Horizons April - May 2013

Horizons Volume 2

ANDHRA PRADESH REAL ESTATE DEVELOPERS’ ASSOCIATION www.apreda.org

A P ’s

Issue 10

mo s t

Rs.50

c r e d ib le

April-May 2013

r e a l

e s t a t e

overburdened!

ma g a z i n e

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APREDA reaching greater heights

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he Andhra Pradesh Real Estate Developers’ Association, popularly known as APREDA, was established in 1995. APREDA today has a majority of leading builders and developers as a part of its over 400 strong membership. It has branches in other parts of Andhra Pradesh and has over the years emerged as an effective, self-regulatory promoter body of the real estate industry in Andhra Pradesh.

APREDA has been effectively working with the Government and other institutions and taking an active role in shaping the real estate policies. In fulfilling this responsibility, APREDA has been making many representations to the government and has been able to get great relief in several matters. Some issues are under the consideration by the Government. In this issue we have covered the various pending issues with the Government on which the industry is seeking relief.

Budget 2013 is pragmatic and is bereft of both sensationalism and populism. The real estate sector saw few changes; (a) Increase in tax exemption limit on interest paid by Rs.1 lakh (in addition to the existing Rs.1.5 lakh) for first time home buyers availing loans up to Rs.25 lakh for the first year, for houses costing less than Rs. 40 lakh. (b) Allotment of Urban Housing fund of Rs. 2,000 crore and rural housing fund of Rs. 600 crore among the positives and (a) imposition of 1% TDS on transfer of immovable property valued over Rs.50 lakh and (b) Reduction in abatement in respect of Service Tax from 75% to 70% in the negative.

We were all saddened by the demise of our beloved Executive Vice-President, H. Bhawarlal Jain, on February 13. His loss is irreplaceable. May his soul rest in peace.

In accordance with the byelaws of the association, APREDA is all set to change its governing body and office-bearers this year as the elections to the asociation are due in March 2013.

While elections take place regularly, in due time, there is a need to laud the achievements of APREDA’s office-bearers and the governing council which retires this season and have taken the association to dizzying heights while retaining its glorious traditions. They have taken APREDA into a new era and have made it a household name in A.P. The annual Property Shows, the flood housing scheme, houses for tsunami victims, tree translocation and other CSR activities are a testimonial to their great contribution. The clear trajectory of Horizons magazine from humble beginnings to a full-fledged RNI recognised publication speaks of their zeal to take the association to higher levels.

We salute them for their invaluable contribution in every facet of the association, both intrinsic as well as incidental and we are what we are today because of their contribution and that of their predecessors.

We take the privilege of wishing the newly elected office-bearers and the governing council all success in their endeavours.

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HORIZONS AP’s most credible real estate magazine

Budget 2013a lacklustre affair Page 12

Some urgent issues needing Government’s attention Page 20

implications of VAT on Construction Activity Page 32

n t e n t s It is time for new experiments Page 28

Ssshhh...! mind your manners, it’s a Hospital Page 30

Google Glass: Fun computing on the move!

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real estate on offer Smart solution to kitchen duties Page 38

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Printed, published by P. Prem Kumar on behalf of AP Real Estate Developers Association, owned by AP Real Estate Developers Association, printed at Paper Craft Center, 2-3-514/4, Umanagar, Ameerpet, Hyderabad, A.P. Published from AP Real Estate Developers Association, # 102, Tirumala Shah Apartments, Yellareddyguda, Ameerpet ‘X’ Road, Hyderabad, A.P.- 500 073. Tel: 65572184, 9989844467 email: editor@apreda.org www.apreda.org Editor: Chalapathi Rao Raidu, RNI. No. APENG 03278/01/1/2011-TC Sole distributor: Shams News Agencies.

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From the news pages & sites...

Hyderabad second most affordable office market in world: DTZ

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hennai and Pune have figured in the list of the world’s top 10 most affordable office markets, according to a report by property consultant DTZ. “Tier II cities in China and India continue to dominate the list of the top 10 most affordable markets globally,” DTZ said in its report Global Occupancy Costs - Offices.

The report presents the costs of occupying prime office space across 126 markets worldwide. “The most affordable office market remains Surabaya (USD 1,610 per workstation per annum), followed by Hyderabad and Chongqing,” the report said. Pune and Chennai are at fifth and sixth positions.

London’s West End has emerged as the least affordable office market globally, according to the consultant. “At US$ 23,500, London West End has regained its position as the world’s most expensive office location in 2012, overtaking Hong Kong which was the least affordable market in last year’s report.” the report said.

Total occupancy cost is defined as the average total cost of leasing prime net usable space. It includes rents and outgoings, such as maintenance costs and property tax, if these are normally payable by the occupier.

It excludes leasing incentives such as rent-free periods and fitting-out costs, as well as facilities costs specific to the tenant, such as cleaning or IT. It also excludes amortisation of capital and related expenditure.

Karnataka slashes fee on joint development agreements With the Assembly elections round the corner in Karnataka, the State government is keeping the Bangalore real estate lobby in good humour by slashing fee on joint development agreements for housing projects.

The fee for the agreement (between the landlord and devel-

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oper) is now fixed at Rs 200, down from Rs 1.5 lakh proposed in the State budget last week. Chief minister Jagadish Shettar announced the cut while replying to discussions on budget proposals in the Assembly.

Keeping in mind the critical role of realtors in Bangalore, Shettar had in the budget offered this sector a sop by removing the 1% fee clause imposed on joint development agreements and related power of attorney between the land owner and developer. Instead, a fixed fee of Rs 1.5 lakh was proposed in the budget.

Earlier, developers would pass on the burden of 1% registration fee to the consumers. If the agreement fee cost Rs 1 crore, the amount would have been passed on to the buyers at different rates.

NHB Residex shows increase in home prices across 18 cities

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espite home sales going down in many markets across the country, the National Housing Bank’s residential housing index, Residex has shown an increase in home prices in the October-December 2012 quarter across 18 of the 20 cities it tracks.

NHB Chairman RV Verma says that they will start covering six more cities from the January-March 2013 quarter. Based on these 26 cities, we will asses if we could construct a national property price index,” says Mr Verma.

The cities which have shown the maximum quarter-on-quarter increase are Mumbai (9.6%) followed by Delhi (9.6%), Kolkata (9.4%), Patna (9.4%), Kochi (8.8%), Surat (8.7%), Bengaluru (8.2%), Lucknow (8.0%), Hyderabad (7.1%), Ludhiana (6.5%), Ahmedabad (6.1%), Guwahati (5.1%), Bhopal (4.9%), Bhubaneswar (2.4%), Jaipur (2.4%), Vijayawada (2.2%), Pune (2.0%) and Chennai (0.6%). There was a fall in home prices in only two cities -Indore (-1%) and Faridabad (-5.1%) -- during the quarter.

“The rise in input costs for developers and sustained inflation is reflecting on the increase in prices in 18 cities,” says Verma.

Prices have also been positively impacted by improved infrastructure development in many cities, which is also pushing investor demand. The last few months have seen new supply not coming, which has kept the prices on the higher side.

Home sales have been under pressure because, over the last few quarters as the overall sentiment in the economy has been slow and interest rates high, home buyers have been forced to postpone their buying decisions.

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‘Anywhere registration’ to be a reality in Andhra Pradesh soon

move fast to ease norms for the realty sector after the PMO asked for a quick redress.

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Gujarat shows the way in harnessing the sun effectively

ndhra Pradesh will soon have “anywhere registration” facility connecting all the Sub-Registrar Offices (SROs) spread across the State. The Stamps and Registration Department has speeded up efforts to bring all the 423 SROs on a single platform through a centralised architecture and give open access of land and related properties’ database to sub-registrars.

“More than one-third of the offices are connected online. At least two to three are being linked to the central architecture on an average every day,” Inspector General of Stamps and Registration Vijay Kumar said.

Dr. Vijay Kumar said the department was targeting completion of work on linking all the SROs by April 15.

Once in place, the new system will enable sub-registrars to see encumbrance certificates, market values as well as connected documents of the particular piece of property from anywhere across the State. “This is a pre-requisite for ‘anywhere registration’. The facility will avoid duplication of records and give relief to buyers who intend to buy properties in places other than their own,” he said, adding that efforts are under way to host all the information, including finer details like fingerprints of sellers, in the database.

Green norms for real estate to be eased

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he Environment Ministry is likely to ease green norms for the real estate sector, giving a boost to developers intending to construct high-rise buildings. The relaxation is expected to allow builders put up higher multi-storey buildings on smaller roads and lanes in cities.

In February 2012, the Environment Ministry had laid down rules linking the height of a building with the width of the road it was to be built on as well as the distance from the nearest fire station. The rules had the realty sector up in arms.

At the moment, buildings above 60 metres can get environment clearance if they are on roads at least 30 metres wide. Such buildings have to be within 2 km of a fire station.

Buildings between 45-60 metres need to have an approach road that is at least 24 metres wide and not more than 5 km from a fire station. Buildings between 30-45 metres have to be located on roads at least 18 metres wide with fire stations not more than 10 km away. Buildings between 15-30 metres require 15 metre wide approach roads but have no restriction linked to the presence of fire stations.

