A buoyed up property market in Chandigarh and its vicinity has made state governments claim their pound of flesh by hiking the Collector’s rates in the area, reports Pradeep Sharma

Real estate players are not the only beneficiaries of the boom in the prices of residential and commercial property in Chandigarh, Panchkula and Mohali. In the backdrop of the skyrocketing prices of property in Chandigarh and its periphery, the respective state governments have also taken steps to fill their coffers with a sharp increase in the Collector’s rates (the rate at which property is registered).

Real Issue
Time for discipline & direction
A recent survey by a global consultancy, dubbing the real estate sector in India as most corrupt, has come as a shocker for industry captains struggling to improve the tainted image of the sector. Even Prime Minister Manmohan Singh has said black money in realty was an unfortunate reality.

tax tips
n Service tax liability of co-owners
n Rightful claim
n No tax on agricultural land outside municipal limits
n Surrender of tenancy
n Son as co-owner


n Possession of plot
n Perfect paper work

green house
Colours of spring
Tecoma argentia paints the sky yellow when in bloom When Chandigarh came into existence the green apparel to the barren city was provided by Dr M.S. Randhawa. It is thanks to him that we see trees with different coloured blooms and foliage along the city roads today. Spring is the ideal time to visit Chandigarh as there is a riot of colours on the city roads which lends a serene aura to the City Beautiful. In fact, the changing colours of these trees indicate the change of weather.
Tecoma argentia paints the sky yellow when in bloom

Building industry awards




A buoyed up property market in Chandigarh and its vicinity has made state governments claim their pound of flesh by hiking the Collector’s rates in the area, reports Pradeep Sharma

Real estate players are not the only beneficiaries of the boom in the prices of residential and commercial property in Chandigarh, Panchkula and Mohali. In the backdrop of the skyrocketing prices of property in Chandigarh and its periphery, the respective state governments have also taken steps to fill their coffers with a sharp increase in the Collector’s rates (the rate at which property is registered).

While Chandigarh, where land is scarce and whatever is there for sale comes with a price tag that is virtually out of the reach of the middle class buyer, increased the Collector’s rates by a whopping over 60 per cent last year, its satellite towns - Panchkula and Mohali - followed the suit from April 1, 2011 onwards.

Hike in the Collector’s rates, which earned the ire of property buyers and property consultants and were even termed as "anti-people" by them, were justified by officials on a variety of parameters. For one, the step has been projected as an effort to curtail the role of black money in property transactions. Higher rates will also mean more money for the state exchequer by way of higher stamp duty.

"The hike in Collector ‘s rates was long overdue and would go a long way in earning more revenue for the government exchequer," said a senior official of the Mohali administration.

Le Corbusier's architectural marvel — Chandigarh — retains its leadership position with the official rate for registration of residential property pegged at Rs 10 lakh per marla. Panchkula follows suit with Rs 8 lakh per marla. However, Punjab's "lacking in infrastructure town" Mohali, boasts of Collector’s rate of Rs 5 lakh per marla in the main sectors (Phases I to XI).The highest rate in Zirakpur stands at Rs 2.18 lakh per marla, which is highest among the towns surrounding the tricity. In fact, the per acre registration charges for Zirakpur vary between Rs 1.5 crore and Rs 3.5 crore.

"With tricity emerging as major residential and commercial hub of North India, the hike in the Collector ‘s rate was the need of the hour. However, even after the hike the market value of the residential and commercial property is much above the prices at which the property is registered," said Panchkula-based property consultant Vishal Sharma.

For those wanting to carry out additional construction in their homes, the government seems to be playing villian. For the built-up residential properties, additional construction rates of Rs 650 per sq ft for the construction less than 10 years old and Rs 500 per sq ft for construction more than 10 years old will be added to the Collector Rate.

The Collector’s rates for registration of luxury flats in Zirakpur have not been changed. The rates for registration of flats, apartments and commercial sites in various group housing societies and shopping malls have remained unchanged at between Rs 1,000 and Rs 5,000 per sq ft. It is the government's effort to promote group housing culture in Chandigarh's periphery as plotted colonies are a thing of the past in the land-starved region.

