Friday 30 June 2017

Will GST make homes expensive

The members of CREDAI (RNE) Raj Nagar Extension, believe that property prices will go up once the new tax regime kicks in




Come July 1, under-construction projects will attract a goods and services tax (GST) rate of 12%. Amid all the hullabaloo over the unified tax regime in the country, speculation is rife on would it lead to a hike in property prices?

The members of CREDAI (RNE) Raj Nagar Extension, believe that property prices will go up once the new tax regime kicks in. They feel RERA and GST will push price trends with a 10-20% spike in property prices.

“Taxes are being rationalised which will lead to increased transparency. There will be more clarity post-GST in terms of taxes. Under GST, the under-construction projects are going to attract 12% tax, where previously it was about 4.5%. This will push the market and we can expect an increase in prices. Steel will also attract 18% GST, which will further put stress on prices,” says Manu Garg, Director, Carol Infrastructure Pvt Ltd, who was speaking at a press conference held by CREDAI, RNE chapter.

“Cement has seen both highs and lows in the past and it directly impacts the construction cost. Any increase in cement prices will directly influence the construction cost of a project. The government is also working on the correction of minimum wages. From here, the market will only move ahead so the best time to buy a house is now. Home loan rates are low and the market gives end-users and investors the right climate to buy,” adds Garg.

General Secretary of CREDAI RNE, Gaurav Gupta says that the best time to buy property is now as prices are attractive and home loan rates are cheapest at this point in time. “The market offers attractive prices for home buyers. Home loan rates are the cheapest and affordable homes are getting subsidies from the government,” explains Gupta.


The GST rate for steel has been finalised at 18% which is expected to be beneficial in the long run for other sectors as well. Cement prices are expected to go up marginally, as it has been put in the 28% tax slab from the earlier 23-24%.


Tuesday 27 June 2017

Ensure builders don't charge home buyers higher tax after July 1 Venkaiah Naidu to states

The finance ministry last week had clarified that GST will actually reduce their tax outgo for payments made after July 1


NEW DELHI: Housing minister Venkaiah Naidu has asked chief ministers of all the states to ensure builders don't charge higher tax from home buyers after the goods and services tax (GST) comes into effect from July 1.

In a letter yesterday, the minister said builders asking home buyers who have booked flats and made part payment to make entire payment before July 1 or to face higher tax incidence is against the law.

"I would like to request state governments as well as builders' associations to ensure that no builder/construction company should ask customers to pay higher tax rate on installments to be received after the imposition of GST," Naidu said in his letter.

The finance ministry last week had clarified that GST will actually reduce their tax outgo for payments made after July 1.

"Construction of flats, complex, buildings will have a lower incidence of GST as compared to a plethora of central and state indirect taxes suffered by them under the existing regime," the finance ministry said.

The ministry had also warned that if any builder resorts to such practice, the same can be deemed to be profiteering under section 171 of GST law.

The letter written by Naidu to state CMs highlighted that in the current tax regimes, incidence of central excise duty, value added tax (VAT), entry tax, etc, on construction material are currently borne by the builders, which they pass on to the customers as part of the price charged from them.


"This is not visible to the customer as it forms a part of the cost of the flat. The buyer/customer does not see the embedded taxes on account of cascading and sticking of input taxes in the cost of the flats, etc," it said.

However, under GST, full input credit would be available for offsetting the headline rate of 12% and it is for this reason that refund of overflow of input tax credits to the builder has been disallowed.

Builders body Confederation of Real Estate Developers Association of India (CREDAI) has also urged the government to consider accommodating the abatement of land value in GST regime to ensure that home prices don’t rise.

CREDAI had also highlighted that the GST regime does not eliminate multiple taxation for the real estate sector, and availing input tax credit may not be feasible, thus limiting the capacity of developers to absorb the additional tax burden or pass on the benefits to homebuyers.




Friday 23 June 2017

No ads of housing projects without registering with RERA Govt

The clarification is likely to further dampen the already subdued real estate market that has seen no real appreciation in value of property




Clearing the air on real estatedevelopers issuing advertisements, the government has said no ongoing or future projects can be advertised without registering them first with the new regulator.

The clarification is likely to further dampen the already subdued real estate market that has seen no real appreciation in value of property or sales growth during the last few years.

The Real Estate (Regulation and Development) Act was passed last year to regulate the sector, eliminate fly-by- night operators and protect buyers' interest. The Act came into force from May this year.

Realtors' body NAREDCO had submitted a representation to Ministry of Housing and Urban Poverty Alleviation seeking clarity on advertisement and sale of the ongoing projects amid conflicting reports and interpretation on the issue.

