Tamil Nadu govt sets guidelines for officials in charge of property tax collection

Did you receive an SMS alert from Chennai corporation to make a self-declaration of your house/flat details for property tax purposes? This is part of a system put in place by the state to introduce a revised tax regime.

A detailed set of guidelines has been issued to commissioners of all local bodies on the preparation of a master list of properties and a time frame has been set to map them. At a meeting, officials were asked to first accumulate records of all properties available with housing society, housing board, slum clearance board, ration cards maintained by civil supplies department and other registers maintained by municipalities and corporations to verify omissions in assessment.

Officials are to cross-check records by going door-to-door and finally submit the verified data to seniors. Armed with this verified database, officials will ensure that residents file returns from October 20.

“Field staff will be deployed and 100% filing of returns must be ensured. The returns filed by the owners will be kept in safe custody with no room for tampering. Wherever returns could not be obtained before the due date, the property concerned should be inspected by the revenue staff and returns prepared and submitted to the office,” said a senior official.

Officials of the municipal administration department told TOI that all officials were informed of these guidelines and the deadline. “While everyone is aware that property tax has been revised, we wanted to create a system for officials to implement it which is why we came out with a set of guidelines for them,” said a senior official.

Source Komal Gautham, Economic Times, Chennai

At your service | Times Property, The Times of India, Chennai | July 31, 2018

At your service

Chennai

With a growing number of house owners not having the time to take care of their property, they are beginning to rely on professional property management services to take care of their needs.

House hunting can lead to having interesting experiences for each person. When Srividhya, a financial analyst, was scouring the city for a house to move into on rent, she contacted a person whose phone number was listed on a website. “I found myself speaking to a property manager who enquired about my requirements. He was managing the property that belonged to someone else. But what surprised me the most was that he wanted to interview me to see if I fit the bill of the property owner. I was not aware that the city had such services where an owner could hire such people so that they don’t have to micro-manage certain tasks,” she says.

Many from the earlier generation may have built houses to live in them. But today, buying a house is not merely to live in it, but it is also seen as an investment. Hence an owner, today, need not essentially live in the same house. And this is where home management services are sought.

How exactly is it relevant today? T Chockalingam, Managing Partner, 360 Property Management Services, says, “20 years back, if you owned a house in a city that you currently did not live in, you would take the help of a relative (family member) or a friend to help find a tenant, or to help with anything that was related to the property such as a repair or renovation work. Today, there are a lot of Indians who are settled abroad or live far away from the property, and they may be reluctant to ask a relative’s help in this regard. Simply because they may know that these people may not feel obliged to help them, or they may live far from the property themselves and may find it inconvenient to visit it often.” And that is how these services have become crucial to many Chennai residents.

These companies offer a range of solutions. They help in buying and selling houses, and finding tenants for the house. Tenants are often interviewed, the information is verified and that is shared with the house owner. Sometimes it is also their job to find tenants according to the demands of the owner. “Sometimes they will be particular about tenants having a small family, or belonging to a certain state or community. We have to find them accordingly. Then a rental agreement is drafted and the deal is finalised. We then become facilitators,” says a property manager.

Further, services pertaining to electrical, plumbing, carpentry, flooring, wood work and painting are taken care of by a team from property management service companies. Also, property tax, maintenance charges, water and sewer charges and other expenses are paid on time by these organisations. They visit the property from time to time to check if it has been well maintained by its occupants and even pictures and videos of the same are shared with the owners.

“The prices for the services depend on the size of the property, its location and the specific work that we need to do. Generally, people think it is only NRIs who look out for such help. But even those who have multiple assets, or own a small building with many apartments, take our help,” says Prabhu Shankar, Manager, Nimmadhi Property Management. He offers a word of advice, “Verify if such a company is registered. You can try and do that by checking if that company has a GST number. Also, read the reviews online, see the customer feedback and check if anyone you personally know has enlisted their help.”

Source: Ranjitha G, Times Property, The Times of India, Chennai

The plot you’re going to buy in South Chennai may be no man’s land

Beware! The plot you’re going to buy in South Chennai may be no man’s land

Chennai

If you are planning to buy a plot of land in south Chennai and its peripheries, then exercise maximum caution before investing in the property as it could be a plot usurped through fraudulent documents. In the past four months, 17 cases of land registrations through double documentation worth of Rs 200 crore have been unearthed in the sub-registrar offices located in the southern parts of the city. Land sharks have been eyeing no man’s land, vacant plots including the government’s poramboke to make a fortune in the realty market.