The February 2012 regulations also required a ‘no-objection’ certificate from the State Fire Department and the National or State Disaster Management authorities. The provisions had been brought in considering safety measures for high-rise buildings and increase in traffic in cities.

The Environment Ministry had set up a committee under Planning Commission member K Kasturirangan to review these and other clearance conditions applicable to roads, SEZs and the realty sector. Sources said the Ministry is likely to

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here is a dazzling field of mirrors that you can find near the vast saltpans of the Little Rann. It is like a sparkling oasis in the desert — much like a gleaming silver screen covering the vast desolate white sand around.

This is Charanka village in Patan, where over 2,965 acres, rows of photovoltaic cells or solar panels have been laid out to harness the sun. They are generating 214 MW of electricity every day -- more than China’s 200 MW Golmund Solar park.

The Gujarat Government claims that nearly 17 private and state companies have pumped Rs 9,000 crore as investments in this park. Not surprisingly, land prices here have shot up.

Former Charanka village sarpanch Barubhai Ahir says that till December 2009, when the project took off, land prices here were Rs 25,000 per acre. “Today just because of the solar park, a 1.5 kilometre periphery around the Charanka solar project would cost Rs 6 lakh per acre.”

Apart from Charanka, solar parks are present across 13 sunkissed districts and spread over 2,375 acres, most of which is vast stretches of non-arable land. Almost 84 developers have joined hands to construct solar power plants of one to 40 MW capacities in these places.

The impact of these projects seems to be showing. “The main solar drivers in India have been the Gujarat solar policy and the National Solar Mission (NSM). Projects under these two policies account for 80 per cent of India’s installed capacity until October 2011,” claims Tobias Engelmeier, managing director of Bridge to India (BTI) which brings out the annual India Solar Handbook.

The handbook also says that Gujarat’s predominance is primarily because it introduced a solar power policy in the State in 2009, even before the introduction of the National Solar Mission (NSM). Also the State’s solar policy has been the only policy in the country which had a fixed tariff, and did not follow the reverse bidding mechanism.

Realty players seek more cuts in RBI rate to boost sector

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eal estate players and analysts welcomed the Reserve Bank’s move to cut short-term lending rates, but said that more such steps are needed to bring back growth to the sector.

The Confederation of Real Estate Developers’ Associations of India (CREDAI), however, termed the RBI’s repo rate reduction by “just” 25 basis points as a “missed opportunity” and urged it to ease funding options in the realty sector.

“One would have expected RBI to be realistic and appreciate the fact that the real estate industry supports hundreds of other industries and hence plays a major role in rejuvenating the economy, hit by job losses and dwindling investments,”

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tailers,” said Amitabh Mall, partner and director at consulting firm Boston Consulting Group, but the demand for appropriate space continues to be a primary challenge for key luxury labels.

In 2011, the local luxury market saw a robust 20% growth to touch $5.8 billion, according to Indian Luxury Review 2011, a report prepared by lobby group Confederation of Indian Industry, or CII, and consultancy AT Kearney.

India was scheduled to overtake China as the world’s fastest growing market for luxury goods in 2012, driven by an explosion in the number of rich people, said an October report by researcher Euromonitor. It was also expected to grow at 22% a year in the next five years. The Indian luxury market will CREDAI National President Lalit Kumar Jain said.

The RBI should take steps to ease funding for the real estate sector at much lower rates in the interest of millions of home seekers, and ease Cash Reserve Ratio for banks to further enhance liquidity in the system, he added.

Jain said: “It is high time that we looked at enhancing growth by infusing liquidity and going in for rate cut... We cannot hope to make housing affordable to the masses with such restrictive policies...the continued stubborn approach of RBI is shocking.”

Leading realty consultant Cushman & Wakefield (C&W) said the apex bank had taken the right step to boost economic growth through reductions in key interest rates, although the reduction of 25 basis points is a small one.

“If this rate cut also translates into further lowering of loan interest rates by banks for businesses and for home buying consumers, then we can definitely expect to see some momentum in a slow and anxious real estate market that was left largely disappointed by the Union budget,” C&W Executive Managing Director (South Asia) Sanjay Dutt said.

Welcoming the rate cut, CHD Developers Managing Director Gaurav Mittal said the step is slated to be beneficial for both the buyers as well as the developers, who have been struggling with cash crunch in recent times.

M3M India Director Pankaj Bansal said a further reduction expectation will give encouraging outlook to the economy and the developers can expect more inflow towards equity market.

Ramprastha Group CEO Nikhil Jain said: “It will not only help the realtors for fund allocation but also help the people at large in terms of liquidity and lower interest rate. As developers, we were waiting for progressive measures from the apex bank to mobilise the liquidity in the market which has been a baited breath for us for long.”

Hyderabad has big promise for luxe goods, says Reliance report

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he demand for suitable real estate from international luxury labels looking to enter or expand their operations in India continues although last year was not remarkable in terms of sales.

“2012 was neither bad nor a great year for luxury brand re-

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touch $7 billion in value by 2017, while China will grow 15% over the same time, the report said.

“The problem with the sector is not that of a slowdown. The critical issue is the lack of right retail spaces and environment. If luxury sector growth in India has to escalate, it has to look beyond same-store sales and set up new stores at the right places. That’s how it grew in China,” said Darshan Mehta, president and chief executive officer, Reliance Brands Ltd. Same-store sales is the amount of sales generated from shops that have been open for at least one year.

The demand for space is coming from the apparel, accessories and footwear labels looking to open more stores in India, as well as those keen to set their foot in the country.

Hermès, the French luxury fashion brand known for its Birkin bags, and Louis Vuitton, the bags and accessories label, are evaluating appropriate realty options across the top Indian cities, according to at least two real estate consultants. In January, Mint reported that a lack of mainstream retail options has hindered the entry plans of Italy’s Prada, which sells apparel, accessories and footwear.

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“We keep getting queries all the time, but the right opportunity and space is always a concern,” said Pankaj Renjhen, managing director, retail services, at Jones Lang LaSalle, a property consultant. Cities such as Mumbai, Delhi, Chennai, Kolkata and Hyderabad have the potential to add luxury retail spaces to cater to the growing interest in these cities by foreign brands, he said.Indiyeah, a report on the luxury sector by Reliance Brands published in January, pointed out that there were only three malls in India with adequate ambience, brand mix and location to be considered luxury shopping destinations. “Of all the factors hampering the growth of this segment, a severe lack of appropriate real estate is the single most important one,” it said.

Reliance’s report, meanwhile, categorizes Chandigarh and

Hyderabad as cities with a big promise for luxury.

“For the next three-five years, companies and brands will continue to look at the top metros, that is Delhi and Mumbai, to the extent of adding more stores and maybe single stores in cities such as Chennai, Hyderabad and Kolkata,” said Renjhen. “Bangalore would be very selective for certain brands only.”To meet the surge in demand for real estate for luxury retail, several developers are coming up with new projects in Delhi, Kolkata, Mumbai and Chennai in the next 18-24 months. Dinaz Madhukar of DLF Ltd—the country’s largest developer by market value which runs the luxury DLF Emporio Mall in New Delhi—said in an earlier interview that it was coming up with two Emporio-like projects in the National Capital Region.

Now, send a text message to charge your cellphone

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un out on your mobile battery? Just send a text!

People living off-grid can now power their phones simply by sending a text message.

A London-based company, Buffalo Grid, has introduced a solar-powered cellphone charging station that is activated by text message. A patchy or absent power grid poses a conundrum of problems for rural areas in the developing world, particularly in Africa and Asia, where the use of cellphones is rapidly rising. The company’s basic technology, which was recently trialled in Uganda, should help tackle this issue, the ‘New Scientist’ reported.

The battery extracts power from the solar panel using a technique called maximum power point tracking (MPPT) and a 60-watt solar panel charges the battery.

A solar panel’s power output is dictated by environmental conditions such as temperature and the amount of sunlight as well as the resistance of the circuits connected to it.

MPPT monitors the conditions and changes the resistance to ensure the maximum possible power output at any given time. The innovation lies in how the stored power is released to charge a phone. A customer sends a text message, which in Uganda costs 110 shillings, to the device.

Once it receives the message, an LED above a socket on the battery lights up, indicating that it is ready to charge a phone.

At the Konokoyi coffee cooperative in Uganda, each text message allows a phone to be charged for 1.5 hours. A fully charged Buffalo Grid unit can last for three days, has up to 10 charging points and charges 30 to 50 phones a

day.

To bring the cost down further, Buffalo Grid hopes to co-opt the cellphone network operators into subsidising power for charging the phones, or even making it free.

“When you bring power to phones that don’t have any, people will use them more,” said Buffalo Grid’s Daniel Becerra.

“Instead of paying for the charge, people will spend more on airtime,” Becerra said.

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Budget 2013a lacklustre affair

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t is often said that a budget cannot please everyone. In a country as diverse and large as India which is in the throes of a rapid developmental phase but at the same time experiencing a type of slowdown due to the rising subsidies and sluggish exports, the not-so encouraging global scenario, the poor farm growth rate, several perspectives centering around economic factors have be kept in mind.