"Section 3 (1) of the Act prohibits advertisements for all projects (ongoing/future) without registration with the real estate regulator. This provision has come into effect from May 1, 2017," the ministry said, while responding to the NAREDCO's letter.

NAREDCO President Parveen Jain said the prohibition on advertisements and sale in the ongoing projects will hit the industry.

As per the Act, Section 3 (1) specifies that "no promoter shall advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building...,in any real estate project or part of it, in any planning area, without registering the real estate project with the Real Estate Regulatory Authority established under this Act."

For the ongoing projects, this section provides that the promoter should make an application to the authority for registration of the project within a period of three months from the date of commencement of this Act.

Ending the 9-year long wait, the real estate law, which will regulate the realty sectorinvolving over 76,000 companies, came into force from May 1, 2017.

With all the 92 Sections of the Act coming into effect, developers are required to get all the ongoing projects that have not received completion certificate and the new projects registered with regulatory authorities within three months, ending July.

This would enable the buyers to enforce their rights and seek redressal of grievances after such registration.



Tuesday 20 June 2017

Tamil Nadu cuts property guideline value by 33%

The move could remove hurdles in property transactions in many rural areas, where guideline values were at times higher than market values.



CHENNAI: Hit by low realty transactions for successive years, the Tamil Nadugovernment has decided to effect a 33% reduction in guideline values (the government-fixed minimum value of properties) for registration of properties. The decision was taken in Thursday's cabinet meeting and the revised norms will come into effect on Friday.

The move could remove hurdles in property transactions in many rural areas, where guideline values were at times higher than market values. To compensate for the possible loss of revenue, the government has increased the registration fees for conveyance, exchange, gift and settlement effected in favour of non-family members deeds from 1% to 4%. It will come into effect on Friday .

The developer community has welcomed the reduction in the guideline values. City developer Arun Excello MD P Suresh said, “This will give the much needed fillip to the real estate sector. But owing to the 3% increase in registration fees, the effective reduction in cost of conveyance of property is only marginal. For instance, for a property whose guideline value is Rs3 lakh at present, the resultant reduction in cost of registration is only Rs 2,000. In the case of an apartment buyer registering an undivided share of land worth Rs3 lakh, there is no savings at all even after reducing the guideline value by 33%. Still, there is substantial savings for the seller on account of resultant drop in capital gain tax, which is calculated based on guideline value when the guideline value is higher than the market value“.

N Nandakumar of Devinarayan group said the reduction in guideline value would help the affordable housing segment and spur the real estate growth. “Higher guideline values have the tendency to push the market prices up for properties. The reduction in guideline value will definitely lead to softening of property prices“. “We expect the volume of transactions to go up,“ said T Chitty Babu, MD, Akshaya Homes. TN still has a long way to go in fulfilling the Centre's proposal to introduce uniform stamp duty and registration fees (4+1% respectively) across the country. Only very few states have introduced four per cent stamp duty and one percent registration fees, Babu said.

With goods and services tax round the corner, state governments are left with very few things to levy tax on. Most of the services as well as commodities have been subsumed by 
GST. Only alcohol, fuels, stamp duty and registration fees are available for states to levy tax on.

Tamil Nadu government is in the process of imposing phased prohibition and had closed down 1,000 Tasmac outlets on its own. Another 3,000 shops were closed after the Supreme Court ordered that liquor outlets and bars within 500 metres of national and state highways be shut down.

This leaves little scope for the government to increase its revenue from the liquor sector.

Increasing value added tax on fuels like petrol and diesel will hit all sections of society. This leaves registration revenue as the only other option to increase revenue.

Economists feel the timing of the cabinet is good as only on Wednesday, the Reserve Bank of India gave relief to people purchasing houses above Rs 75 lakh.



Friday 16 June 2017

Hotel associations urge government to roll back 28% GST

The government on Friday said the Goods and Services Tax (GST) Council may go for a revision in the fitment of some goods and services in the tax slabs after reviewing industry representations

NEW DELHI: Hotel associations are actively engaging central and state government officials in their push for a rollback of the 28% tax on hotels where tariffs top Rs 5,000.

The government on Friday said the Goods and Services Tax (GST) Council may go for a revision in the fitment of some goods and services in the tax slabs after reviewing industry representations. The council is scheduled to meet on June 11.


According to industry executives, the tourism ministry has submitted a representation to the finance ministry in this regard after consultations with hoteliers.

