How to use your provident fund to finance a home purchase

Although a majority of the salaried individuals have a provident fund account, only a few are aware that they can withdraw from this fund, for various purposes connected with a house

For purchase of a house or plot or for construction of a house

Under the Provident Fund scheme, an employee can withdraw money from his provident fund, after completion of contribution of five years, for the purchase of plot and/or construction or purchase of a house. The loan can also be taken, for the construction of a house on the plot of land owned by you or your wife, or jointly by both. The loan amount would depend on the purpose for which you are taking the loan. For purchasing a plot, the loan available shall be restricted to 24 months’ basic salary and dearness allowance (DA), subject to a maximum of the lower of either the balance in your provident fund account or the cost of the plot.

In case you want to avail of the loan, to purchase or construct a house, availability shall be enhanced to 36 months of basic salary and DA, with the maximum again subject to lower of balance in the provident fund account or cost of the house. It is pertinent to note that the property cannot be purchased jointly with anybody else, except your spouse, for withdrawing from the provident fund.

In case you withdraw from your provident fund account, the construction should begin within six months and be completed within 12 months of the withdrawal. In case you intend to buy a ready house, the purchase also needs to be completed within six months. The withdrawals for purchase/construction can be made in one or more instalments, depending on the circumstances.

For addition/improvement of the house owned by self and/or the spouse

You are also entitled to withdraw money from your provident fund account, for making additions or improvements to a residential house that is owned by you or your wife or jointly. This withdrawal can only be availed, after five years from completion of the house. It is not necessary that the house for which you want to carry out the improvements should be the same, on which you had availed the withdrawal facility. This withdrawal for improvement can be availed, even if you have not availed of the withdrawal facility for purchase or construction of the house. The amount that you are eligible to withdraw, for improvement or addition, is restricted to 12 months’ basic salary and DA, subject to lower of the balance relatable to the employee’s share with interest in your account or the cost of such improvement.

You can also avail of the withdrawal facility again, only after 10 years from the first withdrawal, subject to the same eligibility criteria, vis-à-vis the amount.

Advances for repayment of housing loan

The provident fund scheme allows you to avail of the withdrawal facility, for repayment of the outstanding balance in a home loan taken by you or your spouse for the above purposes. The advance amount cannot exceed 36 months of basic salary and DA. This withdrawal can only be made for loans, availed either by the members or by the spouse, from specified entities like governments and state government, registered co-operative society, state housing board, nationalised banks, public financial institutions, municipal corporation, or any development authority, for purchase of a house.

 

Read all such Property News at CREDAI MCHI – Thane Unit website.

 

 

 

 

Affordable housing may be next big theme

The government's efforts to boost affordable housing in a bid to attain the goal of 'Housing for All by 2022' have started to yield positive results. All indicators including the much-needed supply; pick-up in housing loans and sales in this category are cumulatively pointing towards an uptrend. However, price rise has been arrested due to good supply and this has been helping in maintaining affordability.

Several incentives for affordable housing including the infrastructure tag, extension in timeline for project completion and with regards to size of these houses have been helpful in drawing interest for all the relevant stakeholders including developers, financiers and most importantly homebuyers.

Share prices of real estate and cement companies have already been moving up on account of this major affordable housing push trickling into other segments of the business and driving revenues.

Read all such Property News at CREDAI MCHI – Thane Unit website.

Thane emerges as best destination for home buyers among MMR

According to a recent report by Knight Frank India, Thane is slowly becoming a preferred destination for property investments. We look at the property options and the advantages of investing in this region

 

Thane is fast scoring over other parts of the Mumbai Metropolitan Region (MMR), by becoming a sought-after region among home buyers. In its recent report, real estate consultancy firm Knight Frank India, stated that Thane has become popular among the rich, who are looking to buy a property.

In its Wealth Report, Thane is one of the 20 cities across the world, where the rich are currently looking forward to invest.

Advantages that Thane offers, for property buyers

There are multiple factors that are helping Thane.

Thane’s strategic location, realistic property prices, rapid infrastructure development and availability of land for housing, have helped it to emerge as a residential location that suits the new-age home buyers. Real estate experts point out that Thane has evolved phenomenally over the last few years, as a residential market. This has prompted people from Mumbai to shift to Thane, in search of homes that are competitively priced and offer good amenities, open spaces and greenery.

Compared to Mumbai, people can get bigger houses, with all the modern amenities. Investors too, can earn far better returns, as compared to the Mumbai’s realty market. The proposed metro to Thane, has also pushed up demand for the place.

Thane had several factories and industrial units, which subsequently closed down, to make way for real estate projects. Many information technology (IT) companies, have also shifted their offices to Thane and this is turning the city into a service and tech hub.