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Therefore, most of the times budget making turns into an exercise in give and take, some compromise, a little expediency and a lot of expectations which hinge on determinants mostly not fully in human control.

Having said this, this budget certainly doesn’t seem to be a game-changer nor is it bold. What it perhaps is – with the perspective of the realty sector – that it

HORIZONS AP’s most credible real estate magazine

is a “mixed bag,” which attempts a little push but is shy of advancing ahead with boldness.

Let’s analyse the implications of the budget on realty, infrastructure, affordable housing, construction activity and the other sectors which drive the economics of all building activity.

The dominant theme of budget 2013 seems to be a boost for middle and low in-

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value of Rs 40 lakh taken during the FY 2013-14 has been increased by Rs 1 lakh to Rs 2.5 lakh for first-time home buyers. This is in addition to the Rs 1.5 interest deduction already allowed for self-occupied properties. If the limit of Rs 1 lakh is not availed of in the first year the balance can be claimed in the next accounting year. This certainly comes as a boost for first-time home buyers and is likely to spur demand for low-cost houses.

come housing and tax from high price tag properties.

The four key proposals with regard to the realty sector are as follows: 1) Benefits for first-time home buyers 2) Easy loans for low-cost homes 3) Higher service tax for premium housing 4) TDS for the transfer of property Incentive for first-time home buyers The tax deduction limit for interest paid on housing loans up to Rs 25 lakh on property

Easy loans for low-cost homes With the increase in the allocation to the Rural Housing Fund from Rs 4,000 crore to Rs 6,000 crore, it is expected that affordable housing may get a shot in the arm. Union Finance Minister P.Chidambaram also mentioned in his budget speech the proposal to launch a fund for urban housing with an outlay of Rs 2,000 crore to address the huge shortage of houses in the cities, which would again benefit the large number of people in the urban areas who do not have a house of their own.

Higher service tax The service tax abatement for high-end property (on homes and flats of above 2,000 square feet or costing Rs. 1 crore and above) has been brought down from 75% to 70%, which comes as a dampener for the premium housing segment, as a larger portion of the home value will come under the tax net. The raise i s

marginal – 0.6 per cent increase in the property value based on 12 per cent service tax – but realtors fear that the demand in this sector could be affected.

TDS for property transfer The Finance Minister has imposed a one per cent TDS on transfer of immovable property exceeding Rs 50 lakh in value, but has exempted agricultural land from its purview. This could act as an impediment for high-value property transactions as it would bring them under the tax net.

In the long run, this appears to be a positive step as it increases the reporting of property sale and garnering of capital gains tax for the government, but in the short run could be a negative factor for home buyers as they have to provide proof of TDS and payment to the Registration Department. Additionally, this proposal could hit redevelopment projects, because the additional burden of compliance needs to be borne by the developers or passed to the buyers.

Realty sector not too gung-ho on budget Industry analysts and players are, however, are not too upbeat on the budget announcements. Navin Raheja, President, Naredco, and Chairman Raheja Developers Limited, expressed disappointment (Refer to our

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article “Naredco’s wish list for the budget” in the Feb-March issue of Horizons) and said there was hardly anything for the real estate sector in the budget. Raheja said, “We were expecting inclusion of housing under the Infrastructure category under Section 80 IA of the Income Tax Act and deduction of income derived from investment on construction of houses as available under u/s 80IB of IT Act 1961 up to 1,200 sq ft to encourage affordable housing. Also, service tax on houses of more than 2,000 sq ft area or more than Rs 1 crore cost has gone up from 3% to 3.6% because of reduction in abatement from 75% to 70% which will impact home buyers in big cities as the cost of housing will go up.”

“One per cent TDS on transactions of immovable properties of more than Rs 50 lakh will curb speculation and bring about improved reporting and accountability in high-value immovable property transactions. But this in turn will impact owners of smaller properties in big cities and may lead to exchange of black money,” says Mr Raheja.

Anuj Puri, Chairman and Country Head of Jones Lang LaSalle, said the setting up of the Urban Housing Fund by the NHB would infuse liquidity for urban housing and boost demand. The TDS of 1 per cent to be charged on the transfer of immovable property is an obvious move to curb speculation and bring about improved reporting and accountability in high-value immovable

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property transactions, he added.

Mr Chalapathi Rao Raidu, vice president of APREDA, says that the budget proposals are a big letdown, keeping in view the high expectations that they had generated. It is completely devoid of boldness or the will to encourage a crucial sector such as realty. The Finance Minister has given an incentive for first-time home buyers but has imposed a 1 per cent TDS on transfer of immovable property and lowered the service tax abatement for high-end property (on homes and flats of above 2,000 square feet or costing Rs. 1 crore and above) from 75% to 70%, which is like “giving from one hand and snatching from the other.”

Meanwhile, the Confederation of Real Estate Developers’ Association of India (CREDAI) is ‘largely disappointed’ with the Finance Minister’s proposals relating to the housing sector. Except for minor sops, the budget has missed the opportunity to boost housing supply, which would have had downstream benefits for the economy, according to Lalit Kumar Jain, President, CREDAI. Mr Jain said nothing substantial had been announced. The association had hoped to be accorded

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industry status, measures to encourage FDI and steps to increase supply of rental housing.

Sanjay Dutt, Executive MD, South Asia, Cushman & Wakefield, said that overall, the budget did not meet the expectations from developers, occupiers and investors in the real estate industry as it did not address their concerns on MAT and DDT taxation on SEZs. According to Ravi Saund, COO of CHD Developers Limited, it might be early to gauge whether the Union Budget would succeed in propelling the growth engine of the Indian economy to newer heights. “However, a couple of reforms announced is a welcome move. Prime facie, it looks positive for the real estate sector at large. Infrastructure has received a major thrust, especially the transport and energy segments. The steps to increase funding for roads, highways and other infrastructure will surely add muscle to the Indian realty map taking tier 2 and tier 3 cities on the new growth trajectory,” he explained.

The announcement of providing rural housing fund of Rs 6 lakh crore and urban housing fund of Rs 2,000 crore are positive steps for the housing market in India. These funds, along with infrastructure investment, would boost the economy and bring down the acute housing shortage in the country, feel developers.

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However, there were no announcements to grant industry status to the real estate sector, which has added to the disappointment among builders and no news on continuation of interest subvention of 1% on home loans for affordable housing. We have to wait and see if there is any clarity on these issues. “The sector feels disappointed for not providing status of infrastructure,” said Nikhil Jain, CEO, Ramprastha Group.

Positive factors l The budget has provided a boost to affordable housing with an additional interest benefit of Rs. 1 lakh on firsttime home loans up to Rs. 25 lakh.

However, this provision is only for the first year and with a carry-forward benefit of the unutilized deduction to the second year. This will help boost housing sales in tier 2 and 3 cities and peripheral areas and distant suburbs of metros, but not within the metros, where housing is more targeted towards the mid and upper income segments. lThe setting up of the Urban Housing Fund by the NHB with an allocation of Rs. 2,000 crore will infuse liquidity for urban housing and spur demand. lThe budget’s focus on education and job creation is commendable as job creation is a primary driver for real estate in India. lThe additional allocation of Rs. 1,4873 crore to JNNURM towards public road transport will help make lagging real estate locations more viable in the long term.

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Major share of pie for infrastructure

Infrastructure has once again taken centrestage in this year’s budget. In a major boost to investment, especially in the infrastructure sector where a Rs 55 lakh crore expenditure has been envisaged in the 12th Plan, the government in the budget proposals announced a number of steps to accelerate growth, including setting up two new ports and creation of two new industrial corridors and seven new smart cities.

Spelling out his budget priorities, Finance Minister Mr. P. Chidambaram said debt funds for infrastructure would be encouraged and tax-free bonds up to Rs. 50,000 crore allowed in 201314. The government would also seek funds from multilateral agencies like the World Bank and the Asian Development Bank to build roads in the north-east, linking it to neighbouring Myanmar.

Mr. Chidambaram referred to creation of a regulator to give a boost to

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road projects and address bottlenecks faced by investors. The most important of the initiatives was creation of two new industrial corridors — Bangalore-Chennai and Bangalore-Mumbai — on the lines of the Delhi-Mumbai Industrial Corridor project. Plans were already drawn up to establish seven new smart cities along the industrial corridors. Work on two smart cities at Dholera in Gujarat, and Shendra-Bidkin in Maharashtra would start during 2013-14.

On the power front, the Minister said he had given the nod for constructing a transmission link from Srinagar to Leh in Jammu and Kashmir at an investment of Rs. 1,840 crore. The Dabhol LNG terminal, with a capacity of five million tonnes a year, would be fully operational in 2013-14.

As for rural infrastructure, he said the National Bank for Agriculture and Rural Development, which was operating the Rural Infrastructure Development

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Fund (RIDF), had successfully utilised 18 tranches so far. “I propose to raise the corpus of RIDF-XIX in 2013-14 to Rs.20,000 crore and Rs. 5,000 crore will be made available to it to finance construction of warehouses, godowns, silos and cold storage units designed to store agricultural produce, in both the public and private sectors,” the Finance Minister said.

India Ratings said the constitution of a regulatory authority for the roads sector would address a long-felt need.