However, Zirakpur residents will have to shell out more for getting building maps approved from the municipal council, as the civic body has hiked the approval fee for residential and commercial buildings. The building map approval fee for residential sites has been increased to Rs 323 per sq yd from the earlier Rs 80 per sq yd for residential sites of 50 sq yd to 125 sq yd and Rs 213 per sq yd for 250 sq yd plot and above. For commercial sites, the rate has been increased from Rs 350 per sq yd to Rs 2,815 per sq yd.

The decision of the government to hike map approval fee will deal a severe blow to those getting ready to start construction of their dream home in Zirakpur, said Harish Gupta, a Zirakpur-based builder.



Real Issue
Time for discipline & direction
Vinod Behl

A recent survey by a global consultancy, dubbing the real estate sector in India as most corrupt, has come as a shocker for industry captains struggling to improve the tainted image of the sector. Even Prime Minister Manmohan Singh has said black money in realty was an unfortunate reality.

The KPMG survey established that the sector was the most prone to graft because the property business in India is capital-intensive, involving complex multi-level processes of approvals, coupled with government and political interventions.

The recent allegations of mega land and housing scams, involving Adarsh Housing Society, LIC Housing and Sukna land deal, besides the spectrum awarded for second generation (2G) phone services to some large realty firms have dealt a severe blow to the sector’s image.

It is the fragmented and unorganised nature of the real estate sector with no regulator that has made it a happy hunting ground for corrupt politicians and bureaucrats. And the scope for parking black money results in unholy alliances that often come to light.

The image of the real estate sector has also got dented because of the perception among property buyers that the greed of real estate developers is leading to unreasonably high and unaffordable prices, thereby souring the dream of millions to own a home.

The developer community on the other hand is quite justified in saying the rising costs of building material, high taxes and long and complex approval processes lead to project delays and cost overruns and that they are all contributing to the sharp increase in prices. Even the prime minister says high stamp duties are obstacles to transparent deals in this business. But the realty developers are the ones who get all the blame.

Negating this perception is high on the agenda of industry bodies like the Confederation of Real Estate Developers Association of India (Credai). They have also been lobbying with the media to help change the negative perception about the real estate sector, not just among consumers, but also among policy-makers.

There is no denying the fact that in the past decade, in the wake of reforms and several policy initiatives, the real estate sector has become more organised and professional in its approach with increasing transparency in property transactions.

But there is a long way to go for the sector, which lacks industry status. Today, only a small number of real estate firms are listed on the bourses, making up for 4 per cent of the total market capitalisation. Since majority of the real estate companies are not listed, there is this big issue of mandatory disclosures and transparency, which is adversely impacting the confidence of property buyers.

Major real estate bodies have been demanding industry status for the sector to address key issues of funding, shortage of skilled manpower, land acquisition, delayed approvals and multiplicity of laws and taxes.

But then, the real estate industry captains must realise that reward and responsibility go hand-in-hand. When self-regulation has not worked effectively, the way forward to address the real issues is a regulator for the sector.

Considering the enormity and scale of urbanisation challenge in the current decade, with 590 million Indians expected to be living in cities by 2030, the real estate sector needs a disciplined direction that, in turn, calls for a serious policy rethink.

If we are not able to tap the full potential of this sector, which is a major employer and contributor to the country’s gross domestic product, it is largely because the sector is unregulated. It is unfortunate a section of real estate developers is still opposing the proposed real estate regulatory authority Bill on the ground that it would add to corruption.

The need of the hour is to push for a realistic regulatory framework, one that balances the interests of real estate developers, property buyers and government agencies for promoting ethical and transparent business practices.

This will go a long way in not just giving a boost to the image of the real estate sector but also in enhancing the attractiveness of real estate as a preferred asset class for investment, in turn ensuring its long term sustainable growth.

