of the goods and the materials used in works contracts as
if there is a sale of such goods and materials. As the Supreme Court
in the case of Builders Association vs. Union of India (1989) 73 SW 370
has held that sub-clause (b) of clause (29A) of Article 366 should not be
read as equivalent to a separate entry in the List- II of the Seventh
Schedule to the Constitution of India enabling the State to levy tax on
sale and purchase independent to Entry- 54 thereof. The power of the State
to levy tax on sale and purchase of goods including the deemed sale and purchase
of goods under Article 366 (29A) is to be found in Entry- 54 and not outside it.
Judgment of the Apex Court in K. Raheja’s Case
Pursuant to the amendment made to the Constitution, all the States enacted
law to levy sales tax on works contract. However no tax was being levied on
the real estate transactions taking it that the consideration passing from
buyer of a flat/apartment to the developer did not attract VAT. However,
the Supreme Court in K. Raheja Development Corporation vs. Union of India
(2005) 141 SW 298 case held that if a Developer enters into a sale of a
flat/apartment before construction is completed, it would be a works
contract. Broadly it was based on the reasoning that an agreement to sale
of a flat under construction is an agreement to construct a flat for an
eventual buyer of a flat and an agreement to construct a flat building
is a work contract. Although this judgment of the Supreme Court was in
the context ofthe definition of ‘works contract’ under the Karnataka Sales
Tax Act, the Excise Authorities were very much quick in adopting the issue
and started demanding service tax on the labour portion of works contract
and the States started levying sales tax on the material portion involved
in the construction of the building treating the same to be a works contract.
Nature of Real Estate Transactions
Typically in real estate transactions, the land holder contributes the land,
the developer constructs the building and sells the flats along with the
proportionate rights in respect to the land. As a result, each owner becomes
the owner of an apartment with corresponding undivided share in the land arid
an undivided share in the common areas. The usual feature of such agreements
is that the land holder will have no say or control in the development.
Nor will the land holder have any say as to whom and at what cost the developer’s
share of apartments are to be dealt with or disposed of. Land owner’s only right
is to demand delivery of his share of constructed area and/or other consideration
as per the agreement. Such agreements are neither contracts for construction, nor
contracts for sale of apartments, but are contracts entered for mutual benefit.
In a true joint venture agreement between the land owner and developer,
the land owner is a partner or co-adventurer where the land owner has a
say or control in the construction and participates in management of the
joint ventures. In such situation, land owner is neither a consumer nor
a service provider. Such joint ventures are comparatively rare. What is
factually prevalent are the agreements which are a hybrid arrangements
for construction, consideration and sale. Ordinarily, a developer is not
interested in sharing the control of his business except assuring the land
owner a specified constructed area and consideration.
Keeping in view of the above legal proposition, it is worth noting that
Developers of the real estate do not undertake any construction work for
and on behalf of proposed customers/ allottees and the title in the flat/
apartment so constructed passes to the customer only on the execution of
the sale deeds and registration thereof. Until the time the said sale deed
is executed, the title, interest including ownership remains with the developers.
The payments made by the prospective customers in instalments are aimed at
facilitating purchase of flat/ premises by the probable purchasers so that
they may not be required to pay whole of the price at a time. The initial
agreement between the Promoter/Builder/Developer and the owner is in the
nature of agreement to sale and is as per the provisions of the Transfer
of Property Act, 1882. The same does not by itself create any interest in
the property. Ownership of the property remains with the Promoter/ Builder/Developer.
Only after completion of construction and full realization of the agreed sum,
a sale deed is executed and only then ownership of property gets transferred
to the ultimate owner.
Decision of Guwahati High Court in Magus Construction
The Guwahati High Court in
Magus Construction (P) Ltd. vs. Union of India (2008) 17 VST 17 while examining the
issue of levy of service tax on the real estate transaction held that while the
Promoter/Builder/Developer undertakes construction activities,
the relationship of service provider and the service recipient
is absent and thereby the question of providing taxable service
to some other person does not arise. The Guwahati High Court
held that the construction activities done by Promoter/Builder/Developer
are in respect of their own work and it is only the completed construction
work which is sold to the buyers who may have made agreement for sale before
the construction had actually started or during the progress of the
construction activities or at the end of construction activity.
Any advance payment made by prospective buyers or deposit receipts
issued by the Promoter/ Builder/Developer is against the consideration
of sale of flat /building to such prospective buyers and not for
obtaining service from the Promoter/ Builder/Developer.
In fact, an agreement for sale of a flat that is under construction
is not an agreement for construction of a flat but the same is simply
a financing agreement, whereby the purchaser books a flat while it is
under construction by the developer for himself as an entrepreneurial
venture rather than on behalf of and under instructions from the buyer.
Judgment in K. Raheja’s case referred to larger bench
Recently in a judgment
in Larsen & Toubro Ltd. vs. State of Karnataka 2008 17 VST 460’s case,
the Apex Court has doubted the law laid down in the Raheja’s case and
has referred the said judgment to a larger bench. In L & T’s case,
the developer was engaged in development involving construction of
flats and subsequent sale thereof. Revenue Department’s argument was
that such sale is liable to tax for the reason that transaction for
construction and sale of flats are in the nature of ‘works contract’.
The Apex Court in the said referral order has held that it is important
to bear in mind the distinction between two types of contract namely sale
and works which rests on the principle that the contract of sale is one
whose object is transfer of property in goods and delivery of possession
of a chattel as a chattel to the buyer. When the object of the work
undertaken by a payee is not the transfer of chattel as a chattel, the
contract is one of work arid labour. The Apex Court further observed
that if the ratio of Raheja’s case is to be accepted then there will
be no difference between works contract and a contract for sale of
chattel as a chattel.
Circular of Central Board of Excise & Customs
The Central Board of Excise and Customs also in view of the ongoing
controversy as regards levy of service tax on construction of residential
complexes, vide Circular dated 29-1-2009 has clarified that any service
provided by a Promoter/ Builder/Developer in connection with the construction
of residential complex till the execution of sale deed would be in the nature
of self service and would not attract the scope of service tax.
The circular of Central Board of Excise and Customs has not only
settled that the disputes as regards levy of service tax on the real
estate transactions but the same will also help in resolving the
controversy as regards levy of sales tax on real estate transactions.
Although the referral order of the Supreme Court in L & T’s case shall
result in a bringing temporary relief for the real estate developers,
until a larger bench renders its verdict, the need of the hour is to
prevent the over zealous officials from levy of service tax which appears
to be against the very concept of the works contract tax and the object of
the 46th Amendment of the Constitution.
Conclusion
The Constitutional Amendment in Article 366 (29A) read with the relevant
taxation entries has enabled the State to exert its taxing power in an
important area of social and economic life of the community.
In exerting this power, particularly relating to transfer of property
in goods involved in the execution of works contract in building activity,
the State might perhaps, be pushing its taxation power to the peripheries
of the social limits of that power, and, perhaps even of the constitutional
limits of that power. However it should be borne in mind that the real estate
industry is very important for the economic growth of the country and the
Government should not take it to be a tool to realize more revenue and
force the industry to engage itself into long drawn litigations that too
at a time when the world economy is passing through a phase of great recession.
Author:- Dr. Ashok Saraf, Senior Advocate, Guwahati High Court
Monday, December 14, 2009
197 housing societies in state served liquidation notices-Chennai
77 To Be Wound Up In Chennai; Many Were Defunct For Yrs
The registrar of housing cooperative societies hasissued liquidation notices to 197 housing societies
that have virtually been defunct for more than five years
without any activity or transaction. Seventy-seven of the
197 societies to be wound up are in Chennai.