Prominent developers and prime areas in Thane

 In recent times, various well-known developers such as Godrej Properties, Hiranandani Constructions, Kalpataru Group, Runwal Builders, Rustomjee, Piramal Realty and Puranik Builders, have all started projects in this city. Areas like Pokhran Road, Ghodbunder Road, Kolshet, Majiwada and Kasarvadavali, which boast of good schools, premium malls and good healthcare facilities, are in demand.

Thane is well-connected to the central and western suburbs via Ghodbunder Road and to Gujarat via the Mumbai-Ahmedabad Highway through Dahisar Check Naka. It is also connected to Bhiwandi, Kalyan and Navi Mumbai via the Thane-Belapur Road and to Mumbai city via the Eastern Express Highway and the Eastern Freeway.

Thane has become an affordable and preferred realty market, owing to the continuous improvement in infrastructure, seamless connectivity to Mumbai, emergence of new business hubs and the opening up of new land parcels, which are encouraging home buyers and investors to buy property in Thane.

Read all such Property News at CREDAI MCHI – Thane Unit website.

 

 

 

 

Can a home be bought for end-use as well as investment purposes?

While real estate may give better ROI than any other investment instrument, can an end-user afford to think like an investor? We get some answers

Weekend vacay anyone?

Planning a weekend getaway? Why not plan one to your weekend home? Read on... 

If you come home as ` happy as you leave, you have had a good vacation'Unknown This aptly summarises what you should look for in a weekend home a good vacation! This thought has proven to be a catalyst for the inception of the concept of weekend homes.

We all are living at a time where life runs on deadlines and stealing even some moments for yourself or your loved ones sometimes seem impossible. Living in a fastpaced city like Mumbai, makes it even more difficult to gain a sense of repose for a day. Hence, a great escape from a monotonous life to a leisurely spaced-out home with a picturesque view and new-age amenities, is what defines today's weekend homes. Factors such as a rise in disposable incomes and an aspiration to live a hassle-free life, have fuelled the demand for this market significantly.More importantly, the stressful life that people lead today, is making a vacation home a necessity than just a fad. According to a JLL report, the vacation home market in India is growing at a steady pace of 10-12 per cent per annum, which proves that people are more open to taking the plunge and buying their vacation abode to break loose from the unvarying routine.

However, one should keep in mind certain factors before taking a leap of faith to invest in one:

1 Location is key: End-users should take into account the location of the property and ensure excellent returns and its safe quotient for personal use. Hence, the best option would be to evaluate options, which are in close proximity to your current location. Anything between a two-three hour drive is preferred than travelling endlessly for a vacation to escape the hustle-bustle of life.

2 Look at new-age amenities: Weekend homes have become synonymous with luxury living, an experience, which will help you rejuvenate and take care of your overall well-being. It's all about having multiple options for recreation such as a club house with a spa, restaurants, crèche, pools and jacuzzi, sports arenas catering to various kinds of sports enthusiasts, etc.

3 Developer's credibility: Whether it's a weekend home or just a second home, it always merits to invest with a credible developer who has a proven track-record of de livering quality projects on time. One should look at the company's financial stability, past record of delivery, kinds of products offered, post sales services, regulatory approvals, which can account for their credibility.

4 Value for money: Real estate as an asset, involves lesser risks compared to other asset classes since there will always be scope for capital appreciation. Thus, not only will you own a `resort' like home, but also be sure of an investment that will pay you off well in the future.

5 A `larger than life' lifestyle experience: There is a particular kind of lifestyle we all live and desire to live. While one may look for a place of solitude encompassed with nature's bounty, others might seek a resort kind of a set-up. One might also contemplate between buying a bungalow, condo or simply a service apartment.So, make sure that your home is compatible with your needs.

While there will be more factors that an individual can consider pertaining to their desire, assessing market conditions should not be forgotten. For instance, currently, with a fall in home loan rates and favourable market conditions for consumers in light of RERA, the dream of owning a property can fall within people's budgets. Hence, why wait?

Read all such Property News at CREDAI MCHI – Thane Unit website.

"Take the real estate plunge now"

 

 

What happens when you get the young guns of Mumbai's real estate market in one room to discuss the burning issues plaguing the sector?

In an exclusive Times Property roundtable, we tried to achieve just that.

Here are a few takeaways

The recently held CREDAI-MCHI Thane Youth Wing roundtable saw the getting-together of the young fresh blood that has taken it upon themselves to catapult this liquidity-starved sector (the third highest contributor to India's GDP), to a brighter future. 

 

 

 

 

 Read all such Property News at CREDAI MCHI – Thane Unit website.

 

COMPACT HOUSING, THE NEED OF THE HOUR

Jul 22 2017 : The Times of India (Thane)

The constraints that drive urban India have been changing constantly. People from other parts of the country have been migrating to thriving cities like Mumbai and Pune to explore better job opportunities.While real estate developers have been attempting to cater to the rising demand for housing, urban land prices have been on the rise, thus consequently increasing the cost of homes. This has given rise to compact homes near these city's main office locations, thus making it a preferred trend.