The writer is editor of Realty Plus, a real estate monthly (IANS)



tax tips
S. C. Vasudeva

Service tax liability of co-owners

Q. There are five co-owners in a commercial property situated in Delhi and inherited as per the provisions of a Will. The property is rented out to a nationalised bank at present. The rent prior to March 31, 2010 was received in the name of the executor of the Will and he used to distribute it among all the co-owners. From April 1, 2010 rent is being received directly in the names of five co-owners even though there is only one lease agreement. The total annual rental income of each owner is less than Rs 10 lakh. But the total annual rent received from the property exceeds Rs. 10 lakh.

  • Is the service tax payable on the rent received from a property or on the rental income of an individual?
  • In the above case is each of the five co-owners individually liable to pay service tax?

— Sunil

A. Under a sub-clause of Section 65(105) of the Finance Act, 1994, the taxable service is defined as service provided or to be provided to any person, by any other person, in relation to renting of immovable property for use in the course of furtherance of business or commerce. The word 'person' has not been defined by the above Act. Under Section 3(42) of the General Clauses Act 1897, person shall include any company, or association or body of individuals whether incorporated or not. Thus a person will generally include a natural person, partnership firms, HUF, body of individuals, corporate bodies, charitable institutions, Government undertakings, corporative societies etc.

In the case cited in the query it seems the service provider was the deceased because the rent was being received in the name of the Executor. It is, however, not clear as to whether the inheritance has been recognised by the court and it is on the said basis that the rent is to be paid to the legal heirs. If the ownership of the legal heirs has been recognised and the payment of rent is to be made individually on the said basis, it may then be possible for each of the co-owners to claim the limit of Rs 10 lakh. This opinion is based on the presumption that the service is being provided by each of the co-owners for the identified share of property leased to the bank.

Rightful claim

Q. I sold my jewellery in financial year 2008-09 and in order to claim benefit under Section 54F, I acquired a residential house property within the stipulated period. The Assessing Officer has denied the exemption under Section 54F on the contention that the property purchased by me is an old residential property and further that the same has been let out for commercial purposes. Is the stand of the AO correct?

— Rajeshwar

A. The provisions of Section 54F of the Act require the investment of the net consideration in the purchase/construction of a residential house within the specified period. The Section nowhere requires that the acquisition should be of a new house property. Further the use of the property is not a relevant criterion to consider the eligibility or benefit under Section 54F of the Act. The requirement of this Section is investment in a residential house property. If the property purchased by you is a residential house property within the records of the municipal authorities, the claim under Section 54F of the Act should not be denied.

No tax on agricultural land outside municipal limits

Q. I am a retired Govt. Pensioner and am settled in Patiala. During February, 2006, I had sold my share in inherited agricultural land at my native village. I sold it for approximately Rs 20 lakh and the payment was received through cheque. The land is purely agricultural and is far away from the limits of any municipality.

I have following queries:

  • Is it compulsory for me to invest the above amount?
  • If yes, within how much time and what are the different options are there for me to invest?
  • Can I invest the sum in a plot or a house in Ludhiana in the name of my son?

— Ram Singh

A. In case the agricultural land is situated outside the municipal limits and is not within the notified distance of municipality/municipal corporation/cantonment board etc; as specified in Section 2(14) of the Act, the capital gain arising on the sale of such land would not be taxable. This is because such an agricultural land is not considered to be a capital asset within the provisions of aforesaid Section. The fact that the agricultural land inherited by you is not so covered within the area specified by the government, may be confirmed by obtaining a certificate from Tehsildar that the land is not situated within the municipal area and that it is situated beyond the distance specified in the notification. In case the capital gains tax is not leviable on account of the above facts, you can invest/spend the amount realised on the sale of your share in the agricultural land in any manner you deem fit.

Surrender of tenancy

Q. I am in possession of an industrial shed. It is on rent. The owner wants to get it vacated. He is offering me some money to get it vacated. If I accept the money then how would I account for it for income tax purposes. Would there be any legal hitch in this? Please let me know legal status in this case.