The budget reiterated the government’s commitment to press ahead with previously announced measures such as credit enhancement from India Infrastructure Finance Company Limited and encouragement for setting up infrastructure debt funds. Both of these had the potential to galvanise the bond markets to fund the massive infrastructure investments India urgently needed, the agency said.

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l The TDS of 1% to be charged on the transfer of immovable property is aimed at curbing speculation and bringing about improved reporting and accountability in high-value immovable property transactions. l The rate of abatement on homes and flats of above 2,000 square feet or costing Rs. 1 crore and above has been reduced from 75% to 70%. Effectively, this translates into an increase in service tax outflow, which means that luxury housing will now become even more expensive.

Flip side Meanwhile, the proposals also have a flip side to them, as it is felt that that there has been no proposal on certain key expectations from the real estate sector. These include implementation of the Real Estate Regulator and the Land Acquisition Act. There has been no effort for according industry status to the realty sector and no bold moves but just tokenism with regard to the affordable housing sector. All said and done, the country’s real estate sector still continues to struggle with its larger hurdles. While the affordable housing category has been rightly been given priority, aspects relating to improved transparency and corporate governance within the sector have been somewhat ignored.

On the whole, putting the larger perspective in the picture, the budget has shown commitment to streamlining taxation and regulatory policies. This should give more comfort to offshore real estate investors who have been bogged down by the political inertia and therefore unsure of India as an investment destination in the recent past. n

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Horizons completes three years

AP Chief Minister N.Kiran Kumar Reddy releasing the issue of APREDA Horizons magazine on November 10 at the inaugural of the APREDA Property Show - 2012 at Hitex in Hyderabad. Horizons has successfully completed three years of its existence and carved out a niche for itself in the hearts of one and all in the realty sector.

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Future scenario

Some urgent Government’s In line with APREDA’s initiative to strive for a level playing field and protect the interests of all stakeholders in the realty sector, the association has focused on some problems which need to be addressed on a priority. Some of the key issues are listed below: MA&UD 1.Vacant Land Tax: Vacant land tax is being levied on all urban property lying unutilized. This tax is also being levied on lands/plots/property for which permission for construction was given and

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the work is in progress. Such lands are no longer ‘Vacant’ and various charges like development /external development, etc. are already paid. Collection of vacant land tax in respect of all projects under construction must be stopped.

House tax/property tax may be levied once occupancy certificate is issued and the units are assessed for property tax.

2.Provision of EWS/LIG Housing Units in all Housing Projects: Gram Panchayat Areas In the case of GHMC /GVMC & VMC an option to provide the EWS/LIG units within a radius of 10 km of the project site or within 5 km from the nearest aerial boundary of the municipal limits has been given. Similarly, for Urban Local Bodies, an option to provide the EWS/LIG units within a radius of 5 km of the project site or within 5 km from the

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nearest aerial boundary of the municipal limits has also been given. A similar provision to provide the EWS/LIG units within 5 km of the site to all the projects that are coming up in Gram Panchayat areas falling in Urban Development Authority areas and in sanctioned master plans must also be made. Such a provision has been made in the Master Development Plan 2031 released vide GO. Ms. No. 33 dated 24 Jan 2013 in para 2.14.1.

3.Disposal of EWS/LIG Units: The disposal of LIG/EWS units must be left to the discretion of the Builder/Developer.

In many cases people purchasing villas or large housing units are approaching the builders to purchase these units for their employees like drivers, security and household staff. Therefore, it is felt that

issues needing attention the allotment and disposal of these units be left to the developer/builder.

4.LRS: It is felt that where the layout developer comes forward for regularization of unauthorized balance unsold plots, a provision may be made to permit such regularization. While furnishing proof, agreement of sale or GPA executed prior to the cut-off date of 31-12-2007 may also be considered as proof for applying for regularization. This will enhance a cohesive regularization of the layout.

5.Approach road for function halls: There is a variation in the approach road width that is required for function halls, marriage halls, etc. Table II, Clause B2 of G.O.168 dated 07-04-2012 requires a width of 12 m only, whereas, the width given in the Residential Zone

Stipulations in G.O.Ms.No. 288 dated 03-04-2008 is 18 m. Since G.O 168 supercedes instructions given in earlier G.O.s, the required road width must be 12 m and a clarification must be given in this regard.

6.CDA value addition charges: The Government has rationalised the leviable value addition charges. However, there is a discrepancy in application of the said rationalised charges. While in respect of GHMC, they are applying to all building application cases where building permission has not been released, in case of HMDA they are levying the old rates in all cases received before the date of the said government memo.

Since government has brought out the clarification memo after due and careful consideration this should be imple-

mented as being done in case of GHMC where the revised VAC rates are made applicable to all cases where building permission has not been approved or where applicants have not paid the said charges. Many cases are pending in HMDA for want of the above clarification and application of the revised rates, viz. although many applicants have applied to HMDA, but are yet to remit the value addition charges in anticipation that the revised rates would be made applicable in all such cases.

7. Occupancy Certficate: The conditions for issue of Occupancy Certificate (and subsequent release of mortgage) have been laid down in Para 26 of G.O.Ms.No.168 dated 07.04.2012.

Release of mortgage should be considered after inspecting the following as per

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Problem solving

the G.O:a.Number of floors b.External setbacks c.Usage of the building d.Parking space provision e.Abutting road width But in reality, it is experienced that the occupancy certificate is not being given even after completing the construction of the building, when just the finishing works are left. There are other conditions being insisted upon like Fire Dept. NOC, water feasibility, etc., which are not specified in the G.O. under reference. It is felt that occupancy certificate must be issued within 15 days after complying with the instructions laid down in the G.O and no extraneous conditions be added.

8.Requirement of Internal Approach Road in Gated Group Development Schemes: In G.O.Ms.No.168 dated 07.04.2012, Group Development Scheme, Rule-8 Clause (m), the basic pre-requisites to qualify for Group Development Schemes are:a.Minimum Plot Area Size should be

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4,000 sq. mtrs. b.Minimum abutting approach road should be 12.0 mtrs c.Setbacks as per the table No-III. And the Minimum Setback requirement for 15 m buildings is 6 m, which is in tune with National Building Code - 2005 for building heights up to 18 m. The authorities are insisting that every gated group development scheme should have a minimum 9 m wide approach road within a gated development for connecting individual blocks, which contradicts the required setbacks as per Table No-III and establishes a loose end in defining the required open spaces/setbacks. This also conflicts with the NBC which clearly stipulates the setback requirements for low rise and high rise buildings. Therefore, the question of Internal Approach Road with 9 m connecting the blocks in low rise apartment blocks does not arise. Internal approach road of 9 m to 18 m is required only in gated layouts where the land is sub-divided into plots for construction of houses. We request that instructions be given not to insist for minimum 9 m wide approach road

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within a gated development for connecting individual blocks.

9.Relaxation on production of Pattadar Passbook: Hitherto, registration of lands from the owners was being carried out by the Registration Department without the insistence on producing the Pattadar Passbook. Recently instructions have been issued by the government not to carry out registrations if the land owners do not produce the Pattadar Passbook as a result of which numerous registrations have come to a standstill. Administrative procedures for issue of valid Pattadar Passbook at the revenue offices at the mandal and village levels have not yet been streamlined due to various reasons.

As a result, valid title-holders are unable to obtain the Pattadar Passbooks in time.

This is resulting in great inconvenience to people desirous of selling their land, as also to those intending to purchase the same. In certain cases, production of Pattadar Passbooks is not possible due to reasons listed below: a.When a person purchases or has purchased agricultural land through an

Problem solving

AGPA, after having paid the registration fee and after having paid the complete amount to the land owner, Pattadar Passbooks are not issued to the AGPA holder. The AGPA holder may not be able to get the Passbook from the original land owners, as in some cases only a part of the land has been purchased. The original land owners also sometimes do not cooperate in providing the Passbooks or in some cases are demanding additional payments for the same. Since, as a procedure, Pattadar Passbooks are not issued to AGPA holders, insisting on production of the same by the Registration Department is not practical. b.When a company purchases agricultural land from a land owner, Pattadar Passbooks are not issued in the name of the company. Only proceedings are provided by the MRO and insistence on the production of the Passbooks by the Registration Department is not practical again. c.When an individual purchases some non-agricultural land, the registration office is insisting on Pattadar Passbooks, even for non-agricultural lands, which are not issued at all.

Instructions must be issued to permit registration without insistence on Pattadar Passbook till such time when the procedures for issue of the same are streamlined and implemented at the revenue offices. As an interim measure this extension may be provided for a period of 2 years so that the public is not inconvenienced.

Revenue Department 10.Stamp Duty on Registration of DGPA: Development Agreement-cum-Power of Attorney (DGPA) is a facilitation document between the builder and the land owner. The Registration Act provides for imposition of Stamp Duty either on the land value or on the value of the proposed construction. In contravention of this provision, the department is now charging stamp duty on both the value of land and proposed construction; probably on account of a typing mistake in one of the G.Os. We request that a fixed amount be collected for such documents as has been the practice earlier. This would spur growth. Alternately, the stamp duty may be fixed at 1% of the land value falling to the share of the developer.