These societies had come under the state housing
department’s scanner following the busting of a
Rs 490-crore scam in some societies, which had
allegedly diverted customers’ money for purposes
other than what it was intended for — clearing their
loan liability with the Tamil Nadu Cooperative
Housing Federation. Consequently, the housing
department carried out reviews in all 1,035 societies in the state
— 816 are affiliated to the Tamil Nadu Housing Cooperative
Federation — and many issues ranging from availability
of excess staff in some societies to total inaction in
many others were brought to light.
While as many as 197 societies were issued notices
15 days ago for liquidation, another 214 have been
put on alert for transferring their assets and liabilities
to better-performing ones, said the registrar of housing
cooperative societies, Dharmendra Pratap Yadav.
Most of them have assets and liabilities worth less
than Rs one crore each, said Yadav, adding that
those assets would be adjusted against the liabilities
before they are merged with other societies.
“They have been given 30 days notice to reply to the liquidation notices.
Later, we will assess their finances,” he added.
The Tamil Nadu Cooperative Housing Federation had
stopped funding these societies in September after the
scam surfaced. The federation, over the years, had
provided Rs 4,753 crore as loan to societies and as
of now, there is an outstanding dues of Rs 1,168 crore.
In many cases, despite the members having paid the full
money to the society concerned, the latter had not
remitted it to the federation.
To maintain transparency and accountability
in their activities, they were also instructed to close
down all bank accounts and carry out financial transactions
only through escrow accounts to be opened in district cooperative banks.
Saturday, December 12, 2009
Dubai crisis: Dawood dials builder, asks him to pay up
S Balakrishnan,
11 Dec 2009, 0659 hrs IST,
MUMBAI: It is rare that the don himself picks up the phone
and threatens anyone. That job is left to his lieutenants
like Chhota Shakeel.
Butsince the stakes are very high and the builder is also in
the top league, don Dawood Ibrahim decided to issue the
threat himself.
Sources in the security establishment told TOI on Wednesday
that the Karachibased Dawood Ibrahim had last week threatened
a builder with dire consequences if he did not part with a huge
sum of money. Not only did he issue the threat, but also
activated his ace shooters to tackle the unwilling builder.
Alarmed by this development, certain middlemen, including
underworld operative Mohammed Macchi, are trying to broker
a settlement. Some of them are believed to have flown to
Karachi to personally mollify the don. A top crime branch
official said: “We will enter the picture only if a formal
complaint is lodged with us.’’
The apparent reason why the builder has not approached the
crime branch’s anti-extortion cell so far is that he himself
was using the don’s finances for several of his projects.
“The dispute is over the quantum of returns to be paid to
‘mucchad’ aka Dawood Ibrahim. The stakes are stupendous and
hence, the don has himself got into the act. The collapse
of the Dubai economy is already hurting his business interests
and this dispute in Mumbai has complicated the situation for him,’’
a senior security official observed.
It is well-known that the underworld has huge stakes in the
real estate industry in the Mumbai-Thane belt, both in fresh
constructions and in old buildings and slum rehab projects.
An SRA official said: “We receive calls from the ‘bhais’ who
ask us to approve the projects of their frontmen. We dare
not complain to the police.’’
Source:TOI
11 Dec 2009, 0659 hrs IST,
MUMBAI: It is rare that the don himself picks up the phone
and threatens anyone. That job is left to his lieutenants
like Chhota Shakeel.
Butsince the stakes are very high and the builder is also in
the top league, don Dawood Ibrahim decided to issue the
threat himself.
Sources in the security establishment told TOI on Wednesday
that the Karachibased Dawood Ibrahim had last week threatened
a builder with dire consequences if he did not part with a huge
sum of money. Not only did he issue the threat, but also
activated his ace shooters to tackle the unwilling builder.
Alarmed by this development, certain middlemen, including
underworld operative Mohammed Macchi, are trying to broker
a settlement. Some of them are believed to have flown to
Karachi to personally mollify the don. A top crime branch
official said: “We will enter the picture only if a formal
complaint is lodged with us.’’
The apparent reason why the builder has not approached the
crime branch’s anti-extortion cell so far is that he himself
was using the don’s finances for several of his projects.
“The dispute is over the quantum of returns to be paid to
‘mucchad’ aka Dawood Ibrahim. The stakes are stupendous and
hence, the don has himself got into the act. The collapse
of the Dubai economy is already hurting his business interests
and this dispute in Mumbai has complicated the situation for him,’’
a senior security official observed.
It is well-known that the underworld has huge stakes in the
real estate industry in the Mumbai-Thane belt, both in fresh
constructions and in old buildings and slum rehab projects.
An SRA official said: “We receive calls from the ‘bhais’ who
ask us to approve the projects of their frontmen. We dare
not complain to the police.’’
Source:TOI
Friday, December 11, 2009
Deduction u/s. 80-IB(10) on YOY basis to builders/developers showing profit on partial completion method
Dec 11, 2009
Analysis of CBDT Instruction No 4/2009, dated 30th June, 2009
Background
* An undertaking engaged in developing and building housing
projects is entitled to a deduction to the extent of 100% of
the profits derived from such housing projects subject to the
fulfillment of certain conditions in accordance with the provision
of section 80-IB(10) of the Income-tax Act, 1961 (ITA).
* One such condition requires that the said projects
should commence on or after 1 October 1998 and complete within
four years from the financial year in which the housing project
is approved by the local authority ( In cases where the said
approval is obtained on or after 1 April 2004).
* In the case of an undertaking showing profit on partial
completion, there was an issue whether the deduction
u/s. 80-IB(10) would be available on a year to year basis
or in the year of completion of the project.
Clarification
The Central Board of Direct Taxes (CBDT) has now
clarified that the deduction can be claimed on a
year to year basis where the assessee is showing profit
from partial completion of the project in every year.
Further, it is also clarified that in case it is later
found that the condition of completing the project within
the specified time limit of 4 years as stated in
section 80-IB(10) has not been satisfied, thededuction
granted to the assessee in the earlier years should
be withdrawn.
Conclusion
The above clarification puts to rest a long drawn controversy
regarding timing of claiming deduction u/s 80-IB(10) in respect
of housing projects where the assessee was showing profits
on partial completion.
Analysis of CBDT Instruction No 4/2009, dated 30th June, 2009
Background
* An undertaking engaged in developing and building housing
projects is entitled to a deduction to the extent of 100% of
the profits derived from such housing projects subject to the
fulfillment of certain conditions in accordance with the provision
of section 80-IB(10) of the Income-tax Act, 1961 (ITA).
* One such condition requires that the said projects
should commence on or after 1 October 1998 and complete within
four years from the financial year in which the housing project
is approved by the local authority ( In cases where the said
approval is obtained on or after 1 April 2004).
* In the case of an undertaking showing profit on partial
completion, there was an issue whether the deduction
u/s. 80-IB(10) would be available on a year to year basis
or in the year of completion of the project.
Clarification
The Central Board of Direct Taxes (CBDT) has now
clarified that the deduction can be claimed on a
year to year basis where the assessee is showing profit
from partial completion of the project in every year.
Further, it is also clarified that in case it is later
found that the condition of completing the project within
the specified time limit of 4 years as stated in
section 80-IB(10) has not been satisfied, thededuction
granted to the assessee in the earlier years should
be withdrawn.
Conclusion
The above clarification puts to rest a long drawn controversy
regarding timing of claiming deduction u/s 80-IB(10) in respect
of housing projects where the assessee was showing profits
on partial completion.
25 properties' auction put off by HUDA
11 December 2009, 03:29am IST
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PANCHKULA: The auction of 25 properties of Haryana
Urban Development Authority (HUDA) was postponed
for indefinite period on Thursday.