— Narendra Kumar

A. The amount received by you as a consideration for the surrender of tenancy would be taxable as income from capital gain. In such a case, the cost of acquisition would be taken as purchase price if purchased from a previous owner. In case no such amount was incurred, the cost of acquisition would be taken as 'Nil'. Therefore, in case you have not paid any amount at the time of grant of tenancy rights, the entire amount would be taxable as a capital gain. It would be treated as a short-term or long-term depending upon the period of tenancy and would be exigible to tax accordingly. There is no legal hitch in receiving such an amount.

Son as co-owner

Q. I purchased a plot in Moga for Rs 4,80,000 in June 2000 and constructed a house in 2002 by taking a loan of Rs 12,50,000, and an additional loan of Rs 4,00,000 later. The house was not complete and I had to spend about Rs 2,00,000 towards woodwork and painting etc. in the subsequent four to five years out of my salary savings and borrowings from friends and relatives. Now I intend to sell this house at an estimated price of Rs 1 crore and build a house at Panchkula for my son who wants to settle there. Since the cost of land at Panchkula will be more than the sale proceeds of my house, additional funds will be required for the construction of the new house. I, being a senior citizen and a pensioner, will not be eligible to get home loan from a bank. Nor will my son be entitled to raise loan because the property will have to be purchased in my name to save capital gains tax. Can my son be made a co-owner in the plot to be purchased in my name so that he can raise home loan for construction? Please also advise in which account the sale proceeds of Moga house should be parked till the time the deal for the purchase of plot at Panchkula matures. What will be my tax liability based on the above facts? I do not own any other house.

— Devinder Singh

A. Your queries are replied hereunder:

  • Your son can become a co-owner of the plot provided he acquires a part of the plot by making a payment of funds for such acquisition from his own sources.
  • The capital gain arising on the sale of Moga house is required to be deposited by you in a designated account under Capital Gains Deposit Scheme Account before the date of filing of the return of income. The proof of such deposit is required to be submitted along with the Return of income. The exemption from the levy of capital gains tax in the year of sale would be allowed on the basis of such proof of deposit. Presently Income Tax Return is not required to be accompanied by other documents. The relevant proof of deposit should be retained by you so that the same can be produced as and when the same is required by the authorities.
  • In case you comply with the requirements specified in Section 54 of the Act i.e. deposit the amount of capital gain in the aforesaid designated account and invest such capital gain by making withdrawals from such account, in purchasing a residential house within a period of two years after the date of transfer of your Moga house property or in constructing a residential house within three years after the date of transfer of your Moga house property, the capital gains tax shall not be leviable on the capital gain arising on the sale of your Moga house property. However, in case you do not comply with the aforesaid requirements, the capital gains tax would be leviable on the difference between the sale price and the indexed cost of the Moga house property plus any expenditure incurred wholly and exclusively in connection with such sale @ 20% plus applicable education cess. The amount of tax liability cannot be computed as the date of completion of the Moga house property has not been indicated in the query.



B K Sanghi

Possession of plot

Q. My son and daughter had booked a residential plot in Sector 114 in Mohali with Ansal API Ltd. in September 2007. The plot for which booking had been made was park facing. PLC over and above the basic cost of the plot had been charged from me. The plot was offered for possession in March, 2010. Before taking possession of the plot my son and daughter transferred the plot in the name of their mother. They also deposited transfer fee to the builder. However, at the time of taking possession it was noticed that the plot was not park facing for which PLC had been charged. So we did not take possession as we were interested in the park- facing plot only. The builder did not bother to refund the PLC amount. Instead that amount was adjusted towards the last instalment (5%) to be paid by me before taking possession of the plot. Even after adjusting this amount towards the last installment, a sum of Rs 12,000 is still lying with the builder. He has not bothered to release the excess amount lying with him for over a year despite my request to refund it. Along with this, I had deposited an advance payment to the tune of Rs 9 lakh for which the builder had verbally promised to pay a nominal interest. But no interest has been paid by the builder so far.