All cases have been reported in the sub-registrar offices under the purview of the South Chennai District Registrar. The cases have come to the light, incidentally, after the arrest of a registration official P Sivapriya attached to South Chennai District Registrar who has been accused of aiding illegal property registrations in and around the Pallikaranaimarsh land.

Registration department sources told TOI that illegal registrations came to light during a verification of a property transaction. According to official sources, every stamp paper has a different identity serial number. “But in one of the sale deed, whose registration was traced to November 1975, the same serial number was present in all the stamp papers. This raised our suspicion,” an official said adding that further inspection of the sale deed revealed that the entire document was forged.

This apart, complaints from the original owners also brought the murky activity to light. Sources said about 40% visitors to the South Chennai District Registrar’s office were victims of forgery and had come to file complaints.

Officials said there was a pattern to the fudging of documents. “The registrations with fake documents pertain to unclaimed and open land, and poramboke land of the government. It needs strenuous efforts to differentiate between a forged sale deed and original document because the fraudsters have recreated rubber stamps matching the old style,” a registration department official, privy to developments, said.

While 17 such illegal documentations have been unearthed, steps are being taken to file FIRs, sources added. “The total transactions would be worth of Rs 200 crores,” an official said.

When contacted, a senior official with the office of inspector general of registration said they have received complaints in this regard. “Fraudulent property registrations are generally rampant in South Chennai,” the official said.

Source: Yogesh Kabirdoss, Economic Times, Chennai

Plot regularisation files move at snail’s pace at chennai corporation

Plot regularisation files move at snail’s pace at corporation

Chennai

Inordinate delay by Chennai Corporation in processing and disposing of applications for regularisation of unapproved layouts has been frustrating applicants, who have to make several trips to Ripon Building to follow up on their papers.

The civic body has received 5,297 applications for regularization since the scheme was rolled out on May 4, 2017, with most of the applications coming from Madhavaram, Ambattur, Valsaravakkam, Perungudi, and Shollinganallur zones. Since the extension of the May 3 deadline, the corporation received 1,891 applications.

Calling for decentralisation of the process, which could be handled at zonal office levels involving more officials, residents say it is taking months now. “After I applied for approval of a plot in Puzhuthivakkam in November, not even an acknowledgment was sent. For every status update, I need to keep visiting Ripon Building. After all these months, I am yet to receive an approval,” said V Moses.

Sources said only six engineers were working on the regularization files, though the number of pending applications ran to several thousands. Two plot owners were flummozed when they were asked to produce no-objection certificates from Airports Authority of India for layouts in Moulivakkam and Madhavaram.

“What does AAI have to do with properties so far, in Moulivakkam?” questioned a resident. “We need a hassle-free and public-friendly approach. What is the use of conducting camps urging people to get their sub-divisions and layouts regularised, when the process is so cumbersome and never-ending?” questioned G Satish of Sholinganallur.

Officials, however, told TOI that 240 layouts had been approved till date and that the process was picking up steam when compared to earlier months when only 13 layouts got approval in a span of a year. According to officials, 597 applications were for plots in CRZ area. “Non-submission of all the required documents by the applicant is one of the causes of delay. Once we get the update from CMDA, the applicant can submit all the missing files even in a day,” he said. Scrutiny of the framework plan takes two weeks for the CMDA if the documents are in order. Orders have been issued to involve two more engineers in regularization work, said an official.

Source: Shruti Suresh, The Times of India, Chennai

Demand for retirement homes in Chennai goes up

Demand for retirement homes in Chennai goes up

Chennai

There has been a sudden spurt in the number of enquiries for senior citizen homes in and around Chennai. The growing realisation that it would be better to relocate to a senior citizen community than living alone has been attributed to this surge in demand. Moreover, the number of developers who focus on retirement homes continues to remain limited. The demand from both residents and NRIs is predominantly from the affluent category. The demand for senior citizens homes has been estimated at 5,000 units in the city alone but only less than 10 developers are currently involved in development in the entire state of Tamil Nadu.