The auction of these properties was scheduled
to be put under hammer on Thursday. HUDA has planned
to auction some shops in Industrial Area Phase II and Sector 20.
It is pertinent to mention here that a local court had
attached these properties due to non-payment of compensation
to land owners, whose land had been acquired by land
acquisition officer.
Last week, the local court had directed attachment
of these sites. In June, 1983, when 20 landowners at
Maheshpur village challenged the compensation against the
acquisition of land for Sector 21. Later in the year 1996,
the Punjab and Haryana High court fixed the compensation
as Rs 2.25 lakh per acre. The order was upheld by apex court
in 2008 as well and it was directed that the compensation be
disbursed within two months. However, the payment was not released and
the land owners moved local court following which the properties
to be auctioned were ordered to be attached.
Source:TOI-Chandigarh
Text Size:
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PANCHKULA: The auction of 25 properties of Haryana
Urban Development Authority (HUDA) was postponed
for indefinite period on Thursday.
The auction of these properties was scheduled
to be put under hammer on Thursday. HUDA has planned
to auction some shops in Industrial Area Phase II and Sector 20.
It is pertinent to mention here that a local court had
attached these properties due to non-payment of compensation
to land owners, whose land had been acquired by land
acquisition officer.
Last week, the local court had directed attachment
of these sites. In June, 1983, when 20 landowners at
Maheshpur village challenged the compensation against the
acquisition of land for Sector 21. Later in the year 1996,
the Punjab and Haryana High court fixed the compensation
as Rs 2.25 lakh per acre. The order was upheld by apex court
in 2008 as well and it was directed that the compensation be
disbursed within two months. However, the payment was not released and
the land owners moved local court following which the properties
to be auctioned were ordered to be attached.
Source:TOI-Chandigarh
Hydrabad City realtors in a tizzy
11 December 2009, 05:57am IST
HYDERABAD: Hyderabad's real estate sector was in a
state of shock on Thursday, just hours after the Centre
conceded to the demand for a separate
Telangana state. Speculating that the move would further
dampen the already crippled industry, realtors were seen
making their own calculations about the future of their
business in the city. Apart from a few optimistic voices,
most realtors opined that the T decision would spell doom
for real estate in Hyderabad and result in a steep fall in
the property value.
"We will go back at least by five years in terms of growth,"
said Khaja Asif Ahmed of Stellar Project Management Consultant,
adding, "It will take at least two to three years for
the political unrest to settle and till then no investor
from outside would put his money here." According to his
prediction, the industry, which is still battling the recession ghost,
is set to hit a new low over the next few months.
City realtors say that Hyderabad, as part of Telangana, would
also disrupt the flow of sentiment-driven investments.
"So far people from all over the state invested in Hyderabad
because of its status as the capital of Andhra Pradesh.
But if it becomes part of Telangana, people would think
twice before picking up property here," said a Kukatpally-based
realtor Madhusudan admitting that it would indeed be a long haul
before the sector gains momentum. "Until a clear separation takes
place, there will be no new investments," Madhusudan said.
A common sentiment that seemed to be riding high among most players
from the sector was that of ‘protecting Hyderabad' from the turmoil
by declaring it as the joint capital of two states. "Our fear of
stagnation in transactions (purchases) can be best addressed through
this move. That way the value of properties in the city would remain
unaffected and investors too would feel secure," said Ashwin Rao, director,
Primus Developers. Though Rao is one among the few optimistic builders
who feel that the industry would be back on track, only after an initial
glitch of a few months, he says that the common capital stand would be
ideal to arrest the slump in the realty business.
Source:TOI HYD
HYDERABAD: Hyderabad's real estate sector was in a
state of shock on Thursday, just hours after the Centre
conceded to the demand for a separate
Telangana state. Speculating that the move would further
dampen the already crippled industry, realtors were seen
making their own calculations about the future of their
business in the city. Apart from a few optimistic voices,
most realtors opined that the T decision would spell doom
for real estate in Hyderabad and result in a steep fall in
the property value.
"We will go back at least by five years in terms of growth,"
said Khaja Asif Ahmed of Stellar Project Management Consultant,
adding, "It will take at least two to three years for
the political unrest to settle and till then no investor
from outside would put his money here." According to his
prediction, the industry, which is still battling the recession ghost,
is set to hit a new low over the next few months.
City realtors say that Hyderabad, as part of Telangana, would
also disrupt the flow of sentiment-driven investments.
"So far people from all over the state invested in Hyderabad
because of its status as the capital of Andhra Pradesh.
But if it becomes part of Telangana, people would think
twice before picking up property here," said a Kukatpally-based
realtor Madhusudan admitting that it would indeed be a long haul
before the sector gains momentum. "Until a clear separation takes
place, there will be no new investments," Madhusudan said.
A common sentiment that seemed to be riding high among most players
from the sector was that of ‘protecting Hyderabad' from the turmoil
by declaring it as the joint capital of two states. "Our fear of
stagnation in transactions (purchases) can be best addressed through
this move. That way the value of properties in the city would remain
unaffected and investors too would feel secure," said Ashwin Rao, director,
Primus Developers. Though Rao is one among the few optimistic builders
who feel that the industry would be back on track, only after an initial
glitch of a few months, he says that the common capital stand would be
ideal to arrest the slump in the realty business.
Source:TOI HYD
Boost for dissenters, blow to developers in Mimbai
Swati Deshpande & Nauzer Bharucha,
11 December 2009, 06:34am IST
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The Bombay high court has in one stroke decided
the fate of over half a dozen pending cases
concerning redevelopment of various cooperative
society buildings in the city.
The ruling last Saturday not only dismissed the application
of a builder against some members of Fardoon Cooperative
Housing Society, Khar, but also effectively protected interests
of dissenters elsewhere. Justice S C Dharmadhikari made it clear
the verdict would be a precedent for similar cases pending before
the single bench.
One case that stands effectively dismissed is that of Pantnagar
Railway Cooperative Housing Society in the suburbs, where Jaideep
Construction had a redevelopment agreement with a majority of the
society members. Of 33 members, 28 had passed the resolution,
vacated the premises and shifted to rented premises. Of the
remaining five, two were not members and two were subsequent
transferees yet to be admitted to the society's membership,
while one was operating a restaurant whose licence had been
cancelled.
Vineet Naik, advocate for the builder said, "We will study the
judgment but it will most likely be carried in appeal.
It affects various redevelopment projects in the city where
a few members without bona fide reasons may hold construction
to ransom. In our case, though documents showed they were
residential occupants, they wanted commercial premises.''
Sapnil Kothari, a corporate lawyer associated with over six
redevelopment projects at various stages, says,
"The interests of all members of the society may never
coincide and the entire redevelopment process, aimed at
improving the Mumbai skyline and create more housing would
be held to ransom.''
The ruling may also set off a fresh wave of litigation.
A flat owner in Goregaon (West) is already contemplating
a petition to protect himself against the builder who
he says is trying to cheat him of his lawful area in
the new redeveloped building.
Meanwhile, the Sahara Cooperative Housing Society case
in which Justice A M Khanwilkar had paved the way for
easy redevelopment in 2007, when he ruled that dissenting
minority members could be evicted forcibly so they do not
hold development work to ransom, is expected to come up for
fresh hearing on Friday. The 12-flat building in Khar (W)
continues to be occupied to date, with only the society
secretary and chairman shifting out.
Another case in point is Jeevan Deep building, built
in 1958, in Khar (West). Dubai-based Jairam Masand who
owns a flat in it last month rushed to the Supreme Court
after not getting any relief from the high court, and the
SC directed the authorities and the developer, Whiz Enterprise,
to maintain status quo. But by the time the order came,
demolition had already started. "I am not against redevelopment.
In fact, I was happy that everyone would get a new flat.