Kindly advise me:-

  • Should I take possession of the plot?
  • If I take possession, then will it weaken my case for claiming compensation from the builder for not giving park-facing plot to me.

I have sent two letters to the Ansal Api Ltd., but haven't got any reply so far. I don't know who I should approach in this regard. I don't want to surrender the plot. But at the same time I want that I should be compensated by the builder for his failure to allot a park-facing plot for which booking had been made. It is relevant to add that all the terms and conditions as per agreement are in favour of the builder. The agreement is, however, not registered with any authority.

— Vishnu Pathak

A. You should immediately take possession of the plot as a bird ion hand in better than the two in the bush. From your question it seems that your son and daughter while transferring plot in the name of your wife had agreed for the ordinary location of plot even after paying preferential location charges (PLC). That, perhaps, is the reason why the builder adjusted the PLC charges in the last installment. Check out this point. Your family should have been careful while executing the agreement.

The verbal assurance of interest on the advance payment does not hold any water in the legal terms.

As you yourself said that the terms and conditions of the agreement are in favour of the builder, so taking possession of the plot may weaken your case for compensation.

The excess amount of Rs 12,000 lying with the builder seems to be safe and he is bound to return in with nominal interest.

For claiming compensation for mental harassment and unfair trade practice from the builder you should follow a proper procedure beginning with a legal notice and subsequently approach the consumer court for the redressal of your grievances.

Perfect paper work

Q. I own a 1 kanal house in Sector 18, Chandigarh. I want to sell this house. What should I do for selling the house through a property dealer?

— Varinder

A. Selling or buying a property involves a lot of paper work and it is very important to navigate deftly through all this. Every little detail regarding the transaction should be put in black and white. If you are selling house through a property dealer then everything should be put on paper very meticulously. In my opinion before going into any deal you must realize the power of paperwork. Please go through all terms and conditions carefully before signing the vital document i.e. “Agreement between Buyer and Seller” commonly called the “Agreement to Sell”.

Before finalising the deal ensure that the buyer is genuine, take a bigger percentage of the token money and clearly set the time for the final settlement of the deal.

If anyone gives you a wrong commitment then you should have a document to prove your case then you will have an upper hand and will surely be supported by the judiciary.



green house
Colours of spring
Satish Narula
The all red foliage of kusum (above) and the unusual unusual yellow and red mix of Bombax ceiba (below), too, paint a pretty picture. Photos by the writer

When Chandigarh came into existence the green apparel to the barren city was provided by Dr M.S. Randhawa. It is thanks to him that we see trees with different coloured blooms and foliage along the city roads today. Spring is the ideal time to visit Chandigarh as there is a riot of colours on the city roads which lends a serene aura to the City Beautiful. In fact, the changing colours of these trees indicate the change of weather. Planners of large plantings can take a cue from here and make their projects colourful.

After the dull winters, the weather opens up and these trees start waving the magic wand of colours. With each passing day there is one or the other tree species that puts forth its best colour palette. First to come to life are the deciduous fruit trees. Many of the city residences and the outer boundary, especially the Manimajra area are dotted with peach, plum and pear plants. When these come into flowering, there are no leaves on trees and the blooms look like a perfect flower arrangement by Nature. Take any old garden, whether it is a Mughal or a Japanese garden, and you are sure to find such trees there. I have included such plants in the Japanese garden coming up in Sector 32, Chandigarh. A few such plants were also included in the landscape design of Kalagram and along the Madhya Marg. Such plants are used for the indoor floral arrangements also.

Bombax ceiba is the next to bloom. Also called the cotton tree, it grows very tall and has equally bold flowers that are distinctly visible even from a distance. The flowers form capsules that burst to give cotton. Near the newly constructed trauma centre at PGI two huge trees stand on the either side of the road close to the bus stop. When in bloom they look very pretty against the blue sky. One of the trees bears yellow flowers unlike the normal red blooms. The contrasting trees standing side by side seem to be joining hands. A flowering tree gives its best when it gives blooms at a time when there is no foliage. Next to attract is the Tecoma argentia, called Tecoma tree. The profusion of flowers on the leafless tree is amazing. This tree should be planted for distant viewing.

