Holds a meeting with MCHI to bring down project costs, levies and penalties likely to be trimmed.
IN a bid to counter the prolonged slowdown in the real estate sector in the city, the Brihanmumbai Municipal Corporation (BMC) is likely to reduce some charges and penalties levied upon builders. After extensive discussions with the Maharashtra Chamber of Housing Industry (MCHI) on May 19, the BMC is planning to reduce the rising project costs for builders, by cutting down on components such as land under construction rates and some premiums. Senior civic officials said that altering the rate of some levies was underway and this meeting with the MCHI was the first of many planned with a view to reducing the financial burden of taxes for building permissions. “We have had a long discussion with the MCHI and are considering the proposals they have prepared. We are trying to realign the taxes to make houses in Mumbai more affordable,” said Municipal Commissioner Ajoy Mehta.
Keeping in mind the concerns of the city’s builders regarding rising project costs, one measure being considered is the ‘land under construction’ rate, which is levied on land when it is ready for development. A civic official pointed out that the BMC imposes a steep tax once encroachments are cleared and construction can begin on a plot, in the form of water tax and sewer tax.
“The logic behind the tax is to discourage builders from sitting on vacant land and delaying construction. Currently, this tax is higher than the property tax levied after the development of the plot, preventing the builders from setting affordable rates for flats. We are thus planning to bring it down,” said the official.
Welcoming the move, the chairman of MCHI Dharmesh Jain said, “The industry has been requesting the BMC to reduce the charges and the premiums which are too high and need to be relooked at. We had a dialogue on it and will continue to work together. The charges have substantially increased in the last five years and it is now unbearably high for the industry.”
The civic body is also trying to figure out a way of reducing penalties linked with construction beyond the approved dimensions. Currently, heavy penalties are charged under three categories. While construction work done without approved plans will amount to a penalty which is 70 per cent of ready reckoner (RR) rate of the land, work carried out beyond the dimensions approved by the commencement certificate will attract a fine which is 20 per cent of the RR rate and the fine for work carried out after a stop work notice has been issued is 40 per cent of the RR rates. “The MCHI has proposed that in some cases where violations take place because customers make alterations for interior planning purposes, a smaller penalty can be levied,” said the official.
The BMC will try to reduce the costs of premiums that a builder needs to acquire for any project. Premiums are charged for the staircase, lift and lobby area which are free of FSI as well as open space deficiency. Among the expensive premiums, for fungible FSI, while the rate for residential projects is 60 per cent of RR rate, for commercial properties, the rate is 100 percent of RR rate.
The real estate sector has long been in a slump, with the city having also witnessing a drop in stamp duty collections, which has affected state revenue collections. In the last financial year, according to figures given by the Department of Registration and Stamps, the total collection in Mumbai was around Rs 2,330 crore which amounted to around 77.24 percent of the total target of Rs 3,016 crore. The figures for Maharashtra were similar.
Source: Indian Express
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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