Monthly Archives: May 2013
Gains or losses arising on transfer of property are subject to tax under the head of ‘capital gains’.
According to the Income Tax Act, a ‘capital asset’ means property of any kind held by a person, irrespective of whether it is connected to his business or profession.
It does not include certain items like stock-intrade, consumable store or raw material for business, personal effects, and certain agricultural land.
Any real estate, including a flat, site, farmhouse, commercial property, etc, are all subject to capital gains on sale or transfer.
It is not only sale of property that attracts capital gains. Even certain specified transfers are deemed as sale and any gain arising is subject to capital gains tax. Transfer of property means conveying property, in present or in future, to one or more people.
The income arising on transfer of a capital asset is subject to capital gains tax — if there is a transfer of a capital asset during the previous year. Transfer will be deemed to have taken place on the date on which the possession is handed over. In case the payment has been received, but the transfer not effected yet, it will not be treated as a sale transaction.
Under the income tax laws, a capital asset may be a long-term capital asset or a short-term capital asset. In case a property is held for more than 36 months, the capital gains arising from it are treated as longterm capital gains. In case a property is transferred or sold after holding it for less than 36 months, the income will be treated as shortterm capital gains, and vice versa for capital loss.
It is to be noted that this is different from the provisions applicable to securities including shares and mutual fund units, where the qualifying period for long-term capital gains is over 12 months.
The period of holding determines taxability — whether it is a long-term capital asset or a shortterm capital asset — and accordingly whether you have incurred a long-term or short-term capital gains or loss.
The amount of capital gains is arrived at by applying the concept of Cost Inflation Index (CII). The index is published by the I-T department. The present worth of a property is arrived at by applying the CII to the cost of the property as well as any improvements made to it. This is deducted from the consideration amount received to arrive at the capital gains.
If the amount of the capital gains is equal to or less than the cost of the new property, the capital gains will not be charged to tax. For the purpose of computing, in respect of the new property, any capital gains arising from its transfer within a period of three years of its purchase or construction, the cost will be reduced by the amount of the capital gains.
A capital loss, whether short-term or long-term, can be carried forward and set off for the next eight years. After eight years, it lapses and cannot be carried forward any more.
You may save tax in respect of long-term capital gains by investing the gains in a residential property or in capital gains bonds. It needs to be ensured that the conditions prescribed under the relevant section are strictly complied with. Otherwise, the amount claimed as exempt can be made subject to tax.
Mumbai emerged as the most attractive investment destination in the country for office properties, while the NCR, due to oversupply, has not quite matched the returns that the financial capital has delivered.
Mumbai has emerged as the most attractive destination to invest in commercial property in the country, while the National Capital Region (NCR) of Delhi, due to oversupply, is not likely to give high returns to investors, a report by global consultancy firm Knight Frank said.
But the NCR will continue to remain the biggest suppliers of office space in the country. This augurs well for the entire real estate sector in the region.
The report has factored in the economic growth while predicting the returns from investment in commercial property. It said that as the economy is likely to revive in the coming years, the demand for office space in Mumbai and Delhi will increase.
According to the report, the total stock of office space in the NCR region is 110 million sq ft, of which 88 million sq ft is already occupied. Further, the report said, around 45 million sq ft will be added over the next five years.
This means that almost 50% of the total existing commercial space is likely to be added in the next five years. The report said that vacancy levels will peak during these years before they stabilize at 18.8% by 2017.
This means that by 2017 around 38 million sq ft of additional office space will be absorbed by the market. As a corollary to this, around 2.5 million new jobs will be created in the NCR region, the report said. This will inevitably create a huge demand for residential real estate. Therefore, consultants and expert say that investments in residential property in the NCR are likely to give high returns in the future.
Returns from investment in commercial properties in the NCR, the report said, will fetch one of the lowest — between 10% and 11%. While the Peripheral Business Districts (PBD) of Noida and Gurgaon will give a return of 11% per annum, while the CBD and SBD in Delhi would fetch returns of around 10%.
Micromarkets like Connaught Place, Nehru Place, Saket, Jasola, and Bhikaji Cama Place in Delhi will give subdued returns, around 10%. Samantak Das, Knight Frank India’s chief economist and director (research and advisory services), said that the rentals in the CBD and SBD of Delhi are not likely to appreciate very sharply due to abundant supply of high quality space in the peripheral business district of Gurgaon and Noida.
