Tag Archives: Association of India

Lalit Kumar Jain: Bihar is better than Maharashtra for builders.

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When it comes to ease of approval and a good bureaucratic set up for real estate, Bihar seems to be better opportunity than Maharashtra, according to Lalit Kumar Jain, real estate tycoon and president of Confederation of Real Estate Developer’s Association of India (CREDAI). Jain was speaking to DNA against the backdrop of the first ever all India CREDAI meeting to be held in Pune from Wednesday.

“In Bihar, the bureaucratic setup to get necessary sanction allows us to complete our projects on time. Thanks to the organised system there, the end buyer also pays less for real estate compared to Maharashtra,’’ he said.

The two-day conference, will discuss amongst other things, the various challenges faced by the industry in terms of approvals, government’s decision to reserve 20%flats for economically weaker section of society and other issues.

While commenting about various problems facing the industry, Jain saidthe apparent delay in the process of getting sanctions for the projects was a major concern. “In case, the sanctions are delayed, the cost of the project escalates which results in a burden on the customer,’’ he said.

The decision of the state government to compulsorily reserve 20% of the flats for economically weaker sections of society according to Jain would be have a negative effect on the industry. “To compromise on this, the builder will pass on the cost to other buyers who will feel the pinch,’’ he said.

Budget 2012: 1 per cent TDS imposed on property sales.

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The government has proposed one per cent TDS (tax deduction at source) on transfer of immovable property if the sale value exceeds Rs 50 lakh in urban centres and Rs 20 lakh in other areas.

Finance Minister Pranab Mukherjee said in his Budget speech that the measure is proposed in the Budget and is being taken to “deter the generation and use of unaccounted money.” Immovable properties, other than agricultural land would be covered under the new provision.

The application of TDS would be effective from October 1 this year. It has been provided that transfer of property would not be registered unless the buyer furnishes proof of deduction and payment of TDS.

At present, tax is required to be deducted at source by the transferee on transfer of immovable property by a non- resident. But, there is no such requirement on transfer of such property by a resident except in few cases, it added.

Reacting to the proposal, the apex realty body CREDAI said that this would lead to increase in property prices.

“It looks like that the proposal of TDS would apply on transactions in the secondary market and not on sale of builder’s flat,” Confederation of Real Estate Developers’ Association of India (CREDAI) Chairman Pradeep Jain said.

The new proposal intends to collect tax at the earliest point of time and have a reporting mechanism of transactions in the realty sector.

The provision would apply if the consideration exceeds Rs 50 lakh if property is situated in “specified urban agglomeration” and Rs 20 lakh if property is situated in any other area.

Union Budget 2012-13: Buying or building of a house will cost more.

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Realty players said that purchase or construction of a house would now cost more due to expected rise in prices of key raw materials cement and steel and a hike in service tax by 2 per cent.Barring low-cost housing, property prices are expected to rise in the coming days after the proposed hike in service tax from 10 per cent to 12 per cent.

TDS at the rate of 1 per cent on transfer of immovable property (other than agricultural land) above a specified threshold will also add to the cost of buying a house. The threshold would be over Rs 50 lakh an urban areas and Rs 20 lakh elsewhere, according to the budget proposals.

Cement and steel manufacturers have already hinted at a price hike after the Budget proposed raising the excise duty to 12 per cent.

Commenting on the budget proposals, Confederation of Real Estate Developers’ Association of India (CREDAI) Chairman Pradeep Jain said, “Application of TDS on the purchase and sale of property and increasing Service Tax by 2 per cent will further add on to the overall cost of property and are bound to make property more costly in coming days.”

Realty consultant DTZ said that increase in the service tax is going to further increase marginally the overall burden on the home buyers of mid and high segment (dwellings costing more than 25 lakh). The impact of service tax would be about Rs 40,000 on a Rs 75 lakh home.

However, DTZ said that affordable housing, being part of negative list, is exempted from service tax and the move would give a boost to the affordable housing segment.

Jones Lang LaSalle India Chairman and Country Head Anuj Puri said that “the increase in the service tax rate from 10 per cent to 12 per cent will increase the cost of production for developers, who are already reeling under high input costs. It follows that this increased burden will be passed on to end users”.

Builders say that Pranab Mukherjee has ignored ground realty in the Union Budget 2012-13.

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With predicting an escalation in property prices, top players in the realty sector said they had been ignored by the finance minister.

Chief of the Confederation of Real Estate Developers’ Association of India (CREDAI), Lalit Kumar Jain, said the announcement on external commercial borrowings (ECB) for affordable housing was a minor respite but still meaningless. Jain, who is also chairman and managing director of Kumar Urban Development Ltd, added, “We contribute 6.5% to the GDP and expected a big boost from the budget for affordable housing through special schemes, an interest subvention of 5-7 % for LIG (low income group) and EWS (economically weaker section) housing and promotion of rental housing through tax exemption.”

Jain also pointed out that the interest subsidy on home loans was too low. The Budget has extended the scheme of interest subvention of 1% on housing loan up to Rs 15 lakh where the cost of the house does not exceed Rs 25 lakh for another year.

In addition, Gaurav Gupta, director, Omkar Realtors & Developers, lamented that the realty sector had got nothing to boost market and customer sentiments. “There are no indications of this sector being granted the status of an industry, which it much deserves. On the contrary, the increase in service tax will push up realty prices as the additional cost will be passed on to the buyers.”

Tata Housing MD and CEO Brotin Banerjee added, “Initiatives to make affordable housing available to a larger section of the society have only been met partially.”

There were some who welcomed the proposals. Sachin Sandhir, MD, RICS South Asia felt it “exceeded expectations” given the pressures on the fiscal situation.