The Federation of Associations in Indian Tourism & Hospitality, or FAITH, said it is hoping for a GST rate of 18% for the industry as post the 28% rate, hotels with a tariff of Rs 5,000 and above will be 7% higher than the current average rate, and restaurants in five-star hotels will be 9.5% higher.

“All chief ministers, finance ministers, tourism ministers, chief secretaries, revenue secretaries and tourism secretaries of all states have been sounded on the issue. A team is meeting tourism ministers and chief ministers to request their state finance ministers to vote favourably,” said a spokesperson for FAITH.

The GST Council has pegged GST rates for air-conditioned eateries and those with liquor licences at 18%, non-air-conditioned restaurants at 12%, hotels charging room rentals between Rs 1,000 and Rs 2,500 at 12%, Rs 2,500 and Rs 5,000 at 18%, and above Rs 5,000 at 28%. Hotels with tariffs below Rs 1,000 have been exempted from tax.

Garish Oberoi, vice-president, Federation of Hotel & Restaurant Associations of India (FHRAI), said, “At no point did we think of this 28% tax slab. We were thinking of a 12% tax slab. We had given figures to the government and that is what countries across the world are charging. Most states like Uttar Pradesh, Rajasthan, Himachal, Haryana, Punjab and Uttarakhand will have to pay much more. We had asked for one tax across the board.”

Oberoi said FHRAI members had been invited for a meeting by the GST sectoral group on Saturday.

According to a research by consulting firm HVS, the primary GST rate of 28% on hotels, if implemented, will make star-category hotels in India the most taxed in the world, surpassing hotels in New York, London and Paris, even without add-on levies such as municipal tax, service charge, etc. “If one were to put aside other costs (such as service charge, municipal tax, cess etc) on an ‘apples to apples’ comparison, not a single state (in India) was levying such a high tax on its guests as will now be the case with this new tax regime,” HVS said in its report.



Tuesday 13 June 2017

SBI makes home loans above Rs 75 lakh cheaper

The RBI had recently lowered risk weightage on home loans from 75 bps to 50 bps and the provision for standard assets was reduced to 25 bps from 40 bps.



MUMBAI: Country’s largest bank, State Bank of India (SBI) has taken a lead and lowered interest rates on loans above Rs 75 lakh. This comes within days of Reserve Bank of India reducing capital requirement on big ticket home loans.

The bank has lowered home loans rates by 10 basis points for home loans above Rs 75 lakhs to 8.55% for women and 8.60% for others. SBI has said that the revised rates are effective from June 15.

The 
RBI in its monetary policy lowered risk weightage on home loans from 75 basis points to 50% bps and the provision for standard assets was reduced to 25 bps from 40 bps.

Speaking to media soon after monetary policy was announced, N S Vishwanathan deputy governor RBI, “We have observed that delinquency is lowest in the home loan segment. We have reduced the SLR by 50 basis points as a part of the transition to 100 percent liquidity coverage ratio by January 2019. In the interim it will provide some liquidity to banks. Possibly these two measures together should bring some buoyancy to the home loans segment.”

“Fifteen basis points reduction in standard asset provisioning will make the interest rate cheaper by 3-4 basis points,” said Gagan Banga, vice-chairman, Indiabulls Housing Finance Company told ET early this week..



Friday 9 June 2017

Pune civic body sees 40% rise in online property tax collection

Sources said that an increase in tax collection will help the department to achieve its annual tax collection target of Rs 1,333.50 crore




PUNE: An increasing number of Puneiites are opting for property tax payment through online portals this years collection reveals.
In the last 45 days, the Pune Municipal Corporation collected Rs 286 crore of property tax, of which 40% (around Rs 114 crore) was received via online gateways. Last year the administration was able to collect 30% of the tax amount via online portals in same period.

Sources said that an increase in tax collection will help the department to achieve its annual tax collection target of Rs 1,333.50 crore. A source said PMC was expecting more rise in tax collection in the next two weeks on account of the various rebate schemes ending on May 31.

There is an additional concession of 2% if tax is paid through online portals and one-time payment of annual tax will give rebate of up to 10%.

The department said it has already issued tax bill to every tax payer in the city . It has emphasized tax payment through online portals.The process of online payment is explained on the PMC's website.

A property tax department official said, “Statistics show more residents are opting for online gateways to pay property tax to avoid long queues. Last year, about 35% tax was collected via online gateways. This year, it has already climbed up to 40%. We are expecting to take up the online tax collection beyond 50% in near future.“



   

Tuesday 6 June 2017

Mumbai luxury homes see 1.1% on-year price growth in Q1, albeit a declining trend Report

The country’s financial capital ranked 24th among 41 global cities tracked through the index. However, the price growth for prime residential properties has been on a declining trend


MUMBAI: Luxury residential properties in Mumbai recorded 1.1% price growth making it the only Indian city holding on to positive territory during the quarter ended March, showed Knight Frank Prime Global Cities Index.