The varying movement of space requirements has resulted in several developers willfully encouraging compact housing provisions. Buyers who conventionally opted for more spacious homes have begun to realise how compact homes are more suited to their needs. This housing trend has especially reared up in prime metros like Mumbai, Delhi, Bangalore where land is marginal and prices are very high. Due to construction costs and land scarcity, developers have started delivering feasible alternatives such as compact homes that suit the rising demand. Compact houses are the future of housing in India, given that population density, land prices, infrastructure, etc, are major concerns. The trend looks promising, since land rates are high and increasing floor areas are increasing the unit cost as well. When compact homes are a part of larger projects, buyers get to enjoy the same amenities.Compact homes also have lesser maintenance costs.

The younger generation's need for a home is quite different from the older generations.Their requirements are simple a compact dwelling, which takes care of their requirements; a home that is located at a close distance to all amenities and facilities and more importantly, a home that doesn't burden their wallets.

With the development of smart cities, the demand for housing units will increase. Since the proportion of the middle-income group is more than their high-income counterparts, compact houses will be required. The resale value of compact homes is always high and such homes are in demand, as there are always potential buyers. This means that owners of compact homes can exit their investments easily and at a good profit, if they find the need to do so.

Projects below 400 sq ft fall under this segment, which mainly include studio apartments and 1-BHK homes. Convenience and connectivity highlight this home type. Neighbouring recreational areas, local shopping, social and transport infrastructure are synonymous with compact housing.Thus, well-situated vicinities are a crucial factor here.

With growing needs and shifting trends, working professionals, smaller families and modern buyers are the ideal audience. With the stated parameters, ideal suburbs for compact houses include Chembur, Ghatkopar, Thane and Navi Mumbai. Such compact homes often exist within the confines of larger complexes, equipped with services that come with them. Thus, buyers can not only have the benefit of additional amenities but save costs.

With the government's aggressive focus on `Housing for All', this inventiveness will drive apartment sales on account of its affordability. These apartments are expected to be better than bigger properties, owing to them catering to the low-to-mid-range markets, which are essentially the biggest buyers in the country. Compact homes will define the future of urban living in India on account of the rising population, land crunch and civic concerns.

Compact housing is eminently practical and sensible for the contemporary urban citizen. With so many advantages to owning compact homes in well-connected neighbourhoods, this is one real estate market segment that will not only hold but also grow exponentially in the years to come.                                           

Freeway to be extended by 3km till Eastern Express Highway in Ghatkopar

The Eastern Freeway will be extended by 3km, further northwards, by connecting it to the Eastern Express Highway (EEH) near Ghatkopar.

Mumbai Metropolitan Region Development Authority (MMRDA), which will carry out the work, said the extension will go through slum pockets near Ramabai Nagar, on the east side of the EEH. Metropolitan commissioner U P S Madan said, "Around 2,000 slums will have to be cleared to create space for the freeway."

A slum rehabilitation scheme is proposed by a private builder and MMRDA has told the Slum Rehabilitation Authority (SRA) to expedite clearance. Madan said, "It should take at least a year for the project to get off the ground. During this period, we will revise the detailed project report, begin the process for getting environmental and coastal regulatory authority (CRZ) clearances, as some mangroves will be affected."

Earlier too there was a extension plan but environmental hurdles forced MMRDA to put it in cold storage.

The project will help ease congestion on the Ghatkopar-Mankhurd Link Road and at the Chheda Nagar junction. Vehicles coming from CSMT for Thane have to come to the Chheda Nagar junction before hitting the EEH. Those coming from Thane to CSMT too have take the same route. The Eastern Freeway has been of huge benefit to motorists as it is an important arterial road for north-south connectivity.

Around 22,000 vehicles ply daily since the stretch between Orange Gate and Shivaji Chowk was thrown open to traffic. The response was tremendous as it was estimated in 2006 that it would be 24,000 per day by 2020.

The opening of the route up to GMLR helped further reduce congestion on Dr Ambedkar Road. The freeway also helped reduce traffic on Dr Ambedkar Marg, Rafi Ahmed Kidwai Marg, MbPT Road and Eastern Express Highway.

A conservative estimate states there may be a reduction of 50% in fuel consumption as well as levels of harmful emissions, noise and vibration. Presently, on an average, 5,487 freight vehicles enter/leave Mumbai Port. Of the total freight traffic, about 42% originates or is destined outside Greater Mumbai, and about 14% to the eastern suburbs.

Read all such Property News at CREDAI MCHI – Thane Unit website.

The gist of GST

Post GST's implementations on July 1, there have been a few apprehensions that end-consumers are currently harbouring. The quintessential question therefore is: how severely would you be affected by GST in your real estate dealings? We seek some answers...