In the NCR region, the peripheral business districts of Gurgaon, Noida, and Greater Noida are likely to give returns of around 11%. In prime areas like MG Road, NH-8, Golf Course Road, and Golf Course Extension Road rentals are likely to increase by around 25% — to Rs 106-137 per sq ft per month by 2017, against current levels of Rs 85-110 per sq ft per month. During the same period, the capital values are likely to appreciate to Rs 19,550-25,300 per sq ft, from Rs 13,600-17,600 per sq ft. In Noida, similarly, rentals are likely to increase by 13% — to Rs 51-62 per sq ft per month by 2017, from the present rentals in the range of Rs 45-55 per sq ft per month. In the next five years, capital values in Noida are likely to appreciate to Rs 7,650-9,350 per sq ft from the current levels of Rs 6,000-7,350 per sq ft.
In Connaught Place, the report said, rentals are likely to increase by 13% — to Rs 272-294 per sq ft per month from Rs 240-260 per sq ft per month. In the next five years, the report suggested that capital values are likely to increase to Rs 35,000-37,900 per sq ft from the current levels of Rs 30,000-35,000 per sq ft. The net return on investment in the Delhi CBD is around 10%, the report said.
According to the report, Central Mumbai, on the other hand, emerged as the most attractive investment destination in the country for office properties with 19% net annual return, as prices are expected to rise 63% — and rentals by 47% — over five years.
“At 19% per annum return, Mumbai’s central district, which comprises Parel, Lower Parel, Dadar, and Prabhadevi will yield the best investment return in the country,” Samantak Das said.
Mumbai’s (SBD-West) will give a return of 15%. Availability of talent, conducive business environment, international air connectivity, and presence of prominent stock and commodity exchanges along with the presence of the headquarters of several banks form the backbone of the financial industry in Mumbai, the consultant noted. India’s financial capital’s office space has seen highest occupancy of 26% by the banking, financial services and insurance (BFSI) sector, followed by IT/ITeS segment, at 25%.
Realty firm Gaursons today said it has bought 300 acre land on Yamuna Expressway in Greater Noida from Jaypee Group for over Rs 1,500 crore to develop an integrated township.
Ghaziabad-based Company would launch the township by end of this year and plans to construct about 15,000 apartments in affordable segment.
“We have purchased 300 acre land from Jaypee Group on Yamuna Expressway for more than Rs 1,500 crore. The agreement between the two companies has already been signed,” Gaursons India Managing Director Manoj Gaur told PTI.
Jaypee Group has about 4,000 acre land alongside Yamuna Expressway, which was built by them only.
Gaur said the company has already paid about 25 per cent of the total amount of the deal.
Asked about the source of the funding, he said it is through bank loans and internal accruals.
“We will launch the township in six months. the project will have about 15,000 flats, plots, school, hospitals and other infrastructure facilities,” Gaur said, adding that the flats would be in the range of Rs 25-40 lakh.
The township would be in the vicinity of Jaypee group’s F1 Track, Gaur said. He also noted that land is clear as Jaypee Group has taken it from the authority.
Gaursons has big presence in the Ghaziabad, Noida and Greater Noida region.
It is currently developing a 240-acre township ‘Gaur City’ in Noida Extension in partnership with another realty firm Saviour – Real Estate Developers & Builders In Delhi NCR. About 25,000 housing units are being developed in this township at an investment of about Rs 5,000 crore.
Gaursons is also part of township ‘Crossing Republik’ in Ghaziabad, being constructed jointly by seven developers.
UP UNTIL a few years ago, malls meant big international labels and bigger departmental stores.
Traditional retail brands, or powerful local brands as they’re called now, were conspicuous by their absence. Even if they were present, they would mostly be tucked in some corner, away from vantage viewpoints.
Cut to the present. Walk into any new mall that’s come up in the last few months, the first thing that strikes you is the overwhelming presence of those powerful local brands.
Nallis, RmKV, Pothys, Vama, Malabar Gold and Joy Alukkas -they’re all here now, becoming the early occupiers of the new-look mall set-up.
What has led to this change? A combination of factors, it seems. A change in the mindset of traditional retail brands as well as that of the mall developers is the main reason. Also, the general economic slowdown that has not only restricted people’s spending, but also limited the expansion scope of established national and international retail brands that accounted for a bulk of the occupancy at malls earlier. This had even led to some talk in the industry about “ghost malls“, with little footfalls and even less conversion into sales. Some even went to the extent of saying, “some malls have become disasters and not many developers are keen to consider such projects as part of their future plans“.
