Interim Budget 2019: Kahani ghar ghar ki
While the income tax rebate for income under Rs 5 lakh is not all it has been made out to be, this interim budget comes to the rescue of Mumbaikars – rich and poor – with relief on housing. First of all, a budget is all about numbers and who knows numbers better than a Chartered Accountant? This budget was presented by a CA (acting Finance Minister Piyush Goyal) and there was a deft choice of words when the tax rebate for Rs 5 lakh income was presented. It may have misled some into thinking that one has 100 percent tax-free income up to Rs 5 lakh, but that is not the case.
Housing hurrah: What is evident overall is that there have been several provisions for the housing sector. The subtle push will result in a jump in growth, as the steel, cement industry is ready to go all out. Mr. Finance Minister, the josh is high.
Mumbai state of mind: The accent on Maharashtra, and with that Mumbai, should resonate with readers. He addressed I could say, a very Mumbai situation. A father has two sons who are living with him. He wants to buy a home for each of them so that they can live separately. He buys two homes, each for R1 crore. Till now, the buyer could avail of deductions for one home (under Section 54 of the Income Tax Act). He had to pay a tax of 29 percent on the other home. Now, he does not, as there is a deduction for first-time buyers on the second home too. In this way, you have a resolution of a typical Bambaiyya problem, where space is at a premium. There are, of course, limitations because of the Rs 2-crore limit, but it does seek to resolve a problem, has appeal and is practical.
2019 – A year of optimism for Housing
2019 looks like the beginning of all things good for the housing sector. The present Government has some big plans in terms of infrastructure for Mumbai which will help the growth of the city and thereby the realty industry. The implementation of RERA two years ago posed some hiccups to the developers but with time and practice, this too seems to have settled down and paved the way for a transparent and organized sector in the New Year. Budget support for ‘Budget living’: Affordable housing got a boost in the recent interim Union budget yet again. Hopefully, it will give an impetus to PM Narendra Modi’s dream of ‘Housing for all by 2022’ for those with limited budgets. No wonder, affordable housing as a sector is back into focus. Affluent living: While we talk of affordable Housing, Luxury Housing has its own place in our Housing sector. While the exclusive pin-code remains king even today for the rich and famous, it is also world class amenities that is being demanded by the young, enterprising and yes, rich. Budget no bar. A home away from home: Weekend Homes is another section that is a growing sector among Indians and also with NRI’s looking for a piece of land in the green patches of India. A special mention here of two favourite destinations – Goa which is a hot favourite owing to its pristine beaches and
Multiple flats’ sale can still get you tax benefit
In a landmark decision, the Income Tax Appellate Tribunal (ITAT) has held that a taxpayer can avail of tax benefits where long-term capital gains arising on sale of more than one flat are invested or will be invested in one residential house in India, within the stipulated time. It is not uncommon for taxpayers to sell more than one house to buy a larger home or move to a better area. There have been cases where tax benefit claims made by taxpayers have been denied as sale proceeds of over one flat were invested in a new residential property. This recent ITAT decision will benefit taxpayers in Mumbai and, in the absence of any contrary jurisdictional order, will strengthen similar cases.
If on sale of a residential house that has been held for at least two years, the taxpayer makes a profit, then such profit is treated as a LTCG. This gain is taxable at 20% with an adjustment for inflation referred to as indexation benefit. Section 54 of the Income Tax Act, which was the subject matter of the dispute, provides that if the investment is made in one house in India, in the stipulated period (see table for conditions prescribed), then to the extent of this investment, the taxable component of the LTCG is reduced, which results in a lower tax outgo. The ITAT agreed with the contention of the taxpayer that Section 54 of the I-T Act has an inbuilt restriction that the capital gain arising from sale of a residential house cannot be invested in more than ‘one’ residential house, in India. However, there is no restriction that the capital gains arising from the sale of more than one residential house can be so invested. The bench held: “The provision of Section 54 is applied to the transfer of any number of residential houses by the taxpayer provided the capital gains arising there from are invested in a proper manner within the prescribed time period.”