There is a lot of confusion in the minds of the home-buyers and developers about the implementation of GST that came into effect from July 1, 2017. People are not sure whether they would be benefited by the new tax system or would have to shell out more money. We bring some clarity with regards to this.

"The real estate sector is currently burdened with indirect taxes on multiple counts such as service tax, Value Added Tax (VAT), stamp duty, registration charges, etc. People were confused and weren't aware w.r.t which taxes were going to be subsumed to be continued under the GST regime. However, with various initiatives undertaken by the government, it is now made abundantly clear that stamp duty and registration charges shall continue and Service Tax VAT would be subsumed in the GST regime and replaced with CGST + SGST (of specific state). With the increase in the indirect tax rate on construction services (read: 12 percent), the government has issued a press release cautioning developers against resorting to extraction of additional GST on account of the increased tax rate without due regard to GST credits," says Amit Kumar Sarkar, Partner and head indirect tax, BDO India.

Benefits of GST:

The biggest game-changer under GST is the introduction of the Input Tax Credit (ITC), whereby credits of input taxes paid at each stage of production or service delivery, can be availed in the succeeding stages of value addition. Anuj Puri, chairman ANAROCK Property Consultants Pvt Ltd explains, "To ensure that manufacturers, developers and service providers pass on the benefit to the final customer, the government has included an anti-profiteering clause in the GST bill under section 171 of the GST law. This clause clearly states that it is mandatory to pass on the benefit of the tax reduction (due to the input tax credits) to the final customer."

Some important benefits of GST are:

It would help eliminate the cascading tax structure; It would ease compliances; It will create a uniform tax rate and structure; It would help in reducing additional tax burdens (on consumers).

GST misconception and facts:

While there has been a lot of speculation doing the rounds when it comes to GST, Samir Jasuja, founder and CEO, PropEquity clarifies and says, "Let's clear the misconceptions one by one:

Myth 1: Property prices will rise with GST getting applicable on each construction-related material and service:

FACT: Property prices will not rise. The developers can take the input tax credits for the materials used for construction and the services paid. The government has asked the developers to pass on the benefits of the lower tax under the GST regime to the buyers as well, which in turn, will marginally reduce property prices. The government has also passed the anti-profiteering rule, which would prevent any increase in property prices.

Myth 2: EMIs on property buying will shoot up due to GST:

FACT: No, EMIs on property may remain the same or marginally reduce as the overall property price is expected to drop.

Myth 3: Resale property will also get costlier:

FACT: No, it will not get costlier. The impact of GST on resale proper ties is likely to be less.

Myth 4: No input credit will be allowed if you purchase an office.

FACT: The input tax cred it will be allowed for an office space if the purchase is made before the property gets the Completion Certificate (CC) or prior to the first occupancy."

Shubika Bilkha, business head, Real Estate Management Institute explains, "GST has been levied on the renting of residential proper ties and an 18 percent tax will be applicable for leasing commercial properties. Experts have clarified that the threshold limit for the applicability of GST has been increased from Rs 10 lakh to Rs 20 lakh. Hence, some of the landlords that came within the purview of the service tax regime may not be included under the tax net of GST."

India versus the rest:

Experts point out that a uniform tax structure in markets such as Indonesia, Thailand, among others, has been a catalyst to increase investments. It is important to remember that when buyers purchase properties, they focus on the value, their individual needs requirements and potential appreciation of the asset, over taxation slabs. Bilkha shares how, "With the introduction of RERA and GST, the real estate sector is metamorphosing into a transparent, tightly controlled and regulated industry. All these measures will, in the long run, create stable businesses, as well as contribute towards reducing the trust deficit between the consumers and the developers."

How would GST bring in holistic growth in the realty market?

The reduced cost of construction will bring in more liquidity for the developer; The developers can take the input tax credit for raw materials like cement and steel. This would bring down the total amount paid in taxes and avoid double taxation on the same product; Free flow of credits will further boost the margin of the developer; GST will reduce inflated taxes and bring in more transparency and help in improving trust among the buyers.

GST perks for the home-buyers:

Possible reduction of property prices with additional credits flowing to the developers; A variety of products would be available from other states, as the GST regime promotes interstate procurements.

Read all such Property News at CREDAI MCHI – Thane Unit website.

Realty fund inflow jumps 40% on-year in 2017 so far

In the backdrop of an ongoing transformation in business environment, Indian real estate is witnessing a robust rise in investment inflow as both foreign and domestic institutional investors are infusing more funds into the sector.

The Indian property market has posted a 40% on-year jump in inflow of funds since the beginning of this year. Institutional investors, including private equity, pension funds, sovereign funds, domestic investors, and non-banking finance companies have pumped in $3.15 billion in the country’s real estate between January and June end, showed a Knight Frank India study.

According to a separate study by JLL India, India has witnessed private equity inflow of Rs 16,008 crore until June this year compared with Rs 15,601 crore a year ago.