It is the manner in which decisions to appoint the developer
were taken that I opposed,'' Masand said.
Masand and another member are the only dissenting voices in
the society of 12 members. "I am fighting for my rights.
It's not about the money. I have already spent Rs 15 lakh
fighting this case in court,'' he said.
Amrit Rajani, director of Whiz Enterprises, said Masand
was stalling the project and leaving other residents in the
lurch. "The BMC had issued several notices to the society
to demolish the building as it was dilapidated. However,
demolition was stopped after the Supreme Court ordered status quo,''
he said. Rajani added the society has filed a case in the apex court
against Masand for not cooperating. "It is a simple case of arm-twisting.
As developers, we have already invested Rs 11.3 crore in the project and
are paying Rs 11 lakh a month for rent for members who have
already moved out,'' he said.
Source:Mumbai Toi
11 December 2009, 06:34am IST
|
The Bombay high court has in one stroke decided
the fate of over half a dozen pending cases
concerning redevelopment of various cooperative
society buildings in the city.
The ruling last Saturday not only dismissed the application
of a builder against some members of Fardoon Cooperative
Housing Society, Khar, but also effectively protected interests
of dissenters elsewhere. Justice S C Dharmadhikari made it clear
the verdict would be a precedent for similar cases pending before
the single bench.
One case that stands effectively dismissed is that of Pantnagar
Railway Cooperative Housing Society in the suburbs, where Jaideep
Construction had a redevelopment agreement with a majority of the
society members. Of 33 members, 28 had passed the resolution,
vacated the premises and shifted to rented premises. Of the
remaining five, two were not members and two were subsequent
transferees yet to be admitted to the society's membership,
while one was operating a restaurant whose licence had been
cancelled.
Vineet Naik, advocate for the builder said, "We will study the
judgment but it will most likely be carried in appeal.
It affects various redevelopment projects in the city where
a few members without bona fide reasons may hold construction
to ransom. In our case, though documents showed they were
residential occupants, they wanted commercial premises.''
Sapnil Kothari, a corporate lawyer associated with over six
redevelopment projects at various stages, says,
"The interests of all members of the society may never
coincide and the entire redevelopment process, aimed at
improving the Mumbai skyline and create more housing would
be held to ransom.''
The ruling may also set off a fresh wave of litigation.
A flat owner in Goregaon (West) is already contemplating
a petition to protect himself against the builder who
he says is trying to cheat him of his lawful area in
the new redeveloped building.
Meanwhile, the Sahara Cooperative Housing Society case
in which Justice A M Khanwilkar had paved the way for
easy redevelopment in 2007, when he ruled that dissenting
minority members could be evicted forcibly so they do not
hold development work to ransom, is expected to come up for
fresh hearing on Friday. The 12-flat building in Khar (W)
continues to be occupied to date, with only the society
secretary and chairman shifting out.
Another case in point is Jeevan Deep building, built
in 1958, in Khar (West). Dubai-based Jairam Masand who
owns a flat in it last month rushed to the Supreme Court
after not getting any relief from the high court, and the
SC directed the authorities and the developer, Whiz Enterprise,
to maintain status quo. But by the time the order came,
demolition had already started. "I am not against redevelopment.
In fact, I was happy that everyone would get a new flat.
It is the manner in which decisions to appoint the developer
were taken that I opposed,'' Masand said.
Masand and another member are the only dissenting voices in
the society of 12 members. "I am fighting for my rights.
It's not about the money. I have already spent Rs 15 lakh
fighting this case in court,'' he said.
Amrit Rajani, director of Whiz Enterprises, said Masand
was stalling the project and leaving other residents in the
lurch. "The BMC had issued several notices to the society
to demolish the building as it was dilapidated. However,
demolition was stopped after the Supreme Court ordered status quo,''
he said. Rajani added the society has filed a case in the apex court
against Masand for not cooperating. "It is a simple case of arm-twisting.
As developers, we have already invested Rs 11.3 crore in the project and
are paying Rs 11 lakh a month for rent for members who have
already moved out,'' he said.
Source:Mumbai Toi
Thursday, December 10, 2009
Asia property funds to top $200 billion in coming yrs
8 Dec 2009, 1521 hrs IST,
HONG KONG: Asia's property fund size will expand by more
than 50 percent in the next two to three years
to $200 billion, driven by demand from
institutional investors from countries including China,
industry executives said on Tuesday.
Pension funds, sovereign wealth funds
and affluent individuals would
likely boost their portfolios for real estate funds
in coming years after appetites waned sharply during
the sharp economic downturn earlier this year,
the executives told Reuters.
"The next 12 months will probably be a bit slow
because we are still coming out of this difficult
global situation, but then I think it will pick up
more quickly after that," said Nicholas Loup,
Asia-Pacific chief executive of UK-based private
property group Grosvenor Ltd.
Asia's fund managers have $130.9 billion of property
assets under management, based on a survey by the
Asian Association for Investors in Non-listed
Real Estate Vehicles, a non-profit organisation
focussing on fund-related companies in the region.
The current global property fund totalled $409.6 billion,
the association's first-ever survey showed. Loup,
who is also chairman of the association, said Asia's
fund size could easily top $200 billion over
the next few years, barring risks external to the
region, such as debt problems faced by financial
institutions in markets outside Asia.
"The big sovereign wealth funds in the region,
the Chinese insurance companies, will start investing,
(and) you'll see the Middle East looking more eastwards
for their capital to be deployed," said Willem de Geus,
managing director for Morgan Stanley Asia.
Morgan Stanley, Singapore's CapitaLand Financial and
Australia's AMP Capital, are Asia's top three property
fund managers, making up nearly 40 percent of the region's
total property funds, the survey showed. With growing
appetites for property funds in Asia, Morgan Stanley is
considering launching products aimed at institutional
investors in potentially lucrative emerging markets.
"We are doing some homework at the moment on domestic
Chinese funds and domestic Indian funds. We haven't
decided on anything yet," de Geus said.
source: REUTERS
GODREJ PROPERTIES IPO OVER-SUBSCRIBED
MUMBAI: Godrej Properties Ltd's public offer,
through which the realty developer expects
to raise up to Rs 500 crore,
got over-subscribed 1.13 times
on the first day of issue on Wednesday.
The IPO received bids for over 87.68 lakh shares
of the company against 77.32 lakh equities on
offer for public, the latest data with the National Stock Exchange (NSE) shows.
Source: PTI
Tuesday, December 8, 2009
Know your Capital Gain on Income from House Property
7 December 2009
Shelter is one of the basic human needs and buying
a house is generally every household’s dream.
These days, keeping in view the rise in income
levels, households also look at the option of
investing in more than one house property.
People buy a second home for many reasons,
which, Capital Gains Binter-alia, include
as an investment for capital appreciation;
to use it as a holiday home; to get a regular
stream of income by way of rentals;
or to diversify their investment portfolio.
Whatever be the reason, an important aspect to
be considered at the planning stage is the tax
implication of owning and maintaining the second home.
Second House — Self-Occupied
If an individual owns more than one house property
for his use, then under the provisions of the Income
Tax Act, 1961 (the ‘Act’), any one property as per
his choice is treated as self-occupied and its
annual value is computed to be nil. The other house
property is deemed to be let-out and a notional rent
as per the provisions of the Act is computed as the
taxable income under the head ‘Income from House Property’.
In other words, the second house is treated as being
rented-out and its estimated rental income is treated as taxable income.
Second House — Let-Out
If the second house is let-out to a tenant, the actual
rent received, subject to certain conditions,
is treated as the taxable income under
the head ‘Income from House Property’.
Deduction for Municipal Taxes
The taxes paid to the local authority, generally the
municipal taxes, are allowed as deduction in the
financial year, in which such taxes are actually paid.