But Shubhranshu Pani, managing director (retail) at Jones Lang LaSalle India brushes aside such views. “For a mall to succeed, it has to attract an average footfall of 8,00010,000 people a day on weekdays and 25,00030,000 a day on weekends. Of the around 250 operational malls in the country, around 125130 are operating at above these benchmark levels,“ he says. “Of course, due to various factors, some malls are doing well and some not,“ he adds.
S Raghunandan, CEO (retail) of the Prestige Group, a realty developer in the forefront of promoting the Forum brand of malls, highlights five key factors that make a mall succeed. “If a mall is located right, planned right, zoned right, leased right and managed right, it will succeed,“ is his simple mantra.
“If a mall is attracting high footfall, but still not doing well, then there is something fundamentally wrong in its product mix,“ says Rajesh Babu, director, RECS Group, a Chennai-based property advisory firm.
“Some malls may have the best of national and international brands of which only a handful of people are aware, obviously it won’t do well. One needs to have a fair mix of local brands that have a strong brand recall value interspersed with global names. Since there is a general perception that malls are for high priced shopping, accommodating popular local brands enables walk-in customers to loosen their purse strings,“ he points out.
Which is exactly what is happening in the present scenario now. But the transformation has not been easy to come by. “We at JLL have been trying to get traditional retail brands to come into malls for the last five to seven years. Somehow they were not convinced about the viability of it all. But finally, they are opening up to malls in a big way,“ says Pani.
There are a few reasons behind the retailers’ initial reluctance. Most of them operated from self-owned properties and had their own way of keeping the operational costs lower. They had developed their own business model, and for them, lease rentals and high operational costs for just a presence in the malls were simply not a viable option. They were also skeptical of the newage mall concept of revenue sharing. “We know our business. You tell us the commercials. If it matches our thoughts, we will come,“ was the approach that most retailers adopted.
“Yes, there are higher operational costs when doing business in a mall. But there are positives as well. Better infrastructure and parking facilities are enabling people to look at malls rather than the old city streets beset with traffic woes and parking hassles,“ says Sanjay Chugh, founder, Skylines, a Chennai based property advisory. “Moreover, thanks to the multiplexes and food courts, combining shopping with movie-watching and eating out is turning the malls into occasions for family outings,“ he adds Incidentally, there’s also a flipside to the story. If traditional retailers have been reluctant to enter malls, some mall developers too have not been very welcoming to some retail brands. For instance, when owners of a retail brand in Chennai approached the management of an upcoming mall to set up shop there, they were summarily turned away.
Later, property consultants had to step in and explain at length the advantages that the retailer could bring in and the increasing footfalls it could generate during wedding and festival seasons. When the retailer finally opened shop at the mall, its advertising blitzkrieg benefited the mall in a big way.
Another reason why mall developers initially turned away local retailers was the slew of conditions that international brands put forth when signing up for space in a mall. This prevented the locals from co-existing with globals. But JLL ‘s Pani brings in a touch of clarity.
“The international brands do not prevent others. They prefer like-minded brands to be present near them,“ he says. A Levis may prefer a Pepe Jeans to be its competitor, rather brushing space with a local menswear shop. But in most cases, it used to be the mall developer who understood it wrong and ended up avoiding local popular brands, Pani adds.
“Now, mall developers understand the power of traditional retail brands. They are aware that a Pothys or RmKV or Nalli’s will bring the traditional crowd, the festival crowd and the wedding crowd. Further, the mall developers also know that these brands are so powerful, that if they put up a standalone store in that part of the city, people will go running there,“ observes Pani.
“We strongly believe in the power of local retailers. We will get the best into our malls, whichever city we enter,“ says Raghunandan. RmKV has opened its largest store, spread over 30,000 sq ft across three levels in the Forum Vijaya Mall that recently opened up in Chennai. The garment retailer has already established a presence in Phoenix Mall, also recently opened up in Chennai, besides malls in Coimbatore and Bangalore.
Gold jewellery retailers are another segment that have taken to malls increasingly over the last couple of years. Malabar Gold and Diamonds has tied up with Phoenix group to open stores in its upcoming malls in Chennai, Mumbai, Bangalore and Pune.
M P Ahmed, the jewellery company’s chairman, believes that malls are the future of shopping in India. “The developed world has already moved to shopping malls. With parking constraints and the hot and humid weather, malls are the only answer,“ he says.
Not everyone is as gung ho. Joyalukkas, on the other hand, is still apprehensive. “Malls have not yet evolved to do serious business and it is still not attracting serious buyers.