11.Stamp Duty on AGPA: Agreement of Sale cum General Power of Attorney (AGPA) is at present being charged Stamp Duty @ 5% of the Market Value of the property. This amount collected is later ad-

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Problem solving

justed during the execution of the Sale Deed(s). We request that this Stamp Duty be reduced to 0.5% with a validity of one year. This will not entail any loss of revenue to the department, as the balance amount would in any case be collected during the time of actual conveyance.

12.Reduction of the Stamp Duty to 5%: The Registration Department is in the process of revising the property values and the new rates will come into force from April 1, 2013. In the MoU between the Government of A.P and the Govt of India under the JNNRUM the State government has agreed to reduce the conveyance charges (stamp duty+TPT+RF) to 5%. Currently, the department is collecting 7.5% to 8.5%. We request that all inclusive conveyance charges (stamp duty, TPT, RF etc.) be reduced to 5% of the value of the property and that this reduction be done along with the upward revision of property values so that the public is not heavily burdened.

13. Stamp Duty on Registration of Agricultural Land “Fit for House Sites”: While fixing the values for agricultural land fit for house sites, a distinction be made between plotted area and un-plotted area. Fixation of Market Value by mul-

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tiplying the prevalent square yard rate with 4,840 would be incorrect. While developing agricultural land into a plotted area about 50% of land is left out by the developer for roads and other amenities. Moreover developers have to pay NALA charges to the Government and they have to bear the expenditure on developing the land and for developing infrastructure. Hence there would be a huge difference in market value between plotted and unplotted area. Hence the system of fixing market value for unplotted/undeveloped/un-approved lay-out land based on sq. yard rate for plotted/ developed land must be discontinued. It is felt that market value for agricultural land only be used for transactions where the extent is registered in acres/guntas/ cents and the classification of “Fit for plotting/house sites” be done away with.

Square yard rate must only be collected in respect of transactions pertaining to the sale of developed/plotted area under an approval/permit/licence by the competent authority. Alternately, 25% of Market Value of the plotted/developed area (1,210 sq. yards per acre) be the basis to collect stamp duty, etc., for the potential land in unplotted areas in respect of survey numbers where a part extent of land has already been developed for housing under a permit granted by

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the competent authority.

14. Mortgage Property To Be Entered In Watch And Ward Register: As per GO. MS 168, builders/developers have to place specified percentage of the builtup area under mortgage. Such properties are only required to be notarized and not entered in the Property Watch Register. We request you to instruct the Registration Department to comply with the provisions of Para 25 (d) and not to insist on registering the mortgage.

Mines & Geology 15.Seignorage Charges: As of now, the department calculates the amount of of seignorage to be paid through a long and time consuming procedure which is complicated. The amount thus calculated is becoming subject to being challenged and resulting in delay/litigation. APREDA proposes that the department levy a flat rate of Re.1/ - per sft for buildings and Re.1/- per sq. yard for plots payable at the time of sanction of plans. This will streamline the procedure for collections and will result in speedy realization of the tax to the department.

All the pending cases for the payment of seignorage can also be settled using the same yardstick which would settle all outstanding issues.

Tackling unauthorised layouts

This is the concluding part of the article “Layouts – the road ahead,”

by Vishwanath Sista which we carried in the last (Feb-March 2013) issue of Horizons

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nstead of the current policy of regularising layouts on a case by case basis, which does not really solve the network problem, there has to be a solution through planning. The nauthorised layouts should be taken into stride while finalizing the area level plans.

The government should publish the final list of unauthorised layouts and seal the records of local bodies. There should be a freeze on registration of plots till the area level planning is completed and notified.

Myriad laws for layout development Layout development laws are as varied as the authorities which are regulating and controlling them in Andhra Pradesh. These are – (a) UDAs for areas covered in the Urban Development Authority area (b) Municipal Corporations for areas covered in the corporation area (c) Municipal Council or municipality for areas covered in the municipality area (d) Gram Panchayats for areas covered in the Gram Panchayat area. For each authority, the layout stipulations are different and varying in technical standards of both layout preparation and approval as well as specifications of layout development works. While the technical

standards of layout pattern approval are required to be regulated through the Directorate of Town & Country Planning (DTCP) for all non-UDA areas, it is the UDA which approves the layouts in UDA areas. The local authority, whether it is a municipal body or gram panchayat, is required to sanction and release the ‘technically approved layout’ and enforce the layout development standards and works – in other words, ensure that all the roads, drainage works, sewerage and water supply lines are in place, parks are developed and tree plantation is undertaken in the layouts.

While the DTCP is a referral authority for the local bodies (it does not have any statutory powers to approve and enforce layouts and land development on its own), the UDAs have land development powers under the UDA Act. The local body has its own laws – the Municipal Corporation has layout powers under the MCH Layout Rules of 1965, the

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Regulations

Municipal Councils under the Municipal Layout Rules of 1970 and the Gram Panchayats under the Gram Panchayat Layout and Building Rules of 2000. The UDA is considered an outsider in the process, while the DTCP is considered mild and timid since it has no enforcement powers.

It is thus the local bodies which rule the roost in the matter of layout approval and layout development in the case of Gram Panchayats. Added to this is the confusion over technical approval for layouts in ‘minor gram panchayats’ and villages with population less than 5,000 where the gram panchayat is empowered to sanction layout based on a notionally ‘indicative land use plan’ prepared by the DTCP. There are more than 26,000 revenue villages in AP and out of these more than 70% are villages with population under 5,000. So preparing the ‘indicative land use plan’ for these 18,000-odd villages is a Herculean task.

While under the Gram Panchayat rules, the minimum plot size is 125 sq metres,

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it is 200 sq metres (now made 120 sq metres through a recent amendment) in respect of Municipalities, 100 sq metres in respect of Municipal Corporations and no restriction of plot size in case of UDAs like HMDA or VUDA. While the minimum road width is 10 metres in case of Gram Panchayat layouts, it is 12.2 metres in case of UDAs and nine metres in case of Municipalities and Municipal Corporations.

Even the public open space standards differ -- in case of gram panchayats it was 5% (later increased to 10% in the 2000 set of rules), 10% in case of urban local bodies and UDAs. However, the space to be left for other amenities is vague in all layout rules ranging from no mention or insistence in case of Gram Panchayats to 2.5% of layout area in case of UDAs. ‘Paper plans’ run riot There is, however, ‘many a slip between the cup and the lip.’ While the DTCP or UDA ‘technically approves‘ the lay-

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out, the layout owner is reluctant to undertake the layout development works and simply sells the plots without even properly grounding them and the local body does not enforce the conditionality of layout development works since the property registration is done elsewhere, i.e. through the Registration Department that does not insist on filing approved layout copy or clearance from the local authority. The registration authority is more concerned about the land status and not the layout status. The result is unauthorised layouts and layouts that do not have layout developments or amenities and services. Seeing this lacuna, many Gram Panchayats take advantage of this and notionally approve a layout plan and this ‘paper plan’ becomes an instrument in subverting all the other processes.

There is no responsible authority to check whether this ‘paper plan’ is in line with the layout pattern technically or even tallies, on the ground, with the statutory Master Plan. There is just the notion of

Regulations

porous responsibility on the part of DTCP or UDA (the planning and technical approving agencies) and the local bodies who circumvent the layout approval process by encouraging owners to go through this route. They later tackle the issue of layout development works by undertaking area-level facilities through municipal works or public works. In other words, this is to their advantage and gives rise to corruption and other questionable practices.

Enter the Revenue authorities While the position mentioned above on layout pattern and standards is there, the next dimension is the revenue or land status angle. The approving authority simply insists on prime facie ownership based on village revenue records or land sale deed. In many cases, the revenue authority does not recognize its own records (village records or registered sale deed effected by the Registration Department) and later goes for mid-course corrections, viz. declaring the lands as surplus either under the land ceiling laws, both urban land ceiling, which was repealed in 2008 but many lands were declared surplus before the repealment, and agricultural land ceiling, which is still in force, or under land assignment laws (the new POTA Act 2006 has further confused the issue of assignment status of Government lands). Here also, in the backdrop of uncertainty, the local bodies come handy for questionable layout approvals and plots registrations, thus spawning numerous layouts of dubious authenticity.

‘Business as usual’ state So what does an owner or developer do in such a ‘business as usual’ stage? He relies on the services of so-called experts or ‘fixers’ to wade their way through this maze of laws affecting layout and land development, which is a time-consuming and expensive process with a degree of uncertainty and cost overruns, mismatch in the owner-developer agreement, money flow, etc. The UDA came up with the idea of defraying the layout approval

and actual layout development by introducing a system of mortgage of plots (for ensuring that the owner completes the layout development works within the given time frame of 2 to 3 years). In this the owner has to mortgage 15% to 25% of the plots to the UDA and can dispose of the remaining 75% of the plots, thus facilitating easy cash flow for the owner by the developer and undertaking layout development works out of the moneys received through the sale of plots, handing over the open spaces and roads and amenities to local authority, etc.

‘Fly in the ointment’ However, the revenue laws are still a ‘fly in the ointment’ since the land status is still ‘business as usual’ in respect of gram panchayats and non- UDA areas.