This is irrespective of whether these taxes pertain
to the current financial year or the earlier year.
Therefore, an individual should keep a track of the
municipal taxes paid and claim this deduction accordingly.
Deduction for Repair & Maintenance
Further, a sum equal to 30% of the annual value of the
house property is allowed as deduction towards repair
and maintenance charges. It is pertinent to note that
this deduction of 30% is a fixed percentage, irrespective
of the actual amount incurred by the individual
i.e., irrespective whether an individual incurs more
or less amount, he can only claim a deduction
for 30% of the annual value of the house property.
Interest Deduction
Interestingly, in both the above scenarios, i.e., whether
the second house property is deemed to be let-out or
actually let-out, the actual interest paid on the
housing loan is allowed as deduction.
This is contrary to the case of a
self-occupied property, wherein the
maximum interest on housing loan is restricted
to Rs 150,000 p.a., subject to certain conditions.
Hence, investment in house property even if it
is a second house, does have its own tax benefits.
If one is lucky enough to own more than one house
property then s/he can avail of tax benefits mentioned
above, in respect to the second house.
Shelter is one of the basic human needs and buying
a house is generally every household’s dream.
These days, keeping in view the rise in income
levels, households also look at the option of
investing in more than one house property.
People buy a second home for many reasons,
which, Capital Gains Binter-alia, include
as an investment for capital appreciation;
to use it as a holiday home; to get a regular
stream of income by way of rentals;
or to diversify their investment portfolio.
Whatever be the reason, an important aspect to
be considered at the planning stage is the tax
implication of owning and maintaining the second home.
Second House — Self-Occupied
If an individual owns more than one house property
for his use, then under the provisions of the Income
Tax Act, 1961 (the ‘Act’), any one property as per
his choice is treated as self-occupied and its
annual value is computed to be nil. The other house
property is deemed to be let-out and a notional rent
as per the provisions of the Act is computed as the
taxable income under the head ‘Income from House Property’.
In other words, the second house is treated as being
rented-out and its estimated rental income is treated as taxable income.
Second House — Let-Out
If the second house is let-out to a tenant, the actual
rent received, subject to certain conditions,
is treated as the taxable income under
the head ‘Income from House Property’.
Deduction for Municipal Taxes
The taxes paid to the local authority, generally the
municipal taxes, are allowed as deduction in the
financial year, in which such taxes are actually paid.
This is irrespective of whether these taxes pertain
to the current financial year or the earlier year.
Therefore, an individual should keep a track of the
municipal taxes paid and claim this deduction accordingly.
Deduction for Repair & Maintenance
Further, a sum equal to 30% of the annual value of the
house property is allowed as deduction towards repair
and maintenance charges. It is pertinent to note that
this deduction of 30% is a fixed percentage, irrespective
of the actual amount incurred by the individual
i.e., irrespective whether an individual incurs more
or less amount, he can only claim a deduction
for 30% of the annual value of the house property.
Interest Deduction
Interestingly, in both the above scenarios, i.e., whether
the second house property is deemed to be let-out or
actually let-out, the actual interest paid on the
housing loan is allowed as deduction.
This is contrary to the case of a
self-occupied property, wherein the
maximum interest on housing loan is restricted
to Rs 150,000 p.a., subject to certain conditions.
Hence, investment in house property even if it
is a second house, does have its own tax benefits.
If one is lucky enough to own more than one house
property then s/he can avail of tax benefits mentioned
above, in respect to the second house.
Monday, December 7, 2009
Value buying in realty is back
NEW DELHI: Value buying is back in business. Realty buyers are primarily looking at the sub-40 lakh category to fulfill their dream home
aspirations and it is the 2BHK which has emerged as the preferred format for buyers in these times.
Sunday ET spoke to a cross section of real estate developers, brokers and bankers to assess the ground situation on the kind of housing format and
Home Loan Size that is now gaining maximum flavour.
Most developers agree that the current hotselling flavour of the market is apartments ranging between Rs 25 to 40 lakh. According to Rajeev Talwar, group executive director, DLF, it is primarily the 2 and 3 BHKs which are finding buyers. “As far as prices are concerned, the sub-40 lakh is selling well in Bangalore. We have sold 1,200 units in Bangalore since the beginning of February this year. Similarly in Delhi we have sold 2,500 units since the beginning of the Financial Year. We will be coming up with more affordable housing projects across locations over the next three years.”
Unitech official pegs it a little lower. As per a Unitech spokesperson, the sub-30 lakh category is faring well in these times. “We have sold flats in Noida, Gurgaon, Chennai, Mohali, Kolkata and Hyderabad in this range. It’s mainly the 2 and 3 BHK with sizes between 800-1,000 sq ft respectively. In fact, in the first six months of this year, we have sold over 8 million sq ft of apartments, out of which 40% is in the price range of sub-30 lakh,” he said.
Others feel that a combination offered with a study space is working out as an appealing factor. Says Rita Dixit, executive director, Jaypee Greens, “Options in the range of Rs 25-Rs 40 lakh are gathering momentum. Apartments which offer 2 and 3BHK with study space work out well. These typically range between 1,050-1,400 sq ft. Our projects offering such options, such as Classic and Kosmos, are bringing good business.”
Not merely the property developers but even realty brokers echoed similar sentiments. Pankaj Jain, executive director of Realistic Realtors, a Delhi-based real estatebrokerage firm said, “The 35 to 50 lakh segment is seeing bulk demand across locations. Demand for 2BHK with size ranging from 1,200 to 1,500 sq ft is high as it is an ideal size for a nuclear family.”
The home loan enquiries coming to banks bear testimony to the market trend. According to Renu Sud Karnad, Jt MD, HDFC, “The segment where we are seeing a huge demand is in the price range of Rs 30-50 lakh in metros and bigger towns and around Rs 20-25 lakh in smaller towns.”
Similarly, in the case of Bank of Rajasthan, where a predominant number of customers are from rural, semi-urban and urban centres, the average ticket size is below Rs 20 lakh. As per the loan portfolio of home loan of Bank
of Rajasthan, the sub-Rs 20 lakh loans category constitute almost 95% of the total home loan portfolio.
Buying house? Quote price Home loan process Know your Home Loan How to transform your home |
Sunday ET spoke to a cross section of real estate developers, brokers and bankers to assess the ground situation on the kind of housing format and
Home Loan Size that is now gaining maximum flavour.
Most developers agree that the current hotselling flavour of the market is apartments ranging between Rs 25 to 40 lakh. According to Rajeev Talwar, group executive director, DLF, it is primarily the 2 and 3 BHKs which are finding buyers. “As far as prices are concerned, the sub-40 lakh is selling well in Bangalore. We have sold 1,200 units in Bangalore since the beginning of February this year. Similarly in Delhi we have sold 2,500 units since the beginning of the Financial Year. We will be coming up with more affordable housing projects across locations over the next three years.”
Unitech official pegs it a little lower. As per a Unitech spokesperson, the sub-30 lakh category is faring well in these times. “We have sold flats in Noida, Gurgaon, Chennai, Mohali, Kolkata and Hyderabad in this range. It’s mainly the 2 and 3 BHK with sizes between 800-1,000 sq ft respectively. In fact, in the first six months of this year, we have sold over 8 million sq ft of apartments, out of which 40% is in the price range of sub-30 lakh,” he said.
Others feel that a combination offered with a study space is working out as an appealing factor. Says Rita Dixit, executive director, Jaypee Greens, “Options in the range of Rs 25-Rs 40 lakh are gathering momentum. Apartments which offer 2 and 3BHK with study space work out well. These typically range between 1,050-1,400 sq ft. Our projects offering such options, such as Classic and Kosmos, are bringing good business.”