Food, films, apparel brands and accessories will always do well in malls, but not gold jewellery. You may have lot of footfalls and it is a good brand-building exercise, but the conversions, especially in gold, will be very less,“ says Joy Alukka, chairman of Joyalukkas.
While the brand has a diamond boutique in Lulu Hypermarket in Kochi, all its 12 mall stores in West Asia have been closed down.
“Many jewellery stores are vacating malls in Dubai and other cities because of unsatisfactory sales. I believe customers still prefer the traditional old shops to make gold purchases,“ he says.
Prestige Group’s Raghunandan sums it up neatly: “Traditional retailers and modern retail infrastructure will have to learn to merge and come together. That is in the interest of both the buyer and the seller. We make money when the retailers make money. The reason why we have never faced emptiness in our malls is because we have always been very retailer-focused.“
Central Mumbai has emerged as the country’s most attractive investment destination for office properties with 19% net annual return as prices are expected to rise 63% and rentals by 47% over five years, global real estate consultant Knight Frank said in a report.
But in National Capital region, returns on investment in commercial properties expected to fetch one of the lowest return of 10%. Peripheral Business Districts in Noida and Gurgaon will yield 11% return per annum. “At 19% per annum return, Mumbai’s central district, which comprises Parel, Lower Parel, Dadar, Prabhadevi, will yield the best return on investment in the country,’’ Knight Frank India chief economist Samantak Das said.
Mumbai’s (SBD-West) will give a return of 15%. Availability of talent, conducive business environment, international air connectivity, presence of prominent stock and commodity exchanges along with headquarters of several banks form the backbone of the financial industry in Mumbai, the consultant said. India’s financial capital’s office space has seen highest occupancy of 26% from the banking, financial services and insurance (BFSI) sector, followed by IT/ITeS segment with 25% demand.
As against this, micromarkets such as Connaught Place, Nehru Place, Saket, Jasola and Bhikaji Cama Place in Delhi will witness a subdued return of 10%. Around 50% of the expected supply to be added during 2013-17. However, vacancy levels are also expected to peak before stabilizing at 18.8% by 2017. The report said as the economy is likely to revive in the coming years, the demand for office space in Mumbai and Delhi will increase.
Hyderabad (SBD), Mumbai (BKC & off BKC) and Pune (SBD East) are at third position in terms of investors return at 14% per annum. The business districts of the National Capital Region (NCR) and Bengaluru, despite being the largest office markets in the country, will lag behind other cities in terms of investor return, Das said. “While IT dominates Bengaluru and BFSI remains significant for Mumbai, NCR has a more diversified demand for office space. Also, more and more corporates are evaluating NCR due to better infrastructure and availability of manpower,” Knight Frank India director (occupier solutions group) Viral Desai said.