Over the past 18 months, the government has launched a number of policy initiatives including the implementation of the Real Estate Regulator Act (RERA), implementation of the Goods and Services Tax (GST), Real Estate Investment Trusts and the demonetisation drive. "The global economy has started recuperating with improving job prospects, decline in unemployment rates and rising rate of inflation in the developed economies. Investors in these countries are expecting diminishing inflation adjusted returns. With the strengthening of domestic currency they are finding assets in emerging markets (EMs) cheaper from an investment perspective," said Samantak Das, Chief Economist and National Director, Research, Knight Frank India.

Stable government and implementation of reforms such as the GST is helping India attract the highest interest of global investors. Real estate as the most important investment asset has witnessed a surge in flow of foreign investments. With the sector undergoing a transformation through the Real Estate (Regulation and Development) Act 2016, affordable housing focus and the Real Estate Investments Trusts, domestic investors have also joined the bandwagon.

"A slew of reforms unleashed by the government is changing the investment scenario in the country and has made India one of the most attractive emerging markets from an investment point of view. So much so that a comparison between debt and equity investments seen between 2014 and first half of 2017, which stand at more than Rs 98,000 crore, are higher than the Rs 95,000 crore seen during an entire decade from 2003 to 2013," said Shobhit Agarwal, MD - Capital Markets & International Director, JLL India.

Among all the segments, commercial realty has witnessed the highest interest from investors owing to falling capitalization rates. With low yield environment and rates further expected to go down, yield-generating commercial assets have been turning out to be a good bet to generate healthy risk adjusted returns.

"Excess liquidity in the market has created compression in interest rates that will lead to fall in capitalization rates in future, hence locking such investments at higher yields will be helpful for appreciation in capital values of these assets. Corporates are also increasing head count as they are focused on growth due growing GDP numbers thus leading to higher absorption. Overall, it has a momentum impact in investment for commercial real estate," said Rubi Arya, Executive Vice-Chairman of Milestone Capital Advisers.

Milestone Capital Advisors itself has invested in two offices in this quarter and are aggressively scouting for more opportunities.

Global investors, including Blackstone Group, Singapore's sovereign fund GIC, Canada Pension Plan Investment Board (CPPIB), Goldman Sachs and Qatar Investment Authority have already been investing in Indian realty assets for the past few years. In addition to this, more funds are eyeing investment and alliance opportunities.

Read all such Property News at CREDAI MCHI – Thane Unit website.

Thane: On a growth trajectory

Thane, post demonetisation, emerged almost unscathed. Thus, going forward, the realty segment of the city is expected to grow.

Magicbricks recently released a report titled PropIndex for January March 2017, highlighting the performance of the city in the mentioned quarter. The index for Thane shows that it had a stable January-February-March 17 quarter and prices fell marginally.

The effect of the demonetisation drive (November last year), was almost negligible for the city and it had a decent number of new launches during the last year. The ready-to move-in segment, which has traditionally had a high black money component and which was expected to take a hit in the last two quarters, saw its prices moving by 1 percent in this period.

Analysis across 42 localities shows that on an average, Ready-to-Movein (RM) properties were more expensive than Under Construction (UC) properties in the January-March 2017 quarter. For this quarter, the weighted average price of RM and UC properties was Rs 8,221 per sq ft and Rs 7,115 per sq ft respectively.

The gap between the average price of RM and UC properties has remained at the same level in the January-March 2017, as in the previous quarter. RM properties have continued to command a premium over UC properties for more than two years now.

Read all such Property News at CREDAI MCHI – Thane Unit website.

Rental income beyond Rs 20 lakhs to attract GST

Rental income from residential property has been exempt from GST but any earning over Rs 20 lakhs annually, from renting or leasing for commercial purposes, would attract the levy

 

Revenue Secretary Hasmukh Adhia, on July 10, 2017, clarified that if a house property is rent out for shop or office purposes, no Goods and Services Tax (GST) will be levied up to Rs 20 lakhs.

“Rental income received from residential house is exempt. However, if you have given your unit to a commercial enterprise, then, it is taxable if you are getting more than Rs 20 lakhs as rent,” Adhia said at the GST Master Class. A tax payer who earns more than the exempted threshold, will have to register with the GST Network and pay taxes.

GSTN chief executive Prakash Kumar, said that as many as 69.32 lakh registered excise, service tax and VAT payers, have migrated to the GSTN portal. There are over 80 lakh such assessees, in the earlier indirect taxation regime. Out of the 69.32 lakh, as many as 38.51 lakh have completed the entire registration process and the registration certificate is being issued to them.

The remaining 30.8 lakh tax payers are being sent SMS and emails by the GSTN, so that they complete the registration process by giving the details of the business, like main place of business, additional place of business, promoters’ details, etc. Besides, over 4.5 lakh new assessees have registered on the GSTN portal since June 25, 2017.