Not merely the property developers but even realty brokers echoed similar sentiments. Pankaj Jain, executive director of Realistic Realtors, a Delhi-based real estatebrokerage firm said, “The 35 to 50 lakh segment is seeing bulk demand across locations. Demand for 2BHK with size ranging from 1,200 to 1,500 sq ft is high as it is an ideal size for a nuclear family.”
The home loan enquiries coming to banks bear testimony to the market trend. According to Renu Sud Karnad, Jt MD, HDFC, “The segment where we are seeing a huge demand is in the price range of Rs 30-50 lakh in metros and bigger towns and around Rs 20-25 lakh in smaller towns.”
Similarly, in the case of Bank of Rajasthan, where a predominant number of customers are from rural, semi-urban and urban centres, the average ticket size is below Rs 20 lakh. As per the loan portfolio of home loan of Bank
Slum-free Urban India Campaign stipulates to provide seven basic amenities and entitlements to the urban poor and slum dwellers in the country by 2012: Kumari Selja
5 DEC 2009
The Minister of Housing & Urban Poverty Alleviation Kumari Selja has said that the UPA Government has conceived and embarked upon a massive programme of affordable housing and basic amenities to the urban poor under the flagship programme, Jawaharlal Nehru National Urban Renewal Mission (JNNURM). She was speaking on the occasion of laying the foundation stone for houses sanctioned by her ministry under the Basic Services to the Urban Poor (BSUP) component of JNNURM, here today. She said her ministry has been pursuing the goal of Slum-free Urban India Campaign under JNNURM, launched since October 2007 from Tirupathi. This Campaign stipulates that seven basic amenities and entitlements to the urban poor, namely land tenure, affordable shelter, water, sanitation, education, health and social security must be provided to the slum-dwellers in the country by 2012.
Following is the full text of the Minister’s address on the occasion:
“I am very happy to be here in Rangpo to participate in the function for laying the foundation stone for houses sanctioned by my Ministry under the Basic Services to the Urban Poor (BSUP) component of Jawaharlal Nehru National Urban Renewal Mission (JNNURM).
Roti, Kapda aur Makaan are the three basic necessities of a human being. Over the period of planned development, we have been able to address the problems of food security and clothing for the Aam Aadmi. As you may recall we are now working on a National Food Security Act. It gives me great satisfaction to say that for the first time in the history of the country, the UPA Government laid focus on providing “makaan” to the common man in cities and towns. The UPA Government conceived and embarked upon a massive programme of affordable housing and basic amenities to the urban poor under the flagship programme, Jawaharlal Nehru National Urban Renewal Mission (JNNURM), launched in December 2005. My Ministry had earlier decided to support the construction of about 15 lakh houses for the urban poor in the country under JNNURM. Now, we have launched another scheme called Affordable Housing in Partnership to encourage partnerships between Government agencies, parastatals, local bodies and the private developers. Under this new scheme we are targeting another 10 lakh houses, not only covering EWS and LIG but also MIG.
As you may be aware, under JNNURM we support 4 programmes. Urban Infrastructure & Governance and Basic Services to the Urban Poor cover 65 identified cities, including Gangtok. Urban Infrastructure Scheme for Small & Medium Towns and Integrated Housing & Slum Development Programme focus on small and medium towns. I may inform you that the Government of India has so far sanctioned more than 2500 projects in the country under JNNURM covering total project cost of about Rs. 100,000 crores under all the four components of JNNURM together. The Central Government has already committed Central Assistance support of about Rs. 53,000 crores to States/UTs for the sanctioned projects. As far as my Ministry is concerned, we have sanctioned projects for housing and basic amenities to the urban poor, including slum-dwellers worth Rs.33860 crores. We have committed Additional Central Assistance of about Rs. 18,500 Crores. The houses under JNNURM will come with ownership of house in the name of the wife or husband and wife jointly and with provision of basic services such as water, sanitation, social security, education and health care. The poor will be enabled to attain the same quality of life as the other population of the city.
My Ministry has sanctioned 3 projects for Sikkim with the total project cost of Rs.33.58 Crore covering 254 houses for the poor under BSUP. This involves Central Grant of about Rs.29.06 Crore. We have recently provided an additional support of Rs.50 Crores for Sikkim under the Scheme of Affordable Housing in Partnership. Once project report is received, we will process it for sanction.
The projects for housing and basic amenities to the urban poor in Sikkim were sanctioned to enable the Government of Sikkim to attain the broader goal of making Sikkim slum-free and ensure that the urban poor are provided with the basic amenities they need. My Ministry has been pursuing the goal of Slum-free Urban India Campaign under JNNURM, launched since October 2007 from Tirupathi. This Campaign stipulates that seven basic amenities and entitlements to the urban poor, namely land tenure, affordable shelter, water, sanitation, education, health and social security must be provided to the slum-dwellers in the country by 2012.
I am happy to announce that the UPA Government has resolved to introduce a new scheme called Rajiv Awas Yojana for the slum dwellers and the urban poor. The Rajiv Awas Yojana (RAY) would extend support to States/UTs that are willing to assign property rights to people living in slum areas. UPA Government's effort would be to create a Slum free India in five years through the Rajiv Awas Yojana. The Rajiv Awas Yojana will provide a new RAY hope for our cities and towns, especially to the poor, slum-dwellers and disadvantaged sections of the urban society. I urge the Chief Minister to work out plan for Slum-free Sikkim where all the poor residents would own a home and access basic services. I also urge that all the slum dwellers are provided with property rights and enabled to lead a life with dignity.
In addition to JNNURM and the newly announced Rajiv Awas Yojana, my Ministry is working on several initiatives for the urban poor. We have revamped the Swarna Jayanti Shahri Rozgar Yojana with focus on empowerment of women’s self-help groups, entrepreneurship development for self-employment, micro-enterprises, micro-finance, community mobilization and capacity building. The budget for the scheme has been hiked by the UPA Government from Rs.250 Crores in 2006-07 to Rs.515 Crores in 2009-10. To focus on skill development and employability of the poor, the Government of India has announced National Skill Development Mission. The Mission will focus on development of modern skills and training to enable the poor to access remunerative jobs opened up by globalizing urban economies. We are targeting skills training for 2 lakh persons a year under the revamped SJSRY which has come into effect on 1st April 2009.
We have also revised the National Policy on Street Vendors’ 2004 in order to enable the street vendors carry out their trade without harassment from various authorities. The new Street Vendors Policy 2009 and Model Law on Street Vendors 2009 have been circulated to all State and UT Governments. I have urged the Chief Ministers to implement the new Street Vendors Policy to give a new deal to the street vendors. Master Plan must provide legal space for street vending. The Town Vending Committee must have at least 40% members from the street vendors themselves. The vendors must be enabled to carry out business in a hassle free and legal manner.
I am happy to inform you that we have launched an Interest Subsidy Scheme for Housing the Urban Poor. Under this scheme, the urban poor will be able to get loans from banks and other institutions at interest 5% lower than the market rate of interest to build their houses. I urge that the Government of Sikkim takes steps to avail benefit from the scheme.
I hope the machinery of the State Government would ensure that the benefits of JNNURM and other schemes reach the urban poor, especially the youth and women. These programmes have to be implemented in convergence with other Government of India initiatives. The issues of quality healthcare, primary education, social security etc. will have to be addressed by converging urban poverty alleviation programmes with the schemes of Health, Sarva Siksha Abhiyan, Aam Aadmi Bima Yojana, Rashtriya Swasthya Bima Yojana, Prime Minister’s Employment Generation Programme, National Social Assistance Progarmme including Indira Gandhi National Old Age Pension Scheme, Integrated Child Development Scheme, Janani Suraksha Yojana etc. I assure that the Government of India will extend full support to the Government of Sikkim to implement programmes for the poor and disadvantaged sections.