In respect of UDA areas, they have come up with a solution of appointing revenue officers for vetting the land ownership status, which to a certain extent has given confidence in the owners and developers and plot buyers. But in many instances, due to nonintegration of the various revenue laws under one authority, there are many problems. One of the major ones currently is the application of the Non-agriculture Conversion Act of 2006 (a one-time levy which is a steep 9% of the land value) and court cases and debates, which are going on for this upfront charge and the Government yet to come up with a clear solution to the problem.

Is there a way out for streamlining the process?

The aforementioned situation calls for simplifying and making the layout approval process clear. Given below are some suggestions.

1. Simplify the layout approval process – (a) only one authority for all types of layout/land sub-division approval, including vetting the land title/ownership details, with a single stage layout approval and taking a mortgage for ensuring that development works are in place, eventu-

ally.

2. Only one rate of fee and charges (inclusive of all charges like NALA charges, development charge, betterment charge, user charge, etc.)

3. Modification in layout pattern once approved may be allowed except in exceptional cases. All roads, open spaces and amenity areas must be handed over to the local authority through a registered gift deed along with the layout approval.

4.A two-stage development process should be allowed -- basic land sub-division approval which includes layout/ township/area development plan and a second stage for actual development and building construction with approval by the local authority.

5. There should be clarity on defining pre-requisites for the approval of second stage of actual site/plot and building development, which includes group housing scheme/development of various sectors into housing units/for various non-residential uses, developments, etc.

6.Integrate land registration with land sub-division and layout approvals, including all subsequent sales/further subdivisions/resale, etc.

7.Integrate building approval with land sub-division and layout approval.

8.Integrate land development with land sub-division and layout approval.

In the backdrop of the varied laws and layout approval procedures, it is imperative on the part of the Government to come up with an effective institutionalized system keeping the layout simplification process in view, whereby the owner and developer are clear about the layout approval procedure, the land ownership status, the Master Plan provisions or indicative land use provisions, or areas prohibited for layouts, etc. and layout development works and his right to dispose of the plots to customers in a fully ‘legal way.’

- Vishwanath Sista Former Member (Urban Planner), HMDA & Director (Planning),HMDA

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Lead story

It is time for new experiments

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s the Central Government’s first urban focussed housing initiative, the Natonal Urban Housing and Habitat Policy (NUHHP), conceived in 2007 by the Ministry of Urban Housing and Poverty Alleviation aims at promoting sustainable development of habitats in the country with a view to ensuring equitable supply of land, shelter and services at affordable prices to all sections of the society. However, given the magnitude of the housing shortage in the country, the staggering amount of funds required to meet the cost of construction only for overcoming the shortage comes to about Rs.3.61 lakh crore. In this scenario, it is obvious that the public sector’s efforts alone will not be enough to fulfil the requirement due to budgetary constraints of the Central as well as

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Lead story

State Governments.

Additionally, an NHB estimate suggests that the shortage of houses is in the range of between 25 and 30 million houses currently.

Therefore the involvement of multiple stakeholders, i.e. the private sector, co-operative sector, industrial sector for labour housing and the services, institutional sector for employee housing has been emphasised in the NUHHP. The policy aims at forging strong partnerships between the public private and cooperative sectors for accelerated growth in the housing sector and sustainable development of habitats.

This apart, the policy states that all States must be encouraged to develop a “Habitat Infrastructure Action Plan” for all cities with a population of over 1,00,000. The policy gives priority to provision of shelter to the urban poor at their present location or near their workplace.

However, the ground realities seem to be vastly different.

Multiple taxation, which hovers in the range of 50% for housing, is impeding the growth of the realty sector and the government too does not seem to be in a mood to encourage the real estate industry.

Given the huge employment potential the sector offers, the government should pull out all the stops and put the realty sector in the fast track, because this industry is the top-most contributor to the country’s GDP only after agriculture.

Let’s examine how taxation is affecting realty in a variety of ways and trace the trajectory of the taxation process from which realty badly needs relief.

1) Registration Registration charges have to be paid on land, development agreement, mort-

There is an urgent need for a “housing mission” to satiate the demand for no-frills, low-income, low-cost, urban and rural housing in the country gage deed, gift deed, plot, lease deed and housing units 2) VAT is another important component of taxation. i) This is required to be paid by the land developer ii) On input materials used for layout/ infrastructure development iii) On sale of residential/commercial units iv) On layout development contracts v) Development contracts for constructiion vi) Sale of units 3) Service tax i) This is payable for layout development contract/sub-contract ii) On the construction of residential/ commercial units iii) On renting of commercial immovable property 4) Income tax i) Payable as capital gains tax on the sale of urban land ii) Tax on layout development iii) IT on construction firms iv) On material and service providers for land development v) IT on lease rentals 5) Seignorage charges i) On materials used for construction ii) Layout developers/builders 6) Labour cess

i) On material suppliers ii) Works contractors undertaking land development/construction 7) Other taxes i) Various types of fee by local bodies and UDAs ii) NALA tax -- conversion from agricultural to non-agricultural purposes iii) Conversion land use/zone charges payable to UDAs and local bodies iv) Layout development fee/permit fee v) Developement charges vi) Deposits on amenities (Payments to Transco, water charges, etc) on layouts vii) Shelter fee viii) Provision for EWS/LIG units ix) Expenses on cost of giving 5% land free to UDAs These are the myriad taxes that a developer/builder or anyone buying property is required to pay to the authorities.

Despite the fact that there have been several Five Year Plans and schemes such as JNNURM, RAY, SAHIP, Slum Redevelopment, etc., the requirement of houses across the country continues to grow.

There is an urgent need for a “housing mission” to satiate the demand for nofrills, low-income, low-cost, urban and rural housing in the country. As six decades of experiments with cross subsidy schemes have not met the succes they deserved it is time for the government to take some bold and innovative steps to meet the housing demand.

One such step could be a tax-free housing scheme for the weaker sections where there is removal of all types of taxes and provision for reimbursements of taxes on inputs. The government could announce this scheme, at least on any experimental basis for a limited period of time. This could certainly address one of the basic needs -- housing -- of the vast multitudes of people.

April 2013 - May 2013

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Etiquette

Ssshhh...! mind your manners, it’s a Hospital

By Carolann Philips ost of us have at some time or the other visited a sick relative or friend in a hospital. Mutual respect and adherence to the medical facility’s rules maximizes the experience for all involved – the patient, the family and the medical staff.

When visiting a patient in hospital it is considerate to wear fresh clean clothes.

It is inappropriate to wear anything fancy or elaborate. Strong perfumes must be

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avoided as well, as this not only puts the patient in discomfort but may cause allergies. Most medical facilities prohibit the use of mobile phones on the premises. Medical facilities are generally ‘quiet’ zones and so it is good etiquette to silence mobile phones when entering the hospital or at least turn it to vibrate mode. It is also considerate to avoid wearing high heels or shoes that produce a sound when walking. Doors must be opened and closed softly. Care must be taken to speak in a low voice, avoiding loud discussions and deliberations. It is best to avoid taking children to visit a sick person in the best interests of both the patient and the child; however having the child make a get-well card or drawing and taking it along is a kind gesture.

Once inside the patient’s room, it is impolite to sit on the patient’s bed, nibble on snacks or have a tea party! Laughing or joking loudly with other visitors is unacceptable. Patients and immediate relatives generally feel obliged to play host when a friend or extended family member visits, however this should not be the case.

The patient’s room is not an extension of home!

Most patients feel vulnerable and uncomfortable greeting visitors from the confines of a bed. Besides, being ill they might tire

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easily. It is therefore courteous to keep the visit brief. When conversing with the patient, avoid expressing negative feelings, giving unpleasant news or asking for lengthy explanations for the sake of mere conversation. Speaking to the patient’s relatives in a hushed tone or taking them out of the room is thoughtless as it may alarm the patient unnecessarily. It is bad manners to use the restroom meant for patients. A public restroom on the premises should be used instead.

Browsing through the patient’s medical reports, offering unsolicited medical advice or describing other similar cases that ended tragically is insensitive and can be disconcerting for the patient. If a spouse or near relative is attending to the patient at night, care should be taken not to bring a large amount of items from home. It is courteous to leave the room if a nurse or doctor enters to attend to the patient. Questioning the nurse or the doctor about the exact nature of the illness, its cause and the treatment being administered is not appropriate. Medical professionals are not obliged to give lengthy explanations to everybody. If it is a shared room, it is courteous to acknowledge the people on the other side with a comforting smile. Being considerate and thoughtful in ways such as those mentioned above will go a long way in ensuring we are welcome visitors at a patient’s bedside.

(Carolann Philips is a certified etiquette and protocol consultant and behavioural skills coach. She is the managing director of Hallmark Events, a company that focuses on designing and developing programmes with emphasis on organizational behaviour and thinking, based in Muscat, Sultanate of Oman.)

April 2013 - May 2013

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Tax issues

implications of VAT on Construction Activity By: C. Umakantha Sarma

C C. Umakantha Sarma M.Com; B.L., Advocate & Tax Consultant

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onstruction activity involves two types of transactions. One is the sale of immovable property, i.e. the sale of land/semi-constructed flats/ completed flats, while the other is the sale of movable property, i.e. goods involved in the construction of flats/villas/ residential or commercial complexes.