Adhia further said that the facility, to amend the details of businesses provided to the GSTN portal at the time of registration, will open on July 17, 2017. Also, registration for GST practitioners will open on the same day. Besides, cancellation of registration, can also be done online.

Read all such Property News at CREDAI MCHI – Thane Unit website.

 

Maharashtra to hand over forest land for Navi Mumbai Airport

The ambitious Navi Mumbai Airport project has inched another step closer to reality, with Maharashtra issuing a government resolution to hand over 250.0635 hectares of forest land in Raigad district to CIDCO, for the airport’s development

 

The Maharashtra government has decided to hand over 250.0635 hectares of forest land in Raigad district to the City and Industrial Development Corporation (CIDCO), for the development of the Navi Mumbai International Airport (NMIA).

Of the total forest area, 108.607 hectares is under mangroves, while 141.4565 hectares is reserve forest land. The revenue and forest department, on July 11, 2017, issued a government resolution in this regard.

NMIA is touted to be one of the most ambitious projects undertaken by the state government, which is set to change the economy around Mumbai. The new international airport will have better facilities and higher capacity to handle passenger, as well as cargo traffic.

The airport and its allied facilities require 2,268 hectares of land, out of which 1,160 hectares would be utilised for aeronautical purposes.

It is to be developed through a public-private partnership, by way of setting up a special purpose vehicle (SPV). In the SPV, CIDCO and its nominees would have 26 per cent stake.

Read all such Property News at CREDAI MCHI – Thane Unit website.

 

Maharashtra reduces registration, permit time for ease of doing business

A year after the landmark concept of ease of doing business was introduced at the World Bank’s instance, the Devendra Fadnavis-led government has drastically shortened the period for property and sales tax registration, electricity connection and construction permits to start a business.

A battery of top bureaucrats led by the chief secretary made a PowerPoint presentation before the World Bank team in the presence of the chief minister on steps the state has taken to end procedural wrangles and red tape in key sectors.

"Last year, our performance was not up to the mark. As a result, our ranking was very low. Now, we have brought in changes and cut registration time drastically. In addition, we have submitted physical data before the World Bank team for verification. Now, we are better placed in terms of performance," a senior bureaucrat told TOI.

The bureaucrat said the state submitted data on 21 power connections in Mumbai with 100 kva to 150 kva load. The average time taken for providing the connections was nine days and only two documents were required—identify and occupancy proofs. All applications were to be submitted online.

For registration under the Shops & Establishments Act, the bureaucrat said the procedures have been reduced to one from two and the total time reduced to half a day from four to eight days earlier. The entire process is online, including payment. All physical touch points have been eliminated, including inspection before issue of certificates. "We received 65,535 applications, of which 60,584 have been approved and 4,951 are rejected. All completed applications were approved within a single working day," he said.

Procedures for construction permits have been reduced to eight from 42 and total time taken for all approvals during the construction cycle to less than 60 days from 164. "We have introduced a single-window clearance system, including for building plan and plinth approval, completion and occupancy certificates, and a common application form. There is no need to apply or follow up with various departments for NOCs or approvals."

Elaborating on the impact of reforms, the bureaucrat said between June 1, 2016, and May 31, 2017, the BMC received 3,157 plans, of which 1,923 were approved, 834 rejected, 251 amended and 148 are under process. "The average time taken for approval during the past one year was 17.6 days. In the past six months, 48 building plans were approved within seven days," he said.

On registration of properties in Mumbai, the bureaucrat said the number of procedures has been reduced to six from seven. Total time taken for all procedures to register a property has been reduced to 22.5 days from 45.5. Records of rights and title deeds are available online. Cost associated with registering property has been reduced to Rs 30,405 from Rs 51,800. Besides, dispute resolution must be completed within four months.

The period for registration of value-added tax has been reduced to one day from 10 and the cost to Rs 500 from Rs 525. Professional tax registration must be done the same day from two days earlier, since the procedure has been merged with VAT. "Reforms undertaken by the Fadnavis government will go a long way in improving the state’s ranking," said the bureaucrat.

Read all such Property News at CREDAI MCHI – Thane Unit website.

Second homes, your first choice?

Does buying a second home seem like an ambitious idea? Fret not, as we tell you how you could make the most of a weekend home. Read on...

Buying a home in a city such as Mumbai can prove to be a herculean task. Imagine you shelling out more money to buy one more home? Wouldn't it give you sleepless nights? We tell you why it's not such a bad idea. The concept of second homes has been gaining immense popularity among Mumbaikars seeking a peaceful abode, away from the noisy city life, to relax and unwind them.