Last, but not the least, let me congratulate all the beneficiaries for whom foundation stone for houses is laid today. I wish them all the very best for the future. I also thank the State Government of Sikkim for having made this project possible. I would request the Government to ensure that the beneficiaries are also covered under skill development and employment generation support programmes under SJSRY.
Let us all work together with enthusiasm and dedication to make Urban India Slum-free and Poverty-free as quickly as possible.”
The Minister of Housing & Urban Poverty Alleviation Kumari Selja has said that the UPA Government has conceived and embarked upon a massive programme of affordable housing and basic amenities to the urban poor under the flagship programme, Jawaharlal Nehru National Urban Renewal Mission (JNNURM). She was speaking on the occasion of laying the foundation stone for houses sanctioned by her ministry under the Basic Services to the Urban Poor (BSUP) component of JNNURM, here today. She said her ministry has been pursuing the goal of Slum-free Urban India Campaign under JNNURM, launched since October 2007 from Tirupathi. This Campaign stipulates that seven basic amenities and entitlements to the urban poor, namely land tenure, affordable shelter, water, sanitation, education, health and social security must be provided to the slum-dwellers in the country by 2012.
Following is the full text of the Minister’s address on the occasion:
“I am very happy to be here in Rangpo to participate in the function for laying the foundation stone for houses sanctioned by my Ministry under the Basic Services to the Urban Poor (BSUP) component of Jawaharlal Nehru National Urban Renewal Mission (JNNURM).
Roti, Kapda aur Makaan are the three basic necessities of a human being. Over the period of planned development, we have been able to address the problems of food security and clothing for the Aam Aadmi. As you may recall we are now working on a National Food Security Act. It gives me great satisfaction to say that for the first time in the history of the country, the UPA Government laid focus on providing “makaan” to the common man in cities and towns. The UPA Government conceived and embarked upon a massive programme of affordable housing and basic amenities to the urban poor under the flagship programme, Jawaharlal Nehru National Urban Renewal Mission (JNNURM), launched in December 2005. My Ministry had earlier decided to support the construction of about 15 lakh houses for the urban poor in the country under JNNURM. Now, we have launched another scheme called Affordable Housing in Partnership to encourage partnerships between Government agencies, parastatals, local bodies and the private developers. Under this new scheme we are targeting another 10 lakh houses, not only covering EWS and LIG but also MIG.
As you may be aware, under JNNURM we support 4 programmes. Urban Infrastructure & Governance and Basic Services to the Urban Poor cover 65 identified cities, including Gangtok. Urban Infrastructure Scheme for Small & Medium Towns and Integrated Housing & Slum Development Programme focus on small and medium towns. I may inform you that the Government of India has so far sanctioned more than 2500 projects in the country under JNNURM covering total project cost of about Rs. 100,000 crores under all the four components of JNNURM together. The Central Government has already committed Central Assistance support of about Rs. 53,000 crores to States/UTs for the sanctioned projects. As far as my Ministry is concerned, we have sanctioned projects for housing and basic amenities to the urban poor, including slum-dwellers worth Rs.33860 crores. We have committed Additional Central Assistance of about Rs. 18,500 Crores. The houses under JNNURM will come with ownership of house in the name of the wife or husband and wife jointly and with provision of basic services such as water, sanitation, social security, education and health care. The poor will be enabled to attain the same quality of life as the other population of the city.
My Ministry has sanctioned 3 projects for Sikkim with the total project cost of Rs.33.58 Crore covering 254 houses for the poor under BSUP. This involves Central Grant of about Rs.29.06 Crore. We have recently provided an additional support of Rs.50 Crores for Sikkim under the Scheme of Affordable Housing in Partnership. Once project report is received, we will process it for sanction.
The projects for housing and basic amenities to the urban poor in Sikkim were sanctioned to enable the Government of Sikkim to attain the broader goal of making Sikkim slum-free and ensure that the urban poor are provided with the basic amenities they need. My Ministry has been pursuing the goal of Slum-free Urban India Campaign under JNNURM, launched since October 2007 from Tirupathi. This Campaign stipulates that seven basic amenities and entitlements to the urban poor, namely land tenure, affordable shelter, water, sanitation, education, health and social security must be provided to the slum-dwellers in the country by 2012.
I am happy to announce that the UPA Government has resolved to introduce a new scheme called Rajiv Awas Yojana for the slum dwellers and the urban poor. The Rajiv Awas Yojana (RAY) would extend support to States/UTs that are willing to assign property rights to people living in slum areas. UPA Government's effort would be to create a Slum free India in five years through the Rajiv Awas Yojana. The Rajiv Awas Yojana will provide a new RAY hope for our cities and towns, especially to the poor, slum-dwellers and disadvantaged sections of the urban society. I urge the Chief Minister to work out plan for Slum-free Sikkim where all the poor residents would own a home and access basic services. I also urge that all the slum dwellers are provided with property rights and enabled to lead a life with dignity.
In addition to JNNURM and the newly announced Rajiv Awas Yojana, my Ministry is working on several initiatives for the urban poor. We have revamped the Swarna Jayanti Shahri Rozgar Yojana with focus on empowerment of women’s self-help groups, entrepreneurship development for self-employment, micro-enterprises, micro-finance, community mobilization and capacity building. The budget for the scheme has been hiked by the UPA Government from Rs.250 Crores in 2006-07 to Rs.515 Crores in 2009-10. To focus on skill development and employability of the poor, the Government of India has announced National Skill Development Mission. The Mission will focus on development of modern skills and training to enable the poor to access remunerative jobs opened up by globalizing urban economies. We are targeting skills training for 2 lakh persons a year under the revamped SJSRY which has come into effect on 1st April 2009.
We have also revised the National Policy on Street Vendors’ 2004 in order to enable the street vendors carry out their trade without harassment from various authorities. The new Street Vendors Policy 2009 and Model Law on Street Vendors 2009 have been circulated to all State and UT Governments. I have urged the Chief Ministers to implement the new Street Vendors Policy to give a new deal to the street vendors. Master Plan must provide legal space for street vending. The Town Vending Committee must have at least 40% members from the street vendors themselves. The vendors must be enabled to carry out business in a hassle free and legal manner.
I am happy to inform you that we have launched an Interest Subsidy Scheme for Housing the Urban Poor. Under this scheme, the urban poor will be able to get loans from banks and other institutions at interest 5% lower than the market rate of interest to build their houses. I urge that the Government of Sikkim takes steps to avail benefit from the scheme.
I hope the machinery of the State Government would ensure that the benefits of JNNURM and other schemes reach the urban poor, especially the youth and women. These programmes have to be implemented in convergence with other Government of India initiatives. The issues of quality healthcare, primary education, social security etc. will have to be addressed by converging urban poverty alleviation programmes with the schemes of Health, Sarva Siksha Abhiyan, Aam Aadmi Bima Yojana, Rashtriya Swasthya Bima Yojana, Prime Minister’s Employment Generation Programme, National Social Assistance Progarmme including Indira Gandhi National Old Age Pension Scheme, Integrated Child Development Scheme, Janani Suraksha Yojana etc. I assure that the Government of India will extend full support to the Government of Sikkim to implement programmes for the poor and disadvantaged sections.
Last, but not the least, let me congratulate all the beneficiaries for whom foundation stone for houses is laid today. I wish them all the very best for the future. I also thank the State Government of Sikkim for having made this project possible. I would request the Government to ensure that the beneficiaries are also covered under skill development and employment generation support programmes under SJSRY.
Let us all work together with enthusiasm and dedication to make Urban India Slum-free and Poverty-free as quickly as possible.”