Availability of facilities, specifically food service and nursing care in case of emergency are major determinants. Fool-proof security, social infrastructure, ambience and neighbourhood are also tilting factors that nudge people to shift to retirement homes.

The market is predominantly driven by end users and price appreciation is not a major criterion for investing in a retirement home, said a developer involved in the development of such homes.

The sluggish growth in the sector has been attributed to the social stigma that society and relatives may demean the children if the parents shift to senior citizen homes. Delay in delivery is yet another reason as the time span to use the retirement home is short (around 10-12 years only) when compared to buying a regular home. Continuity of services for life by Retirement Community Management Company is cited as yet another reason for the tepid growth. This is because of unavailability of service provider in a retirement community that makes life difficult to live.

“We have come across buyers from the affluent class in the society in our project above SEC A class,” said Ramesh Kumar KAV, CEO & Director, Harmony Eldercare Pvt Ltd.  The retirement community home industry is evolving and will become one of the SBUs for all major real estate companies in a decade, he added.

According to Kumar, retirement home community is a hybrid product of real estate with essential features like facility management, food service and basic healthcare. Hence this has to be marketed differently from the regular real estate projects with trust and credibility as corner stones.

“Innovation is the key to boost the development as well as marketing,” say developers. Deferred management fee model may be adopted for acquisition of retirement homes wherein some part of the building cost will be paid upfront and remaining in a span of ten years. Banks should be involved by using reverse mortgage scheme to take care of increase in monthly maintenance charges due to spiraling inflation. Involvement of residents’ association and integrating with a larger regular residential gated community would further enhance the demand for retirement homes, according to industry sources.

Limited developers undertaking such projects is yet another reason for the surge in demand as stringent criteria are involved right from site location and neighbourhood amenities. Availability of good health care facility within a 5-km radius, good ground water, commuting facilities to nearby markets/temples, designing the buildings with features like same level flooring, wide doors for toilets, ramp at entrance, more lighting level in rooms, rounded corners for all walls, etc. are major criteria to be taken into consideration by the developers, said Kumar.

On the government front, it is felt that there is a need to encourage development of retirement homes by providing fiscal sops on the lines of affordable housing. One of the deterrents is GST. The rate of GST for construction of senior citizen homes should be at par with EWS housing schemes. Similarly, GST at 18% on services provided is very high, say developers considering the limited income at their disposal.

Source: V Nagarajan, Magicbricks Bureau

Happy New Year | தமிழ் புத்தாண்டு வாழ்த்துக்கள்

Happy New Year | தமிழ் புத்தாண்டு வாழ்த்துக்கள்

Happy New Year | தமிழ் புத்தாண்டு வாழ்த்துக்கள்

Chennai records highest percentage of unsold houses

Besides demonetisation and GST, location of the units in places affected by December floods a reason for poor uptake Chennai has 20% completed unsold inventory in real estate, the highest percentage in the country, according to a recent survey by real estate services firm, Jones Lang Lasalle (JLL).

As per a JLL survey, as many as 42,500 units are unsold, of which nearly 8,500 are in ready-to-move-in condition.

The southern suburbs of Chennai including Old Mahabalipuram Road and East Coast Road have approximately unsold 30,000 units, which account for 75% of the total unsold inventory, while western suburbs, including NH 4 and GST road, recorded the second largest volume of unsold inventory of 8,000 units. Both these locations are driven by end-user demand, which has been slow in uptake last year.

A close scrutiny of the data shows that most of the unsold inventory is in locations that were impacted in the deluge of December 2015, which drastically brought down the attractiveness of such projects.

Having said that, Chennai has seen a strong trend in the uptake of commercial office space in the last few quarters. “If the trend continues to remain strong, we should expect to see a simultaneous uptake in residential sector, albeit, the trend usually takes a few quarters to follow,” said, Ramesh Nair, CEO & Country Head, JLL India.

Buyers’ market
“Largely end-user driven, the Chennai residential market has tried to maintain its balance by limiting the unit launches in the last few quarters. Capital values have remained stable, indicating it to be a buyers’ market. The prolonged period of low activity in this asset class is, however, impacting the market, which is not witnessing investments to its true potential,” he said.

