To give a boost to the mission of ‘Housing for All by 2022’ and also address the urban poor’s housing requirement, the Pradhan Mantri Awas Yojana (PMAY) is being reworked. Of the four verticals of the scheme, ‘Promotion of affordable housing for weaker section through credit linked subsidy’ is the one that would appeal to the urbanites the most. There are two important changes being made to the scheme.
First, while the existing guidelines are aimed at the economically weaker section (EWS) and the lower income group (LIG) category, earning Rs 3 lakh and Rs 6 lakh per annum respectively, two new subsidy slabs (yet to be notified) will bring in people earning up to Rs 12 lakh and Rs 18 lakh per annum into the fold.
Second, as per Budget 2017, the 30 square metre (carpet area) limit will apply only in case of municipal limits of 4 metropolitan cities, while for the rest of the country, including in the peripheral areas of metros, the limit of 60 sq. m. will apply.
A 60 sq. m. carpet area is close to 100 sq. m. of built-up area as nearly 30-50 per cent is the difference between them. In sq. ft., a 100 sq. m. is nearly 1,000 sq. ft., which could be equivalent of 2 BHK in several locations. This new move has made affordable housing scheme accessible to many people living in urban areas now.
Type of housing project
To qualify for the scheme, the house has to be within the definition of affordable housing. According to the Housing for All (Urban) Scheme Guidelines March, 2016 issued by the Ministry of Housing and Urban Poverty Alleviation, a project where at least 35 per cent of the houses are constructed for the EWS category will be called an affordable housing project. So if one wishes to buy a home in an upmarket project that hasn’t got any allocation towards affordable housing, the scheme simply won’t apply.
Who all are eligible?
The first eligibility condition is that the person (beneficiary) who applies for the scheme should not own a pucca house (an all weather dwelling unit) either in his or his family member’s name in any part of India. A beneficiary family will include husband, wife and unmarried children.
The second eligibility involves the beneficiary’s income level. EWS households are defined as households having an annual income up to Rs 3 lakh. An EWS house means a single unit or a unit in a multi-storeyed super structure having a carpet area of up to 30 sq. m., with adequate basic civic services and infrastructure services like toilet, water, electricity, etc.
Remember, carpet area is the area enclosed within the walls, the actual area to lay the carpet on. This area does not include the thickness of the inner walls. Built-up area is the gross area of the flat which comprises the carpet area as well as the thickness of the walls and the ducts, and it can be 15-25 per cent more than the carpet area and sometimes known as the plinth area.
LIG households are defined as households having an annual income between Rs 3 lakh and Rs 6 lakh. An LIG house means a single unit or a unit in a multi-storeyed super structure having carpet area of up to 60 sq. m., with adequate basic civic services and infrastructure services like toilet, water, electricity, etc. However, the states/Union Territories have been given the flexibility to redefine the annual income criteria as per local conditions, in consultation with the Centre.
The beneficiary, at his discretion, can build a house of larger area, but the interest subvention would be limited to first Rs 6 lakh only.
No matter how much loan one takes, the 6.5 per cent subsidised interest rate will apply only up to Rs 6 lakh. The credit-linked subsidy will be available only for loan amounts up to Rs 6 lakh and such loans would be eligible for a 6.5 per cent interest subsidy. Any additional loans beyond Rs 6 lakh will be at a non-subsidised rate.
Interest subsidy will be credited upfront to the loan account of the beneficiaries through lending institutions, resulting in reduced effective housing loan and equated monthly instalment (EMI). So if you take a home loan at a 9 per cent rate, you will pay only 2.5 per cent interest on Rs 6 lakh and 9 per cent on the remainder.