Income tax- House property- India simple guide
House Property - Income Tax effects in India:
Self Occupied house property:
If the house is self- occupied, then interest on housing loan taken from recognized financial institutions like bank etc. is eligible for deduction under Sec.24. The Annual Value of the property will be taken as nil and hence naturally there will be negative income i.e loss from house property which can be set off against any other income in the said financial year.
The interest allowed for the houses purchased prior to 1.4.1999 is only Rs.30000/- maximum and for subsequent period, the amount allowed is Rs. 150000/-. Only one house can be treated as self-occupied property if anyone owns more than one house and wants to claim self-occupied property either by himself or his relatives or even if it is locked.
House property given on rent:
For rented property, the annual value i.e. rent receivable is to be calculated first allowing deductions like municipal tax paid for the house property, insurance paid for the house property. This is called net annual value. If it is not possible to calculate rentable value, then the annual value will be taken as ratable value as per municipal /city valuation.
From the Net Annual value, the deductions are allowed for
- Vacancy allowance ( house remained vacant)
- Interest on house Bld loan without any limit
- Repair allowance of 30% of net annual value.
The remaining amount , if it is negative, then this amount can be set off against other income like salaries and business income. Otherwise, it will be taxed at the appropriate rates after adding this with other income. This type of calculation can be done for any number of houses owned by individual given on rent.
When you want to sell the house and have some capital gain:
Capital gain is divided into two categories:
- Short term capital gain.
- Long term capital gain.
Short Term Capital Gain:
If we sell the house property within 3 years from the date of purchase/ construction, it will be treated as short term capital gain and will be added to the income of that year and taxed according to the slab. No indexation benefit will be given for the house property.
Long Term Capital Gain:
If we sell the house property after 3 years from the date of purchase/ construction, it will be treated as Long term capital gain. The tax rate applicable will be 20% after application of indexation on the capital gain.
For example, X sold his property on Jan 1, 2006 for 80 lakhs. He bought it on 22.12.2002 for 35 lakhs. The capital gain will be
Sale price: Rs. 80 lakhs
Index in 2002 was 447
Index in 2006 was 497.
Indexed cost of acquisition will be: Rs. 35 lakhs * 497/447 = 39 lakhs(say)
So there is a long term capital gain of Rs. 41 lakhs. This is long term capital gain as there was 3 years gap and eligible for indexation and tax exemptions if capital gains are invested suitably.
There are tax exemptions available on the long term capital gains we make in selling house property.
- If we invest in a plot, we need to purchase it within 2 years of sale of original property. We have to construct a house on the said plot within a year. In short, if we purchase a plot, within 3 years we have to completely constructed one house on it. Otherwise we will have to pay tax. We have to invest minimum of Rs. 39 lakhs which is our capital gain. If we invest less than that, then the difference will be added to the income of the concerned financial year and taxed according to the tax slab.
- If we purchase apartment, it should be done within 2 years from the date of original property sale. Tax conditions are same just like 1 above.
- We can deposit the capital gains in a capital gains bank account with a nationalized bank within the date of filing returns in which the capital gains accrued. The amount along with the accumulated interest needs to be utilized for purchase of a property within two years of sale date.
- We can invest in Capital gains bonds also issued by NABARD ,HUDCO etc. if their bonds cover to give this benefit. But the interest rate will be nominal.
Caution:
When we construct/purchase a house to avoid capital gains tax after sale of first house:
When we purchase a new house after selling our earlier one , ideally we should own it for a minimum of 3 years or else, the capital gains earlier exempt will be taxed and we will also have pay interest and penalties to income tax dept
Venkata Ramani
SKS Microfinance to Offer Home Loans
Even as realty markets are trying to shake off the downturn impact, SKS Microfinance, the largest microfinance company in terms of assets, is set to offer its customers loans for their housing needs. The company on Thursday said it has joined hands with the Housing Development Finance Corporation (HDFC) in its attempt to bridge the critical gap in the housing finance needs of the poor.The pilot project will be conducted in Andhra Pradesh among credit members who have been with SKS for at least three years. These loans will be towards extension and improvement of dwelling units which double as income-generating units like eateries, kirana shops, papad and agarbathi-making units, among others. Most microfinance clients belong to the low-income category and do not have any documented source of income.
HDFC will provide technology support and the first tranche of funding worth Rs 10 crore. This loan to SKS would help fund about 1,250 members, considering an average ticket size of Rs 80,000. “While SKS will borrow at variable rates, we are lending at fixed rates of interest for a five-year period,” said Suresh Gurumani, CEO, SKS.
SKS member clients can avail loans ranging from Rs 50,000-1 .5 lakh, with tenure between three and five years, which will be delivered at their doorstep. However, unlike other products of SKS, the liability would not be at the group level and it would be offered as individual mortgage-backed loans.
“The launch of our housing microfinance initiative follows massive demand from our members who have no access to formal institutional funding. The interest rates charged are risk-adjusted rates that compare well with industry rates for urban self-employed and non-formal sector clients,” said Mr Gurumani.
According to him, the operational costs and risks are much higher as borrowers of these loans do not have any income papers or bank accounts and all transactions are in cash. Also, while we borrow at variable rates, we are lending at fixed rates of interest for a five-year period,” he added.
“This association helps HDFC to contribute to the financial inclusion story of India by reaching services to the grassroot levels. We hope that similar efforts of other MFIs would facilitate in shaping the housing microfinance sector,” Renu Karnad, joint managing director, HDFC, said. Other MFIs including Basix and Spandana had offered similar products earlier.
Real Estate Agents – Your Guide to Your Real Estate Dreams
Are you planning to buy or sell real estate all by yourself?
Good, but are you acquainted with all the nuances of transacting
a commercial real estate? Let’s face it- selling or buying a
commercial real estate is one of the most difficult jobs and most
of us are not smart enough to handle all the details in the most
economic manner.
Selling your own land might save you the
commission payable to real estate agents however;
you will spend double the amount through other channels
in the transaction process. It is always advisable to get an
experienced real estate agent to help you with your transaction
or to deal with established real estate buyers while selling your property.
Choosing an expert real estate agent can make a big difference
as they are most informed about all real estate investment opportunity
and can ensure that you get the maximum return out of your real estate
transaction. At the same time, these real estate agents would manage
all the legal issues reducing your burden.
Lets now see the benefits of hiring an expert real estate agent.
Professional real estate brokers are equipped with the latest and
up-to date information on real estate market.
These available information are always accessible to
interested clients. They provide clients with information
about the latest happenings in sales price data, comparative
costs and other labor costs to help clients to make the best
out of their investments.
These professional real estate brokers also provide access
to other information, which can make big difference in your
decision about choosing the perfect real estate investment opportunity.
They will provide you with information like market lease trends, popularity
study and a comparative report on the changing trends in different real
estate markets in different states. Addition to this, the real estate brokers
also look after the economic trend that affects the real estate market.
This information can be used by the prospective client to study the
current real estate market and choose the ideal property that fits his
purpose and pocket. They are capable of handling thousands of data
and handling very large transactions that involves millions of dollars.
In order to get the competitive edge, a client should get the latest
information from the professional real estate brokers.
A real estate transaction involves legal issues and complexities,
which are very difficult to be single handedly taken care of by
any layman. These professional real estate brokers are trained to
solve the complicated legal issues and thus save your valuable.
Although the agents will take their share from the sale proceeds
as commission, but it’s worth giving that amount rather than making
an improper investment.
It is advisable not to venture into a real estate transaction
without the guidance and advice of an experienced real estate broker.
They have the right training and equipment to give you proper advice
and transaction services so that your money gets into the right channel
and your real estate venture goes smoothly.
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