Suresh Krishn, President, Credai Chennai,said the unsold inventory would soon find takers. It is just a matter of time. “Currently, the market trend is customers are looking at ready-to-move homes. They want projects which can be delivered soon and occupied immediately.”

He said other real estate firms also felt this trend during FAIRPRO 2018, a real estate expo organised in the city last week. “The expo generated revenues of around ₹176 crore, which indicates the positive sentiments in this sector,” he said.

“Demonetisation, RERA and GST hit the realty sector hard in Chennai in 2017. Also, there was an impact on the inventory because of natural calamities like Cyclone Vardah, flood in the city, and the overall decrease in the number of jobs being created,” said T. Chitty Babu, Chairman and CEO, Akshaya Pvt. Ltd.

“With the advent of new sectors like affordable housing and smart homes, the real estate sector is on a revival mode now. We have seen a steady growth in the demand from homebuyers in the past few months and this is the right time for homebuyers to invest in homes as we expect the prices and home loan interest rates to go up due to the constant rise in input costs and reduced new launches.”

The survey showed that as many as 4,40,000 residential units remain unsold across key cities of India at the end of 2017.

The Hindu

 

GST relief for low-cost homes, First-time buyers

GST relief for low-cost homes, 1st-time buyers

 Now, a first-house buyer with a household income of up to Rs 18 lakh per annum can avail a benefit of up to Rs 2.7 lakh.
  • The tax benefit will also be extended to an affordable housing project, which has been given infrastructure status.

NEW DELHI: The GST rate has been reduced to 8% from the existing 12% on purchase of houses availing of the credit-linked subsidy scheme (CLSS) under Pradhan Mantri Awas Yojna, and of those houses that are constructed in a project that has got infrastructure status.
Under the CLSS scheme, a first-house buyer with a household income of up to Rs 18 lakh per annum can avail a benefit of up to Rs 2.7 lakh while buying a house or apartment of up to 150 square metres (1,615 sq ft) carpet area.

Those who do not qualify for credit linked subsidy scheme (CLSS) will continue to pay GST at 12% for the same house. The tax benefit will also be extended to an affordable housing project, which has been given infrastructure status, in case the maximum unit size in the project is a carpet area of 646sq ft. The first-house condition on the buyer will not be applied in this case. Whether or not the buyer gets the CLSS benefit under PM Awas Yojna, GST will be levied at 8%.

“The decision will give a push to the real estatesector, particularly affordable housing, as prices will fall by up to 4%,” said Getamber Anand, chairman of the Confederation of Real Estate Developers’ Association of India (Credai).

The cap on the size of housing unit to avail of the benefit under CLSS has been kept at 1,615sqft carpet area, which is equivalent to around 2,200sq ft built-up area. This would cover most three-bedroom apartments and houses in the country and particularly in metro cities, said Anand. The Rs 18 lakh cap on household income is also sufficiently large to cover most first-time house buyers. But those buying their second house, or more, would not be able to avail this benefit. NAREDCO vicechairman Parveen Jain said the decision would prove a boon for the masses and fuel rapid growth and development of the real estate sector, furthering the cause of ‘housing for all by 2022’. Developers pay GST on inputs used for the construction of a project. Under GST, taxes paid on the inputs are taken back as credit from the GST paid by the buyer. Input taxes on construction amount to around Rs 400 to Rs 500 per sq ft.

GST in Real Estate: Is one sector and one tax possible?

Ahead of the GST Council’s meeting on November 9 and 10, subsuming all real estate related taxes under GST is a major talking point. Here is a look at the nitty gritty of the same

NEW DELHI: The real estate sector is expected to feature in the November 9, 2017 GST meet. The government has been hinting that the sector can be considered to be brought under GST. Then all individual taxes would be subsumed into the GST. Or will it?

Practically, can all central, state and local taxes on real estate be subsumed into GST? The finance minister has implied that it can be considered and is expected to one of the major talking points in GST Council’s meeting on November 9 and 10. Real estate is unique because it is an immovable asset and is also bound by state laws.