Illustratively, the subsidy will be credited to the borrower’s account upfront by deducting it from the principal loan amount. As a result, the borrower will pay EMI on the remainder of the principal loan amount. For instance, if the borrower avails a Rs 6 lakh loan and the subsidy thereon works out to Rs 2.20 lakh then this amount (Rs 2.20 lakh) would be reduced upfront from the loan (i.e., the loan would reduce to Rs 3.80 lakh) and the borrower would pay EMIs on the reduced amount of Rs 3.80 lakh.
In the two new slabs, people earning up to Rs 12 lakh per annum will get 4 per cent interest subsidy on a principal component of Rs 9 lakh, and the income category of Rs 18 lakh per annum will get a 3 per cent subsidy on a principal component of Rs 12 lakh.
For all the slabs, the scheme will apply to loans with tenure of up to 20 years, as against the limit of 15 years now.
From where to avail the loan
The loan can be availed from any primary lending institution (PLI) such as a bank or a housing finance company. For the purpose of identification as an EWS/LIG beneficiary under the scheme, an individual loan applicant will have to furnish self-certificate/affidavit as proof of income to the bank.
But unlike a normal loan, one has to be careful while transferring subsidised loans to another bank. If a borrower has taken a housing loan and availed of interest subvention under the scheme but switches to another PLI for balance transfer later, such beneficiary will not be eligible to claim the benefit of interest subvention again.
Affordable housing has been given infrastructure status in Budget 2017, which should aid developers in takings its associated benefits. But for a common man, the timely delivery of the house still remains a distant dream. For availing the benefits, the builders had to complete the affordable housing projects in 3 years. Budget 2017 proposes to extend this period to 5 years. Tread carefully and evaluate all the options before venturing out to explore the affordable housing segment, even if you are a first-time home buyer.
Under Construction Flat Booking Finds Tax Deduction Under Time Constraints
If a buyer makes a transaction to book an under-construction flat and if he acquires it within the three-year period of the sale of his old house, then he is entitled to a tax deduction, says a ruling from the Mumbai bench of the Income-tax Appellate Tribunal (ITAT). If an apartment is booked in an under construction project than it must be viewed as a method of constructing residential tenements, says the December 18 judgment.
That means if the buyer uses the entire gain from the transaction to buy another house within two years or construct another house within three years. The two- and three-year period applies even if the buyer bought another house a year before selling the first one. But the property should have been bought in the name of the seller.
It is mandatory that within a period of two years after or one year before the date of transfer of old house, the taxpayer should construct a residential house or acquire another residential house within a period of three years from the date of transfer of the old house. The date of receipt of compensation will determine the period of acquisition or construction in a case of compulsory acquisition.
This exemption is effective and can only be claimed in respect of one residential house property purchased/constructed in India. In the case of multiple house purchases or constructions, the exemption under section 54 will be available in respect of one house only. Any purchases made outside the country does not fall under any kind of exemption. Section 54 gives relaxation in such cases by providing relief to the taxpayer who sells his residential house and acquires another residential house from the gained capital.
After the sale of an asset, the difference between the buying price and the selling price is a capital gain or a capital loss. These are further classified as long-term or short-term. If a property is held for 24 months or less, with effective from 2017-18, then that asset is treated as Short Term Capital Asset. Then an investor can make
treated as Long Term Capital Asset. Then only a Long Term Capital Gain (LTCG) or Long Term Capital Loss (LTCL) can be made on that investment.
ITAT agreed that booking of a new flat in an under-construction apartment should be considered as a case of “construction” and not “purchase”, hence following the earlier decisions of the Bombay high court and the tribunal itself. Further ITAT allowed the fact that the construction can began prior to the date of sale of the old asset. Same was stated in the earlier judicial decisions of the Karnataka high court and Ahmedabad ITAT, that the date of commencement is not relevant but it is the completion of construction that comes in relevance to section 54.
HDFC and Quikr Make A Deal
According to a deal between HDFC and Quikr, a stake of more than 3 percent will be given to the mortgage giant in return to its transfer of offline and online real estate brokerage business to the classified ads platform.
After acquiring Commonfloor in 2016 Quikr already has a major presence in online real estate broking.