"Different people have different reasons for buying a second home. While some may buy one to spend vacations with family, others may simply buy it to reap investment benefits in the future. One may not be able to always travel too far away from one's workplace for a vacation, due to time constraints. In such scenarios, a home close to your workplace or original place of residence turns up well as a probable solution. In case of investors too, it is quite simple to understand their reasons for investing in a second home. While some investors are simply looking for avenues to tie up their money, others are looking for investments, which will fetch them high and steady returns and it is no hidden fact that the real estate sector has been, for the last two decades, the best bet when it comes to good investments," feels Vi jay B Pawar, Founder and Director, Mirador Dwellers Pvt Ltd.

Why second homes?

Experts believe that Mumbai's real estate segment has witnessed a spree of changes in the last two decades. Mumbai, unfortunately hasn't turned out the way it was envisioned to, when the city was being planned decades ago.

Due to this, even though people own homes in the city, they are still on the lookout for second homes for a relaxing getaway away from the hustle and bustle. Anuj Puri, Founder, Anarock Property Consultants points out, "The primary objective for most Mumbaikars is to secure a self-owned home, which is in itself, a massive financial undertaking. For those fortunate enough to be able to afford a second home after this objective is fulfiled, it can be seen as a major income-generating asset, a source of financial security and if the second home is a weekend getaway, a significant lifestyle enhancement."

Location hunt:

A family looking for a short vacation or a young couple looking to blow off some steam after a hectic week at work, find their solace within the confines of their second home. There also exist those people who like to see a handsome ROI on every single penny that they invest anywhere and for such people, real estate investment is always seemingly lucrative and inviting. These people have started to move away from investing in open land and are slowly moving towards buying ready-to move-in homes or plots, which allow them to build a second home of their choice and their convenience.

"As there is a lack of greenery in cities, buyers opt for Matheran, Mahableshwar as potential second home options. Closer to the city, you also have places such as Lonavala, Murud, Karjat, Dahanu and others, which can act as weekend spots. People who prefer beaches over the mountains have Kashid, Goa as options," suggests Rushabh Vora, co-founder and director, SILA. Experts suggest that for rental income and capital appreciation purposes, areas in Navi Mumbai, Thane and Panvel are suitable. Locations like Kanjur marg and Mulund also work well.

For weekend homes, the obvious choices include Lonavala and Khandala, Alibaug, Igatpuri and the greener outskirts of Pune. Goa is also suitable for those who are not averse to long road trips or flying.

"In the holiday home segment, we have recognised two types of buyers one that loves the dense greenery of mountains and hills and the other that loves the vast expanses of the riv er and fields. For the mountain and hill lovers, the ideal location could be the Nilgiris and the de sign of the home can be designed keeping the colonial Britain in mind, whereas, for those who are interested in waterfront homes, the design should be adaptable to the given environment and meet the local needs and lifestyle of the residents," opines Nibhrant Shah, founder and CEO, ISPRAVA.

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Now, no property tax on flats under 500 sq ft in Mumbai

Soon, homes in the city of up to 500 square feet will be exempt from property tax and those sized between 501 sq ft and 700 sq ft will get 60% discount on the tax. Shiv Sena has fulfilled its electoral promise by clearing the proposal at the BMC's general body meeting on July 6.

The proposal will be sent to the municipal commissioner to analyze the financial implications of the move and to find out how many homes will benefit in the city. The commissioner will then send the proposal back to the civic house for discussion. Once the house approves the commissioner’s recommendations, it will be sent to the state government for its final approval.

While activists said they are happy with the move, they added that the city’s old inhabitants—quite literally, "grandparents have occupied premises more than 50 years ago"—should be given similar exemptions for bigger houses, as they are forced to pay property tax according to its present market value.

Housing activist Chandrashekhar Prabhu said, "It is a welcome move. But why are they differentiating between residents of smaller houses and those who have lived in bigger spaces for generations? For instance, my family bought an over 800 sq ft flat 70 years ago for a few thousands and we have been living here ever since. Today, the civic body charges us property tax according to the flat’s market value. This is completely wrong. I do not make that much to pay the tax. It is a ploy to throw out the city's original inhabitants."

It was Shiv Sena leader Yashwant Jadhav who moved the proposal in the BMC house on July 6. Surprisingly, the proposal got cleared without debate.

Jadhav said, "The state government will have to clear the proposal because it will not lose anything. The BMC will lose revenue while providing relief to citizens, and we are prepared for it. It was one of our poll promises, which we fulfilled."

The BJP, though, said it was the first party to demand the waiver and wanted to add more benefits for slum dwellers, but in vain.

Most of the houses in the city are 1BHK or mostly up to 500 sq ft carpet area.

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How will GST impact the cost of homes

Here is how home prices in various segments of the property market will be affected by the GST

 Under the Goods and Services Tax (GST), the effective tax on under-construction projects has gone up to 12 per cent, which is an increase of 6.5 per cent.