What is Goods & Services: Under the Central Goods and Services Tax Act, 2017 (CGST Act), goods and services have been defined as:

  • Goods: Section 2(52) of the CGST Act: “Goods” means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of land which are agreed to be severed before supply or under a contract of supply;
  • Services: Defined under section 2 (102) “services” means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged
  • Schedule III of the CGST Act which states the activities or transactions which shall be treated neither as a supply of goods nor a supply of services includes “Sale of land and Sale of building”(except under-construction buildings which are deemed as supply of service) at Sr. no 5 of this Schedule.

Immovable asset

In real estate, since land is an immovable asset, the industry has been given a 33 per cent abatement on the 18 per cent GST. Therefore, the effective charge on the sector is now 12 per cent as against the listed 18 per cent. During the period of construction, when the developer collects money from the consumers, pays different vendors and service providers and gets the asset constructed, the under construction product is considered a service and therefore, comes under the purview of GST. It also gets input credit from many of the 267 allied industries. Once the input credit starts flowing in there would be clarity on how much the prices can drop by.

Anuj Puri, Chairman, Anarock Property Consultants Pvt Ltd, estimates that the quantum of input credit should come to roughly 2-3 per cent. Therefore, the effective GST impact should be 9-10 per cent. As it stands today, ongoing projects are in different stages of completion and the input credit may not all come back to the developer. However, if developers don’t pass on the input credit benefit to customers, it can be construed as profiteering.

GST can’t be applicable to land as it is an immovable asset and that is why there is an abatement of land value provided to developers in the GST on real estate. There is no GST levied on completed projects which are again considered immovable assets.

Sudip Mullick, Partner, Khaitan & Co says, “The Schedule III note implies that sale of land or buildings are neither goods nor services. If the Government decides to include land and building under GST, firstly, they will have to delete the entry from Schedule III and bring it under Schedule II which deals with activities which can be treated as goods or services.”

Other taxes like stamp duty and property taxes are local taxes and there is as yet no means of subsuming them. If the government decides to include real estate in GST then there has to be a way of compensating the states for this loss of revenue. With 12 per cent GST, 6 per cent stamp duty, 1 per cent land under construction, a labour cess and various other taxes, currently, the sector is already burdened with many invisible taxes. If all of them are subsumed into GST then the rate will have to go up.

Inflationary pressure

Niranjan Hiranandani, President Naredco (National Real Estate Development Council), says that GST has put inflationary pressure of 3.5 per cent on affordable and 5.5 per cent on ongoing luxury housing. “The underlying principle of GST was to keep it revenue neutral.” There are 31 or 32 taxes on affordable housing. No country in the world has such high taxation on affordable housing. He suggests that there should be no tax at all on affordable housing till 2022. Let industry get the input credits so that it becomes profitable and there is ample stock in five years to rationalize rates.

Hiranandani maintains that bringing real estate under GST will make the sector more transparent and hidden charges will come to the forefront.

Current tax rates

Getamber Anand, Chairman, Confederation of Real Estate Associations of India (Credai), estimates that taxes account for 10 per cent of the cost of real estate. Hiranandani says “About a third of the cost of housing can be attributed to taxation.” PWC estimates the tax burden @18 per cent. Essentially, the taxes are so many and varied across states, that one figure is difficult to compute today. Naredco has made a comprehensive list of taxes that are applicable to the sector. (see Box)

Stamp duty

Can stamp duties be subsumed in GST? It is a state tax and the total tax amount comes solely to the state. GST is a central tax and needs to be shared with the Centre. If this issue is discussed at the GST council meeting in Kolkata, then there has to be consensus among the states. Past High Court orders on stamp duty also need to be revisited.

Advantages

If GST is applied on land and immovable property, the buyer has to pay one tax at uniform rate across states (eg stamp duty varies state wise).

The industry benefits in the long run, if the timing is right. Prajakta Menezes, Principal Associate, Khaitan & Co says, “In the short term this sector is already grappling due to demonetization (purchases were deferred by buyers), RERA and GST. One more amendment may aggravate the shock in the short term.”

Implemented efficiently and effectively, one GST for real estate across the country is the way to go. How the states will agree to this and what changes have to be made to compensate them for loss of revenue remain subjects of debate. However, both, the industry and the consumer, seem to be beneficiaries of a more transparent way of taxation