MIDC may allot land parcel for Jewellery Park in Navi Mumbai by month-end
Around 10,000 gold, silver and imitation jewellery manufacturing units and shops in and around Mumbai’s famous Zaveri Bazaar gold market and a few thousand others in Parel and suburban Andheri could find a new home in three years. Maharashtra Industrial Development Corporation (MIDC), the state’s industrial infrastructure development agency, is likely to facilitate the allotment of 10 hectares (around 25 acres) of land in Mahape, Navi Mumbai, to Gem & Jewellery Export Promotion Council by February 27. The allotment decision could be expedited by the month end ahead of model code of conduct for Lok Sabha elections kicking in.
P Anbalagan, chief executive, MIDC, told that the agency was working out the technical and payment parameters before making an offer letter to GJEPC, which will be followed by an allotment letter after the payment of an earnest money deposit by the Council. Once the EMD is made, the buyer has six months to pay MIDC the remaining amount for the land. Given the size of the
Home was not built in a day
The millennials today are increasingly entering the real estate market on the back of increasing standard of living and a strong sense of control over the finances. And the real estate market in the year gone by has proven that it has succeeded in more ways than one. The real estate sector has been under the spotlight since the last couple of years, primarily due to regulatory changes announced by the government. As a result, not only did the sector lose its momentum, but also had to undergo structural changes in order to align itself with the new setup. However, with clarity on the regulatory environment having finally emerged slowly and steadily – not only has sales improved, but also launches have increased across India. The increased focus on creating residential products in lower unit and ticket sizes has also resulted in rich dividends for the developers.
THE GST TALE: Do current market conditions favour buying?: Yes, they indeed do as we are currently living in a buyer’s market; Will prices further come down after the GST rate cut?: Yes, prices will reduce but home-buyers who book right now in under-construction projects can avail the benefits whenever the rate cut comes; Will GST rate cut help affordable housing?: Affordable housing may not benefit from a further rate cut since a GST rate of eight per cent is already applicable for this segment; Would interest rates further go up? Home loan interest rates had increased by five percent over the last one year. The new rate cut, will pave the way for cheaper home loans for home-buyers.
Convenience and connectivity are factors that the younger generation seeks when investing in their first home. And developers are serving just that… Gone are the days when the location of your first home was limited to a five km radius of your parents’ home or the locality you grew up in. With improving infrastructure and a plethora of residential offerings in metros across the country combined with the increasing costs of owning a home, millennials are choosing better value deals in upcoming micro-markets rather than paying a premium for conventional addresses. According to a report released in 2018, about 82 per cent of Indian millennials (those born between 1980 and 2000) prefer to live with their parents owing to traditional family values as well as increasing property prices. While many youth opt to live on rent due to migration to cities for jobs or entrepreneurial opportunities, the report also reveals considerable interest (about 35 percent) in property as an investment among this generation. This gives a ray of hope to the real estate industry, which is trying to tailor-make residential options according to millennials’ preferences, all within affordable price points.
2019: The Year of the Home-buyer
A shift in balance in favour of the home-buyer has resulted in a positive momentum for the residential sector, thereby resulting in sales growth for the first time since 2011 across major Indian cities. The real estate sector has been under the spotlight since the last couple of years, primarily due to regulatory changes announced by the government. As a result, not only did the sector lose its momentum, but also had to undergo structural changes in order to align itself with the new setup. However, with clarity on the regulatory environment having finally emerged slowly and steadily – not only has sales improved, but also launches have increased across India. In fact, according to Knight Frank India’s – Real estate H2 2018 report – affordability has improved significantly across cities since 2010, thereby pushing sales in the positive direction. So can this shift in momentum push the real estate sales even further in the first quarter of 2019? Let’s understand…
On stable ground: “Yes, affordability has increased significantly since 2010 due to a sustained decrease in prices across cities. Annual sales numbers having grown by six per cent Y-o-Y, we have finally seen some growth for the first time in the last seven years and during 2018. Hence, I believe going ahead we should witness buoyant sales,” says Arvind Nandan, executive director – research, Knight Frank. In the past couple of years, we have also witnessed an infrastructural revolution of sorts, which has led to positive developments in the real estate sphere. “A lot of activity has taken place, particularly on the outskirts of the cities. Delhi, Mumbai, Bengaluru, Hyderabad and Pune are classic examples. As a result, connectivity has improved between important centres and we have also seen price correction, especially across suburban hotspots, thereby boosting the purchasing power of potential buyers,” says Manoj Asrani, founder principal, Property Monk Pvt Ltd.