The country’s financial capital ranked 24th among 41 global cities tracked through the index. However, the price growth for prime residential properties has been on a declining trend.

Delhi and Bengaluru, the other two Indian cities on the global list, witnessed negative growth of -2.6% and -0.2%, respectively during this period.

Chinese cities including Shanghai top the index with staggering double digit growth. Cities of Guangzhou, Beijing and Shanghai topped the index with an average price growth of 26.3%.

The small base size and limited residential inventory may have catapult Guangzhou to the top of the table with a whopping price growth of 36.2%, the report added. Shanghai, often cited as a model city for Mumbai also recorded a healthy 19.8% surge on the price card.

According to Samantak Das, chief economist and national director, Knight Frank India, luxury home markets at major Indian metros were probably still recovering from the short-term shocks of the demonetisation last year.

“From nearly a year-on-year price growth of 3% until two years back the prime residential market in Delhi has seen negative growth of almost similar measure in the quarter-ending March 2017. Likewise from a staggering year-on-year growth of 13.6% in 2015, Bengaluru recorded negative growth for the first time in five years,” said Das.

Das added that Mumbai, is holding to a positive price growth albeit, in a declining trend. Globally financial hubs such as Zurich (-7.0%), London (-6.4%) and Milan (-0.9%) have recorded negative growth. “Mumbai did better than many global financial centres but the price growth in the quarter-ending March 2017 has taken it back to Q1 2013 levels after touching a high of 3.2% price growth in 2015,” added Das.

Emerging tech hubs such as Seoul (17.6%), Stockholm (10.7%), Berlin (8.7%) and Melbourne (8.6%) outshined established global financial centres the index shows but price growth in Bengaluru, India’s IT capital was not in sync with the global trend.

Property prices in the US also saw a steady surge but luxury home rates in Toronto spiraled (22.2%) almost three times of Vancouver (7.9%).

Select Asian cities such as Hong Kong (5.3%) and Singapore (4%) fared better following years of ordinary performances.

Although prime rate in London fell by a sharp 6.4%, the performance in in the quarter ending March 2017 indicates stabilisation.





Friday 2 June 2017

Plot promoters to also face action under RERA

The act refers to a plot promoter as "a person, who develops land into a project, whether or not the person also constructs structures on any of the plots





CHENNAI: Union urban development minister M Venkaiah Naidu warned last week of penal action against realtors dishonouring their promises. But it’s not just builders who face punitive measures under the new Real Estate (Regulation and Development) Act. The ambitious legislation, which came into effect on May 1 across the country, also deals with plot promoters. The act is yet to be enacted in Tamil Nadu as the state government has not ratified the draft rules.

The act refers to a plot promoter as "a person, who develops land into a project, whether or not the person also constructs structures on any of the plots, for the purpose of selling to other persons all or some of the plots in a project, whether with or without structures thereon." This apart, real estate agents who facilitate sale or purchase of plots, marketed by promoters are also under the purview of the act. Like builders, plot promoters also must register their layouts with the real estate 
regulatory authority before launching their projects in the market.

Realtors said that including plot promoters would ensure that they do not deviate from assured amenities. About 45% of the total land for a proposed layout must be earmarked for facilities such as roads and Open Space Reservation (OSR) to obtain approval from planning authorities, while the rest can be developed as plots. Former president of Tamil Nadu chapter of Confederation of Real Estate Developers Associations of India (CREDAI) N Nandakumar said that many plot promoters offer attractive facilities to woo customers, but fail to deliver. "For instance, some promise black-topped road, though buyers end up with gravel pathways. A few even offer to plant saplings and nothing would be available in reality," he said. Nandakumar notes that a section of plot promoters seldom adheres to the development regulations with much of the space earmarked for common amenities being diverted for other commercial purposes. "Against this backdrop, 
RERA can play an effective role as the promoters should provide the amenities assured to buyers," he added.

The act clearly states that defaulting promoters shall be punishable with imprisonment for a term which may extend up to three years or with fine which may extend up to a further 10% of the estimated cost of the project or with both.

RERA will also open a window to access complete details about real estate projects. Leading developer Chitty Babu said that details on all projects registered with RERA will be available in an exclusive portal. to be created by the authority. "It (web portal) “It will be a great tool for understating a project ahead of buying a property," he said.