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V Nagarajan: Sale proceeds of office acquired as gift should be credited to NRO account only
September 02, 2018
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I have booked a flat with a developer in Bengaluru 18 months ago but selling the flat to another buyer now due to other commitments. I may make a marginal profit on the sale. What are the tax implications while selling under construction property? R B Saldanha, Sharjah.
If you sell a property booked by you before you take the possession, the profits made on such sale will depend on the time interval between your date of booking the property and the date of agreement to transfer your right in the under construction property. In the current instance, the interval is not more than 24 months. With the result the profits made by you shall be treated as short term capital gains and shall be added to your regular income and taxed at the slab rate applicable.

During the recent visit to Gulf, a few developers have offered apartments assuring rental income with prior lease commitment. Is it safe to invest in such properties? Please advice. Natheem, Dubai.
With the expansion and consolidation of existing operations by corporates and MNCs in metros in India, there is a surge in demand for rental housing in select growth corridors where housing shortage is leading to high attrition levels. Lack of supply level due to RERA and demonetisation impact has impacted the housing demand in select cities and locations. The corporates have swung into action by committing housing with leading developers who have built units but remaining unsold for a considerable time. It is better to scrutinise the leasing commitment entered by the developers with the corporates and then invest in such units. Housing finance companies and banks also offer home loans to invest in such units.

I am planning to sell the office space located in Pune and gifted to me by my relative in India. Can I repatriate the sale proceeds? Kiran Das, Dubai.
The sale proceeds of office space acquired by way of gift should be credited to NRO account only. From the balance in the NRO account, you can remit upto USD one million, per financial year, subject to the satisfaction of authorised dealer and payment of applicable taxes.

Notes

Mumbai’s much-awaited Development Plan-2034 will come into force from Saturday, though only partially. The new DP will allow citizens to carry out internal changes in flats without seeking BMC approval, provided they are not structural changes.

Development Plan-2034

All new plans that have been submitted will now be scrutinized under DCPR 2034. “The regulations have been simplified and incentives given for redevelopment of societies, dilapidated structures and tenanted structures. Slums on open spaces can be redeveloped provided 35% is left as open space. According to experts buildings on roads less than 9m wide will find it difficult to redevelop as TDR will not be allowed on plots abutting such roads.

According to the Ministry of Housing and Urban Affairs the government is committed to solving all problems prevailing in the real estate sector. This is the reason why a high-level committee was formed to look into the residential projects of Uttar Pradesh.

The committee comprised of representatives from NAREDCO, CREDAI, officials of Noida and Greater Noida authority and NBCC. It was formed to come up with a possible solution to complete the delayed projects in Noida and Greater Noida.

The Tamil Nadu government has issued orders increasing maximum plot coverage from 50 per cent to 75 per cent and maximum floor space index from 1.00 to 1.50 for industries.

Improvement in Transparency Level in Realty Sector

India’s remarkable improvement in the transparency scores across all markets has started to benefit the nation in the form of increased volumes of international capital being deployed into the country. Improved market fundamentals, policy reforms and liberalization of FDI into realty sector & retail and strengthening of information in public domain were main influencers, along with digitization of property records and assigning ‘industry status’ to affordable housing. Tools like ‘PropTech’and ‘BlockChain’are becoming integral part of realty sector and use of technology is only going to add transparency in to the sector, according to JLL. PE Investment in Indian Realty has grown in every year, from $2.2 billion in 2014 and $4.7 billion in 2015 to $6.9 billion in 2016 and $6.3 billion in 2017. This year too, it is expected that investment activity will continue to demonstrate the improving transparency of India property markets.

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The author is a business analyst
covering Indian property markets

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