Movable property is liable to tax under the provisions of the APVAT Act, while the immovable property is not liable to tax. The taxation of the activity of construction of apartments, houses, residential or commercial complexes under the APVAT Act is a works contract in nature.

The incorporation value of material in-

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volved in the execution of work alone is liable to tax and not the total contractual consideration in terms of Section 4(7)(a).

The builder/contractor can claim deductions listed in Rule 17(1)(e) from the total contractual consideration to arrive at the taxable turnover. The taxable turnover consists of different material and the incorporation value of the said material is liable to tax at the rate applicable to them in the corresponding schedule. The builder/contractor is eligible to claim ITC to the extent of 75% only. Where the correct value of material consumed is not ascertainable from the books of accounts, the standard deduction as per

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Tax issues

Rule 17(1)(g) can be claimed from the total contractual consideration for arriving at the taxable turnover. The taxable turnover so arrived at is liable to tax at a flat rate of 14.5%. ITC will not be allowed in this case.

The builder can opt for payment of tax under the composition scheme in terms of Sec. 4(7)(d) according to which he is required to pay tax @5% of 25% of the total consideration received/receivable towards the composite value of both the land and building or the market value fixed thereon for the purpose of stamp duty, whichever is higher as per the amended Sec.4(7)(d) w.e.f. 15.9.2011.

Such option can be exercised by filing form VAT 250 before the commencement of each work or for all the works to be executed during the year.

There is no eligibility for ITC in such a case. No tax shall be payable by the subcontractor of a main contractor who has opted for composition scheme subject to production of evidence to prove that the main contractor has opted for composition by furnishing the copy of form VAT

250 filed by such main contractor.

The builder has to enter the details in form VAT 200 filed for the month in which the sale of such property is concluded and registered. The tax dues shall be paid with the return in form VAT 200 and the particulars of payment of tax made directly or through the sub-registrar shall be reported in the relevant columns in form VAT 200.

Here it is important to note that where an agreement of sale is entered into with the buyer on completion of the construction of the building/apartments/villas etc., it is a sale of immovable property not liable to tax.

Where an agreement of sale is entered into at any stage of construction it amounts to works contract liable to tax under the APVAT Act. The judgment of the Supreme Court in the case of K. Raheja Building Corporation (141 STC 298) and the clarification given by the Authority for Clarification and Advance Ruling in the case of M/s Noble Properties, Hyderabad in A.R.Com/48/2012

dt.15.9.2012 supports the same. The Supreme Court in the above case held that “so long as the agreement was entered into before the construction was complete, it would be a works contract and if the agreement was entered into after the flat or unit was already constructed, there would be no works contract.”

The ACAR in the above Ruling clarified that: 1) Construction and the sale of villas along with land in a single deed falls under Sec.4(7) (d) (composition scheme) and all other cases fall under Sec.4(7)(a) (Non-composition Scheme) 2) Where there are two separate agreements, i.e. one for sale of land and another for construction of villas/residential houses, the first one is not taxable under the provisions of the APVAT Act being sale of immovable property. The second one falls under Sec.4(7)(b) (composition scheme) or under Sec.4(7)(a) (non-composition scheme) depending on the option chosen by the builder.

Rates of SeignIorage Fee S.No. Name of the Minor Mineral

Unit

Rate of Seigniorage Fee (in Rupees)

1 2

Building Stone Rough Stone / Builders

M3 / MT M3 / MT

Rs. 50/33 (Rupees Fifty / Thirty Three) Rs. 50/33 (Rupees Fifty / Thirty Three)

3

Road Metal & Ballast

M3 / MT

Rs. 50/33 (Rupees Fifty / Thirty Three)

3(a)

Dimensional Stone used for Kerbs & Cubes

MT

Rs. 88/- (Rupees Eighty Eight)

4 Limekankar / Limestone MT The rate of Royalty as applicable to limestone (other

than L.D. Grade) in respect of Major

Mineral as per the 2nd Schedule

of the Mines and Minerals (D&R) Act, 1957.

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5

Lime Shell

MT

Rs. 88/- (Rupees Eighty Eight)

6

Marble

M3 / MT

Rs. 165/66 (Rupees One hundred and Sixty Five / Sixty Six)

7

Mosaic Chips

MT

Rs. 44/- (Rupees Forty Four)

8

Muram Gravel & Ordinary earth

M3 / MT

Rs. 22/14 (Rupees Twenty Two / Fourteen)

9

Ordinary sand / Sand manufactured from Boulders useful for Civil construction

M3

Rs. 40/- (Rupees Forty)

10

Ordinary clay, Silt and Brick Earth used in the manufacture of Bricks including Mangalore tiles --

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Rs. 3850- (Rupees three thousand eight hundred and fifty only) per kiln per annum for Bricks and Tiles

April 2013 - May 2013

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Budget wish list

Smart solution to kitchen duties Gone are the days of drudgery in the kitchen, as the modular kitchen makes cooking not only simpler but even pleasant

By Ashu Tiwari

T

he modular kitchen, an arrangement whereby you can set up fixtures/accessories as per your preference, is a smart solution to making work in the kitchen simpler. The purpose of such kitchens is to make day to day work in the kitchen not just easier but also more organised as they are built in an ergonomic fashion. For chefs, these kitchens are like a huge playground wherein they can exhibit their skills while for novices, it’s a chance to get their cooking hats on and start experimenting.

Modular kitchens also serve as a solution to the problem of space constraint as items in the kitchen are stored in wellplanned interiors. They are stashed away in cupboards or drawers that are built using the latest technology. A modular kitchen usually comprises a dishwasher, grill, a hob, extractor fans, induction stove, conveniently located cupboards, oven, a fancy sink, etc.

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Interiors

In order to set up a modular kitchen, the width of the walls should first be measured as should any projections such as pillars. This should be followed by locating on the drawing, the position of utilities such as water, gas, switches or drainage outlet. According to the drawing, you can opt for a U-shape or L-shape kitchen, a single line kitchen or a parallel kitchen. This works as an opportunity for veterans to get their designs converted into reality.

The hob in modular kitchens can be either electric or run by gas. Many, however, choose to opt for induction heaters as they do not involve the use of an open flame.

Modular kitchens usually comprise a hob chimney to ensure proper ventilation. The chimney works almost like an exhaust fan, one that has been modified into a chimney and operates on the

principle of suction. The speed of the fan in such chimneys can be adjusted according to one’s requirement. These specialised chimneys that are fitted with extractor fans can also remove any unpleasant or smothering smell besides getting rid of grime.

The cost of installing these kitchens can cost anywhere between Rs. 1,00,000 and several lakhs, depending on how much the customer is willing to invest and the size of the kitchen. You can opt for materials such as engineering wood, plywood, medium density fibre wood or even recycled wood with high gloss or matte finish. Alternately, you can also opt for steel, glass or stone finish.

City based interior designer Vincent Francis says; “Nowadays modular kitchens also come equipped with ‘silent comfort’ or ‘soft closing technology’ so

that even if you bang a closet, it will not create any noise.” Similarly, the lip-sealing technology ensures that dust and insects are kept out. In addition to this, the idea of installing televisions, music systems or an extension of the landline in the kitchen in order to make it a comfort zone is also gaining popularity, Mr. Francis adds. In some cases, the living room forms an extension of the kitchen.

Some of the top brands for modular kitchens in India include Hafele, Gilma, Haecker, Sleek, Cucine Lube, etc. Delivery for the kitchen equipment takes place within a month of placing the order and it is free of cost in most stores in the city.

In this age of depleting space, where the idea of open-space kitchens is losing ground, modular kitchens can prove to be a viable option.

April 2013 - May 2013

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39

Obituary

‘Bash on regardless’ was his credo (A tribute to APREDA Executive vice president Bhawarlal Jain)

T

here are few persons in this world who achieve a lot in a short lifespan and make a mark in whatever they do with single-minded focus and a resolute will. One such man was Bhawarlal Jain, Executive Vice President of APREDA, who breathed his last on February 13 2013 and has left a great void which will be hard to fill.

Bhawarlal Jain was a member of APREDA since its inception in 1995 and contributed immensely to the association in many ways. He held the positions of Secretary General, Vice President and later was the Executive Vice President of APREDA. His contribution to APREDA will be remembered for long as he was a tower of strength for the association and considered APREDA his ‘second family.’ Never one to lose heart even in the most difficult of circumstances, Bhawarlal Jain’s credo was that of an attacking army; ‘Bash on regardless.’

The main force behind organising APREDA’s Property Shows, which have now become the talking point in realty circles, Bhawarlal Jain was unanimously elected the founding Chief Convener of National Real Estate Development Council (NAREDCO) A.P Chapter.

Born on 15 September 1954 at Secunderabad to Lalchandji Munoth and Chunnibai, Bhawarlal Jain completed his early education from Wesley School and was a good student. He later graduated in commerce from Wesley College, Osmania University, in 1975.