सोने की कीमतों में हालिया गिरावट के बाद इस बारे में काफी विमर्श हुआ है कि क्या भारतीयों में सोने का लगाव कभी कम होगा? यदि ज्वेलरों की बात पर विश्वास करें तो कीमतों में आई इस गिरावट से खरीद बढ़ेगी, क्योंकि लोग मानते हैं कि यह गिरावट अस्थाई है। इसी तरह के अन्य लोगों के लिए निवेश की दूसरी सबसे बड़ी पसंद रीयल एस्टेट क्षेत्र है। ज्यादातर भारतीयों के मुताबिक निवेश के सबसे सही विकल्प जमीन और सोना ही हैं। लोग दो हजार या तीन हजार साल पहले भी ऐसा ही मानते थे। इसे किसी सूक्ति की तरह सत्य मान लिया जाता है कि सोने और जमीन में किए गए निवेश पर कभी नुकसान नहीं होगा।
सोने में निवेश करने वाले लोगों की यह लत छुड़ाने को लेकर ज्यादा चर्चा होती है, क्योंकि सोना देश के चालू खाते के घाटे पर असर डालता है। लेकिन जब हम लोगों के पर्सनल फाइनेंस के लिहाज से बात करते हैं तो रीयल एस्टेट की भूमिका ज्यादा बड़ी समस्या साबित होती है। सामान्य मध्यवर्ग के लोग भी बड़ी रकम का कर्ज लेकर शुद्ध रूप से निवेश के लिए दूसरा घर खरीदते हैं। उनका गहरा विश्वास होता है कि दूसरा घर खरीदना, कहीं और निवेश करने से बेहतर विकल्प है। इसके लिए वे 15 साल तक ईएमआइ का बोझ उठाते हैं जो उनकी आय का बड़ा हिस्सा निगल जाती है। ब्याज दरें काफी ज्यादा हैं जबकि किराये से होने वाली आय या तो बेहद कम है या बिल्कुल नहीं है। सोने के मामले में इस हद तक गलत निवेश नहीं हो रहा। लोग ऐसा क्यों कर रहे हैं? इस तरह के भरोसे का कारण क्या है? इस भरोसे का बड़ा कारण इस बात के भ्रामक साक्ष्यों कि मौजूदगी है कि लोगों ने रीयल एस्टेट क्षेत्र से भारी कमाई की है। इस बात को बेहद कम समझा गया है कि लंबी अवधि में रीयल एस्टेट से भारी रिटर्न के उदाहरणों के दोहराए जाने की संभावना अब नहीं है, क्योंकि अब रीयल एस्टेट में निवेश बेहद अलग तरह के मॉडल के जरिये हो रहा है। यदि आप इस बात को जानने का प्रयास करें कि ऐतिहासिक रूप रीयल एस्टेट में रिटर्न किन कारणों से हासिल हुआ तो आप इसके पांच कारण पहचान सकते हैं। पहला कारण रहा, सामान्य या कृषि भूमि का आवासीय या वाणिज्यिक इस्तेमाल के रूप में उपयोग बढ़ना। दूसरा, भौतिक आधारभूत संरचनाओं के निर्माण से जमीन के उपयोग में वृद्धि हुई। तीसरा कारण रहा, ज्यादा जनसंख्या वाले इलाकों में जमीनों की कॉमर्शियल उपयोगिता में वृद्धि। कीमतों में बदलाव का चौथा, समय-समय पर रीयल एस्टेट में आने वाले उतार- चढ़ाव। पांचवा कारण है महंगाई में होने वाली आम वृद्धि, जिससे संपत्तियों की कीमतों में वृद्धि होती है।
इससे पहले की पीढ़ियां जब संपत्ति की खरीद करती थीं तो उन्हें दूसरे से लेकर पांचवे कारण तक का लाभ मिलता था। लेकिन अब स्थितियां बदल गई हैं और अब आप एक रीयल एस्टेट डेवलपर से अपार्टमेंट खरीदते हैं। इस मॉडल में पहले से तीसरे कारण तक का पूरा लाभ डेवलपर और डेवलपर से पहले खरीद करने वाले लोग हासिल करते हैं। इतना नहीं, सबसे बुरा यह है कि डेवलपर संपत्ति पर भविष्य में होने वाले लाभ की कीमत भी पूरी तरह से वसूलने के सभी प्रयास करता है।
रीयल एस्टेट डेवलपमेंट क्षेत्र में होने वाली भारी मार्केटिंग हाइप का उद्देश्य आपको इस बात के लिए तैयार करना ही होता है, आप जो संपत्ति खरीद रहे हैं उसका भविष्य बेहद उज्जवल है और उसकी मांग काफी ज्यादा रहेगी। इसलिए आपको ऐसे बेहतर भविष्य का भुगतान अभी कर देना चाहिए। असल में निवेश के पैमानों पर देखा जाए तो आपकी खरीद कीमत वास्तविक मूल्य से कई गुना ज्यादा होती है, जो निकट भविष्य में वास्तविक कीमत में तब्दील नहीं होगी। यह सिर्फ ठगी है और कुछ नहीं। ऐसा करने के लिए शहरी जमीनों की नकली कमी और रीयल एस्टेट क्षेत्र में बड़े पैमाने पर लग रहे काले धन से मदद मिलती है। हर व्यक्ति को अपने रहने के लिए एक संपत्ति खरीदनी चाहिए और निवेश के तौर पर रीयल एस्टेट में रकम लगाने का विचार त्याग देना चाहिए। हालांकि, आप ऐसा तभी करेंगे जब आपके पास बड़ी मात्र में काला धन न हो। अगर आपके पास काला धन है तो फिर आपको किसी इन्वेस्टमेंट कॉलम से निवेश सलाह लेने की जरूरत ही नहीं है।
असल में निवेश के पैमानों पर देखा जाए तो आपकी डेवलपरों से रीयल एस्टेट की खरीद कीमत वास्तविक मूल्य से कई गुना ज्यादा पर होती है। इसलिए यह निकट भविष्य में वास्तविक कीमत में तब्दील नहीं होगी। यह सिर्फ ठगी है और कुछ नहीं। ऐसा करने के लिए शहरी जमीनों की नकली कमी और रीयल एस्टेट क्षेत्र में बड़े पैमाने पर लग रहे काले धन से मदद मिलती है।