“Most of the searches for real estate are moving online. Quikr has a much bigger presence online. Through this deal, we are partnering Quikr in the broking business,” said HDFC MD Renu Sud Karnad. According to her, this deal will strengthen Quirks position with offline support.
The deal suggests that HDFC will transfer to Quikr its entire shareholding in HDFC Realty, a real estate brokerage platform, and HDFC Developers, which runs the HDFC RED online platform.
Karnad added that the deal expects Quikr to generate home loan leads for HDFC. The transaction consists of a co-branded alliance between both parties and the HDFC brand will continue to be used online for a year.
The e-real estate classifieds platform HDFC RED has around 7,000 project listings and generates traffic of over 80,000 unique visitors per month. HDFC Realty has a 300-member, in-house sales team, and 7,000-strong nationwide broker network. Avendus Capital was the exclusive financial adviser to Quikr while Kotak Investment Banking acted as the exclusive financial adviser to HDFC on this.
30 million monthly users make Quikr India’s largest classifieds platform. It runs multiple vertical businesses across real estate, automobiles, jobs, services, and goods. The Quikr Home, its real estate vertical generates 3.5 million monthly unique visitors.
Both companies intend to work closely and conduct analytics and identify potential homebuyers, and therefore home loan customers, early in their home-buying journey. Quikr founder and CEO Pranay Chulet said, “We see great synergies between Quikr and HDFC as we start working together to bring a seamless online-to-offline platform to developers and consumers.”
Retaining The Sustainability: GRIHA Launches Star Rating For Urban Homes
Green Rating for Integrated Habitat Assessment (GRIHA), is the National Rating System of India, a Sanskrit word meaning – ‘Abode’. Human architecture has always consumed resources in the form of energy, water and material from the environment. From their construction to operation, these habitats absorb the resources throughout their life cycles, emitting wastes in the end. This emission could be direct in the form of municipal wastes or indirect emission into the atmosphere, such as from electricity generation. Hence GRIHA was formed to reduce an architecture’s resource consumption, waste production and overall environment impact up to certain national acceptable limits.
In attempt to quantify all these aspects, like energy consumption, waste generation etc. GRIHA tries to manage, control and bring down the respective to the best possible limit. Being a rating tool, it helps people to assess the performance of their respective projects against the national benchmarks.
Hence it becomes an evaluation of the environmental performance of an architecture on a holistic level. Covering its entire life cycle, this evaluation provides a specific standard for a ‘green building’. This rating system aims to strike a balance between established institutions and emerging concepts, on a national as well as the international level.
The process starts with an online submission of documents according to the criteria. Then a team of professionals and experts from GRIHA Secretariat takes a site visit for the evaluation of the building. There are four different sections categorized by 34 criteria in GRIHA rating system. Some of them are site selection and site planning, conservation and efficient utilization of resources, building operation and maintenance, and innovation.
Sanjay Seth, CEO, Green Rating for Integrated Habitat Assessment (GRIHA) Council says, “A rating between one and five stars is being provided, helping the costumers to know about the sustainability of the houses”.
According to the Union Minister, Hardeep Singh Puri, the climate resilient and sustainable buildings are the need of the hour. As the government is aiming to construct around 1.2 crore houses for the urban poor under the affordable housing scheme.
In one of his keynote addresses, Andreas Baum, Ambassador of Switzerland to India and Bhutan said that the Indo Swiss collaboration is operating with the Indian Bureau of Energy Efficiency in the development of guidelines for energy efficient housing.
“At present India is witnessing a rapid urbanisation, if each building becomes greener than the last one, then we have a huge opportunity and hope for our country. We need to look beyond the conventional methods of building, in order to provide our citizens with a good quality of life. Hence, GRIHA gains important in meeting our national goals with respect to a sustainable society”, says Dr Ajay Mathur, director general, TERI & president, GRIHA Council.
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