The Munoth family is a century-old business house which has interests in construction, jewellery, finance and textiles. However, Bhawarlal Jain forayed into the construction and real estate business in a more active way some 25 years ago and made a name for himself. He built the first gated community in Hyderabad and developed around 2,000 acres of land for construction. He constructed numerous residential and commercial complexes, prominent of which are Happy Trade Centre, S.D. Road, Happy Enclave, Balamrai, Happy Home, Nallakunta, Mahaveer Nagar, etc.

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Memorial meeting for Mr Jain

Posts held in social, educational and other fields •District Governor of Lions Clubs International during 1990-91 •National President of All India Shwetambar Sthanakwasi Jain Conference, New Delhi, (Youth Wing) •Secretary and correspondent, S.S. Jain Vidyalaya and High School, Secunderabad •Trustee Shri Mahavir Jain Hospital and Research Trust •Trustee S.S. Jain Society, Secunderabad •Trustee Lions Bhawan Trust, Secunderabad •Managing Trustee Lions Clubs International Cancer Institute Trust •Secretary Secunderabad Wholesale Cloth Merchant Association •Federation of Jain Educational Institutions of India (FJET) – National Council Member & Past A P State President Achievements •Establishment of a modern Lions Cancer Hospital at a cost of Rs. 7 crore •Shifting of the Jain School to a new premises and construction of the building thereon •Establishment of Lions Blood Bank Born to win A man full of exuberance, his presence inspired confidence and he took on challenges with a gusto that came with years of experience. He was ever helpful to one and all, his family, friends, partners, subordinates and colleagues alike. He had a way in whatever he did; the mails he forwarded, couplets he quoted, the wisdom he shared, the smiles he flashed, burdens he carried, the encouragement he gave and the obstacles he surmounted. Never proud, seldom angry, always a man in control, his composure was always reassuring. APREDA will miss him.

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Budget wish list

April 2013 - May 2013

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April 2013 - May 2013

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Pulse

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APREDA Accolade Advertorial Pulse Interiors

diary

Advertorial

Members observing two minutes’ silence in memory of Mr H Bhawarlal Jain, Exe Vice President, APREDA at the monthly meeting

Mr Aditya Gowra, GC Member, APREDA, giving a power point presentation on service tax at the monthly meeting

On the occasion of inauguration of VUDA’s regional office at Srikakulam, APREDA North Andhra E.C. members at the function (from left to right) are S.R. Niranjan, Secretary, Sourab Gour, Collector, Srikakulam, B.R.Tagore, President, N.Yuvaraj, V.C, VUDA, P. D.Dharma Rao, ex-president, N. Sri Nagesh, Treasurer

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Mr P Dasharath Reddy, Secretary General, APREDA welcoming the representative of Maytas Properties, Mr P Vasudeva Rao, Member of APREDA at the monthly meeting

Mr P Prem Kumar, Presiedent, APREDA, presenting a bouquet to Mr Y Harsha Vardhan Reddy, Member, APREDA

Mr M V Narendranath Reddy, GC Member, APREDA, welcoming Dr N P V S Raju to the monthly meeting

Mr S Ganesh Reddy, GC Member, APREDA, presenting a memento to Mr V V L N Sharma, Planning Consultant, HMDA, at the monthly meeting

Col. (Retd) Narne Ranga Rao, Founder president of APREDA, presenting a bouquet to Dr. (Col.) Subbhash Chadha (Retd.) at the monthly meeting

Mr P Prem Kumar presenting a bouquet to Mr A V K Vishwanath, Member, APREDA, at the monthly meeting

April 2013 - May 2013

47

Tech Talk

Google Glass:

Fun computing on the move!

G

oogle Glass is a pair of glasses with a built-in semitransparent computer screen in one corner. It is simply stylised as ‘Glass’. The video shows the device responding to voice commands to allow users do things such as record videos while hang-gliding, look up photos of tigers while sculpting ice into the shape of a tiger’s head, or checking the weather while walking the dog.

It is the implementation of an idea that Internet and computing must be available anywhere, anytime, without the need to use one’s hands. It is an attempt to make ‘wearable computing’ go mainstream.

The glass has been under development and the first prototype was ready in April 2012 and Google released a video of its performance in February 2013 titled “Glass – How it feels.”

Google Glass displays information like any Smart phone or Tab, hands-free, it can connect to the Internet, recognise and implement voice commands using the Android Operating system and its apps.

Google Glass has a tiny prism which displays a screen like image just above

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your eyeline. You can see what is on the display by glancing up. The glasses also have an embedded camera, microphone, GPS and use vibrations to give you sound. Voice control is used to control the device.

The Glass was originally predicted to be available to the public for “around the cost of current smart phones” by the end of 2012. The Explorer Edition is now available to testers for about US$ 800, while a consumer version is slated to be available by the end of 2013 for a “significantly less” price.

Reception to the device has been a mixed bag. There have been parodies and criticism too. Some feel it may intrude the privacy of people as it can record voice and video. Safety due to distraction has been a major concern. Others feel it will do what machines do best, thereby freeing humans to do what they do best.

However, the technology industry has received Google Glass positively.

To conclude, all radically new technologies bring new potential for misuse, but we need to weigh that against the capacity for good and the progress they bring. So let us wait and watch, it is only a year away at the most.

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Feature Record video Voice Commands Voice activation text “ok glass, record a video.”

Take picture Start Google+ hangout Search Search photos Translate Give directions Use Google Now Send message “ok glass, take a picture.” “ok glass, hang out with [person/circle].” “ok glass, google [search query]”.” “ok glass, google photos of [search query].” “ok glass, say [text] in [language].” “ok glass, give directions to [search query].” “ok glass, [question] “ok glass, send a message to “[name]”.”

Link to images: http://www.techradar. com/news/video/google-glass-whatyou-need-toknow-1078114

Reglations

April 2013 - May 2013

49

Auspicious days

May 2013

Auspicious days

Date

Day

Time (IST)

7

Tuesday

From 05:49 am - 09:46 pm

12

Sunday

After 11:52 am

13

Monday

From 05:47 am - 04:53 pm

18

Saturday

From 10:04 am - 03:55 pm

20

Monday

After 05:49 am

21

Tuesday

From 05:45 am - 09:45 pm

23

Thursday

After 06:52 am

24

Friday

After 12:40 pm

25

Saturday

From 05:45 - 20:23

26

Sunday

After 10:49 pm

27

Monday

From 05:45 am - 12:47 pm

28

Tuesday

After 12:09 am

29

Wednesday From 05:45 am - 09:58 pm

Humour corner

50

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Trend

NHB Residex CITY WISE HOUSING PRICE INDEX (UPDATING UPTO QUARTER Oct-December 2012)

Market rates

CITIES 2007 Jan-Mar Apr-Jun Jul-Sept Oct-Dec Jan-Mar Apr-Jun Jul-Sep Oct-Dec Index 2011 2011 2011 2011 2012 2012 2012 2012 Index Index Index Index Index Index Index Index Hyderabad 100 83 91 84 79 86 85 84 90 Faridabad 100 165 220 206 218 217 217 216 205 Patna 100 146 146 141 140 129 140 138 151 Ahmedabad 100 165 169 163 167 164 174 180 191 Chennai 100 218 248 271 296 304 309 312 314 Jaipur 100 67 64 65 64 80 78 85 87 Lucknow 100 157 160 154 165 164 171 175 189 Pune 100 148 150 169 184 181 200 201 205 Surat 100 128 149 139 152 144 145 138 150 Kochi 100 86 107 97 82 72 73 80 87 Bhopal 100 167 224 208 211 204 207 206 216 Kolkata 100 211 194 191 190 191 196 191 209 Mumbai 100 175 181 194 193 190 197 198 217 Bengaluru 100 88 92 93 100 92 100 98 106 Delhi 100 126 147 154 167 168 172 178 195 Bhubneshwar 100

161 164 168 172 Guwahati 100

157 159 158 166 Ludhiana 100

163 171 168 179 Vijayawada 100

184 186 181 185 Indore 100

208 203 196 194

Locality Price(Rs/Sq.Ft.)

Hi-Tech City/Madhapur

3500 - 5000

Attapur

2200 - 3000

Habsiguda

3500 - 3700

A S Rao Nagar

2000 - 3000

Hyderguda

3000 - 3500

Barkatpura

4000 - 4800

Hasmathpet

2200 - 2500

Bachupally

1800 - 4000

Hydernagar

2500 - 2800

Bandlaguda

2200 - 3000

Jeedimetla

1800 - 2000

Banjara Hills

5000 - 7500

Jubilee Hills

6000 - 7500

Bollaram

1800 - 2800

JNTU Road/Kukatpally

4500 - 5500

Chintal

1800 - 2000

Kondapur

2500 - 3800

East Marredpally

4200 - 5000

L B Nagar

2500 - 2800

Erragadda

3000 - 3800

Marredpally (Secunderabad)

3400 - 4300

Gachibowli

2800 - 4200

Mehdipatnam

3000 - 4200

April 2013 - May 2013

51

Projects

real e s t a t e RESIDENTIAL

52

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Projects

o n offer

April 2013 - May 2013

53

Projects

54

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Projects

April 2013 - May 2013

55

Projects

commercial

PLOTS

56

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Projects

villas

April 2013 - May 2013

57

Projects

58

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Luxury Apartments starting at 95 Lakhs April 2013 - May 2013

59

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