It may not be of much significance for the locals but the mango tree in bloom at this time is one the biggest attraction for foreigners. While conducting a tour of some foreign delegates last year I was amused to see them spending the maximum time looking at a mango tree, touching the blooms, taking fragrance and also clicking pictures.

It is not always the blooms that attract attention. Colourful foliage, too, forces one to stand and stare. Take the example of kusum tree. The newly emerging leaves are very delicate looking and full of red colour pigmentation. You can see red, end to end on the kusum avenue nowadays.

Jacaranda, also called Nilli Gulmohur, is another flowering tree that bears blue blooms in profusion. Even a single tree in an array of all greens attracts attention. It is also at its best now and can be seen growing sporadically in many avenues and also on some roundabouts.



Building industry awards

Supertech Ltd.

Supertech Ltd. bagged three awards at Building Industry Leadership Awards 2011. The company was honoured with North India’s first tallest residential developer, lifetime achievement and young entrepreneur awards. R.K Arora, Chairman and Managing Director of Supertech Limited received the North India’s first tallest residential developer award and Lifetime Achievement award for bringing the tallest residential project to Northern India and for his contribution to the real estate industry. Mohit Arora, Director of Supertech Ltd. bagged the ‘Young Entrepreneur Award’ for using innovative ideas.

Vigneshwara Developers

Sunil Kumar Dahiya, Chairman of Vigneshwara Developers, was conferred the “Most trusted Real Estate company” award , 2011 as per BIB survey recently. Speaking on the occasion, Dahiya,said “I am overwhelmed to receive this award second time in a row, this motivates us to achieve our goals keeping in mind our customers, stakeholders and agents. Our endeavor continues to move ahead and reach the stars. We are highly obliged to our customers and BIB for choosing Vigneshwara as the Most Trusted Developers.”

Dubai properties more affordable

A growing number of investors from India are showing interest in Dubai as they look to capitalise on 60 per cent savings per square foot in the Dubai property market, a Dubai-based real estate company has said.

DAMAC Properties said in addition to the price disparity, Dubai’s property market is becoming increasingly attractive to foreign investors due to the implementation of a raft of new regulations, such as the new Strata law, which favours home owners.

“As these new tougher and more stringent regulations take hold, Indian investors are looking to take advantage of the plethora of investment opportunities that exist within the emirate’s real estate market,” it said in a statement.

At an average price per square foot of $ 264 in Dubai, according to Colliers International, property is now 60 per cent less expensive than in central Mumbai, where the price per square foot is $ 664 according to Jones Lang LaSalle.

DAMAC Properties Senior Vice-President Niall McLoughlin said: “At DAMAC Properties, we have seen a marked rise in interest across our Dubai portfolio from Indian investors; in January 2011 we had double-digit growth in enquiries on the same period last year.

“Not only are we seeing a surge of interest from potential Investors from India but also from other emerging markets such as sub Sahara Africa and China who are looking for quality assets, at competitive prices.” According to McLoughlin, even though confidence was shaken following the global slowdown, the introduction of new regulations in Dubai gives property buyers more security over their investments. DAMAC Properties has also welcomed the return of liquidity into the mortgage market, which it cites as another major factor in the revival of the emirate’s real estate sector.


Laminate floors

Swedish company, Pergo, launched Domestic Extra Collection recently. The new range is designed to handle the wear and tear that happens in our homes.

“A perfect choice when it comes to domestic areas, the Domestic Extra range of laminate floorings comes in a wide range of colours and designs giving you an opportunity to experiment with various ideas for your floors. The 20-year residential guarantee that comes with this range reinstates the durability. It is priced at Rs 150 per sq. ft.” said Naresh Maheshwari, CEO, Pergo India Pvt. Ltd.