 The actual GST rate is 18 per cent on realty, but allows one-third of the tax to be deducted from the land value, from the total cost charged by the developer. While the GST gives an option of getting full input set-off credit, this is not applicable on ready-to-move-in flats and as a result, developers will have to bear the burden of the higher tax or pass on the same to the end-consumers or increase the overall prices, to match the new tax burden, say developers. However, new flats will cost less, giving some breather to the developers of upcoming projects.

“While developers might still get some benefits for projects that are in the nascent stages, they will have to bear the tax burden for ready-to-move-in projects, since they are kept out of the GST’s ambit,” House of Hiranandani’s chairman and managing director, Surendra Hiranandani said. Under the GST regime, tax on under construction projects would be 12 per cent, an increase of 6.5 per cent for buyers, points out Rohit Gera, managing director of Gera Developments. “There is an option of getting full input set-off credit on all input side if GST is paid by them, but this is not applicable on ready-to-move-in properties. As a result, developers will either have to bear the burden of the tax, since it cannot be passed on to the end consumers, or the rates of apartments that are ready-to-occupy will increase to the extent of the taxes,” Gera said.

Vinod S Menon, CEO of Bengaluru-based mid-market developer Citrus Ventures, says “Everybody talks about the positives that GST brings in. However, the devil lies in the details and no one seems to have any clarity on that.” Although the one-third deduction makes the effective rate 12 per cent, with current effective VAT plus service tax rate being nine per cent, there is still a three per cent incremental charge.

“Since no retrospective claim of credits is possible, this will be a bone of contention between customers and developers, as to who will bear this, he said. Coupled with the new RERA regulator, GST will increase paperwork and thus, the overall cost, Menon said.

However, Knight Frank India chairman Shishir Baijal, feels that akin to the note-ban, the GST would trigger some momentary disturbances but augur well for the industry in the long term. “The intention of the GST, is to bring in efficiency in the entire tax system and its implementation will see some teething issues. Eventually, it will pave the way for an extremely efficient tax system for the country,” he said. Echoing similar views, SILA founder and MD Sahil Vora, said there will be pain and forced consolidation in the sector, but in the long-run everybody will benefit.

Anarock Property Consultants’ chairman, Anuj Puri said, the affordable housing sector will not be impacted by GST, as there will be no tax under GST for affordable housing schemes. RICS south Asia managing director Sachin Sandhir adds, “The affordable housing sector is happy, as there is no tax on it. Since almost 70 per cent of the market caters to the middle to high income segment, the GST could shift the focus of smaller developers towards the high volume, low to medium income segment.”

According to Ram Chandnani, managing director, advisory and transactions services, India, CBRE, the GST will also attract international residential investment, as it has been seen globally that a unified tax structure has been one of the many catalysts for increased investments. “Additionally, sectors ancillary to real estate, will see improved supply chain efficiency with the removal of various federal tax barriers and the creation of a common market, thereby, accelerating the delivery of goods,” he noted.

India Ratings maintained a negative outlook for the real estate sector for FY18, on expectations of a continued slump in the sale of residential units. This will lead to continued negative cash flows since FY14 and a further increase in already high debt levels, resulting in a weakening of the sector’s credit profile.

Rohit Jain, a partner at law firm Economic Laws Practice, maintains that greater clarity is needed on the transitional provisions under GST, whether it pertains to credit of inventory, credit on unsold stock or the tax implications where part payments are made under the pre-GST and part under the new taxation system.

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Now, govt plans 10 smart railway stations

NEW DELHI: Ten railway stations in Delhi, Uttar Pradesh, Andhra Pradesh, Goa, Rajasthan and Kerala will be redeveloped as smart stations in a few years.

These stations -Tirupati, Sarai Rohilla (in Delhi), Nellore, Puducherry, Madgaon, Lucknow, Gomtinagar, Kota, Thane (New) and Ernakulam - will get iconic structures with modern state-of-the-art facilities, passenger lounges and congestion-free non-conflicting entry and exit to station premises. These will also have commercial space to set up business centre, offices, studio apartments and hotels.

In order to fast-track the process, Rail Land Development Authority (RLDA) and National Building Construction Corporation (NBCC) signed an MoU on Friday in the presence of railway minister Suresh Prabhu and urban development minister M Venkaiah Naidu. The railways has embarked on an ambitious project to redevelop 403 stations with the participation of private players, public sector entities and foreign agencies.

NBCC chief Anoop Kumar Mittal said the 10 stations will be developed on public-private partnership (PPP) model and self-sustaining finance model through commercial exploitation of vacant railway land. He added the commercial use of built-up space and air space over tracks shall be leased out for a period of 40-60 years.

RLDDA and NBCC will set up a special purpose vehicle to execute the project.

Prabhu said, "We have chosen PPP model and are roping in varied agencies to execute the project namely Railways' own PSUs, other Central government PSUs, foreign countries through government-to-government cooperation and state governments."

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