A Natural Imitation
Technologically-advanced cities fail to tackle pollution, traffic woes, natural disasters and other everyday issues. Is it because, during the development, we forget to consult nature? Think about it, what does Japan’s bullet train, Velcro and beetles from the Namib Desert have in common? Biomimicry. Biomimicry is a branch of science that focuses on creating products, processes and policies inspired by nature. According to Biomimicry Institute, USA, it is an approach to innovation that seeks sustainable solutions to human challenges by emulating nature’s time-tested patterns and strategies. Nature around us has found solutions to a number of problems that we face today; it has adapted itself to survive in extreme weather and cope with natural disasters. The solution to sustainable living is all around us; we just need to learn to replicate it. If a city is developed after studying the ecology of the area, it would not only help build a sustainable city but also an efficient one.
We are constantly working towards building better infrastructure and creating better cities that provide a healthy lifestyle and work culture. However, even the best of us are beaten when it comes to the wrath of nature – floods, earthquakes and other natural calamities constantly remind us that we are not equipped to secure ourselves against them. How then has nature survived? Ecosystems have evolved to sustain along with the nature – something we need to replicate in our lives. Biomimicry is a way towards sustainable development and survival, which will help us evolve along with the nature, and co-exist without destroying it.
How does it work?: When the Shinkansen Electro Multiple Unit (EMU) train, a part of Japanese railway system passed through a tunnel, it would create a loud noise, vibration and pressure waves – something that needs to be avoided when the train is passing through residential areas. This is where Biomimicry comes into the picture. Engineers designed the Pantograph (a piece that connects the train to its power source) inspired by an owl’s wing; the pantograph’s supporting shaft was reshaped to imitate a penguin’s body to lower wind resistance. The nose of the train was inspired by a kingfisher’s head and beak, which eliminated the sudden pressure increase and thus reduces the intensity of the noise. Here, nature provided solutions to make our transport system better.
Ray of Hope for delayed projects
The Maharashtra Real Estate Regulatory Authority has decided to give developers a second chance to complete delayed projects after the usual extension of a year, provided over 50% customers of the property concerned agree to it. Vasant Prabhu, the Maharashtra Real Estate Regulatory Authority (MahaRERA) secretary, said an order was issued last week to give genuine developers a second chance to complete a stalled project if the consumers were willing to wait. He said, “The extension is subject to consent of more than half the flat buyers and a timeframe would be set.” Prabhu said, “We were getting complaints of delay in project execution. With this order, consumers can take a call on if they want to continue with the project. If more than 50% consumers agree, we can give an extension to the developer.”
Nearly 90% of the complaints registered with the MahaRERA are regarding delay in execution of projects. State president of Credai Shantilal Kataria said the order would not only benefit the consumers, but also the developers. “It is neither easy for a consumer nor a developer to cancel a project. Given more time, genuine developers will complete projects within the time-frame decided by both the parties,” said Kataria. The real estate sector faced a rough patch in the past two-three years. It is slowly on the recovery path. Property consultants closely monitoring the market stated that the real estate sector was set to grow this year.
Stamp duty on property deals in city now raised to 6 percent
The state government on Tuesday issued a notification introducing an additional one
The MMRDA used to earlier sell lands in Mumbai and generate funds. With this land bank drying up, the state Assembly cleared an amendment in the Mumbai Municipal Corporation Act that
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