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V Nagarajan: Easing of norms for developers of affordable housing
May 07, 2017
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We are a group of NRIs planning to enter into development of affordable housing in select Indian cities due to fiscal sops provided in the budget. Are these benefits substantial enough to provide return on investment? Please clarify. Raghu Reddy, Dubai.
Yes. There has been a considerable easing of norms for developers of affordable housing hereafter. The infrastructure status and 100 per cent deduction of profits and gains from housing projects under section 80IBA of the Income-tax Act. The benefit will be available for five years instead of earlier three years. Carpet area of 30 and 60 sq m would be counted instead of the built-up area.

 
In order to be eligible, the scheme was to be completed in three years after commencement and it is now proposed to extend this period to five years.
 
Easy access to institutional financing, higher limit on external commercial borrowings will attract more investments and ensure sustained growth of affordable housing in India, making it the core driving segment for real estate. Reduction in holding period under long-term capital gains from three to two years, changing base for determination of capital gains index from 1981 to 2001 would reduce tax burden.
 
Now Joint Venture agreement will be liable to capital gains only on completion of the project. ECB has been made more attractive by increasing the withholding of 5 per cent interest upto June 30, 2020 instead of June 30, 2017. Affordable housing will be exempt from service tax.
 
I am planning to switchover to another institution to take advantage of the recent lending rate reduction announced by various institutions. What is the cheapest lending rate offered in the market now for home loans and is it really worth switching over at this stage? P. Pinto, Sharjah
With the reduction in home loan lending rates, there has been a fierce competition among various housing finance companies and banks. The lowest available in the market is said to be 8.35 per cent per annum. You should remember that for high value loans further negotiation would be possible with the institutions depending on the credit rating of the borrower.
 
There are certain ground realities before plunging into switchover. Quantum of difference, processing and switchover fee, stamp duty in select states, are some of the vital factors that need consideration before switching over from one institution to another.
 
I do not have taxable income in India but taxes are deducted by way of TDS from some payments. How do I claim refund of this amount? Rohan, Ajman.
 You can claim refund of taxes only by way of filing an income tax return to the appropriate authorities. While tax is deposited by way of TDS, the only way you can claim is by filing a tax return. The returns should be compulsorily filed online.
 
Notes:
 
The RERA regulator will have powers to question local authorities for any delay in sanctions for building permissions. The RERA rules will be implemented from May 1. They will include stringent norms to ensure that developers complete their projects in a time-bound manner.
 
Under section 7 of the rules, extension of project registration demands for explanation on the reasons for delay. Here the builder can state all the reasons, even the ones involving sanctions.
 
The government has notified remaining sections of Real Estate (Regulation and Development) Act, 2016 (RERA).
 
The sections notified by the ministry of housing and urban poverty alleviation include key measures such as registration of realty project and agents, functions and duties of project promoters, including compensation, insurance and title of the project, rights and duties of allottees. The notified measures include punishment for non-registration of projects and recovery of interest or penalty or compensation and enforcement of order, etc.
 
Total stock of Grade A and Grade B warehouses in the country grew about 16% in 2016 to 111.9 million sqft. Of this, Grade A stock was 32.9 million sqft while the remaining 79 million sqft was Grade-B, according to JLL. This year, both Grade A and B stock will grow 18% to 132.5 million sqft.
While Delhi-NCR had the maximum warehousing stock in 2016 (29 million sqft), Chennai had 10.4 million sqft. Chennai is emerging as a major warehousing and logistics hub. Embassy Industrial Parks has already entered into a joint venture to building warehouses around Chennai at a collective investment of Rs 220 crore.

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The author is a business analyst
covering Indian property markets

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