Monday, May 26, 2014

Hope is a good thing; maybe the best of things…will Narendra modi led government deliver on expectations that have been raised?

Author: Sachin Gupta | Find me on Twitter

The mood in the country since 2013 was of pessimism. Consumers had postponed their decision to purchase goods and invest in assets, businesses had put a break on investing in new projects, job creation was at an all time low, GDP had plummeted to a 4.5% level, inflation had been as stubborn as a 3 year child, and bureaucrats had stopped moving the files. The buzz word was Election…Election…and Election.

Now that, Elections are done with, what is the current state of mood in the country? Prime Minister designate Narendra Damodardas Modi will take charge today 26th May 26, 2014. Does he posses the magic wand to cure all the ills plaguing the Indian economy today? Then, how the hell this mood and subsequently the economy will improve? What will be the trigger that will make fence sitting consumers to buy goods?  What will enable businesses to invest in new projects? Well, again, it’s that magic thing called “Mood”…and no, we are not talking about the Moods condoms…..what we are talking about is the feeling of optimism among countrymen. Has it changed already from pessimism to optimism? Stocks markets seems to suggest so….the sheer size of BJP led NDA victory has enthused the capital markets and according to some experts this could be the beginning of mother of all bull runs that this country has ever seen.






Why are stock markets so upbeat about Narendra Modi? Decisive; able administrator; and economic development are some of the adjectives that are used to describe him. In my opinion, however, it seems he wants to go down as the greatest political leader in India since Mahatma Gandhi; it is this urge or fire which is driving him. And this urge has resulted in a hope and this hope which spreads like a viral can create infectious optimism and excitement, consumers will again start purchasing, businesses will start new projects, and bureaucrats will become efficient.

According to Keynesian Economics, There are 2 aspects to revive a faltering economy, one is by increased government expenditures and lower taxes to stimulate demand and pull the economy out of the Depression, and the second is Animal Spirit.

Post 2008 world financial crisis, UPA-II under Manmohan Singh implemented only one aspect of Keynesian model by increasing government spending to boost demand. Which of course stretched the fiscal deficit and that resulted in high inflation and high interest rates after 2011. However, they overlooked or were incapable to raise public sentiments or hope. Result, According to Planning commission data, GDP grew by 8.59 % in 2009-10, by 9.32 % in 2010-11, and then started to come down to 6.21 % in 2011-12, 4.99 % in 2012-13, and in 2013-14 it is expected to be at 4.5%. Had they improved public sentiments, things would have been different today.

Modi Government has raised hopes but he has to ensure that these expectations are complemented by action on ground. Because, make no mistake, without any substantive action, hope will soon dither.

Will he be able to deliver and fulfill these expectations???




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Thursday, May 22, 2014

Area and Unit Conversion Calculator

Author: Sachin Gupta | Find me on Twitter

When buying a piece of real estate such as land, apartment, or shop, we come across various kinds of area units. In some instances, we may know the conversion factor and for others we use our calculators.

Here we present a widget for you to convert areas from one unit type to another.








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Monday, May 19, 2014

Lease Agreement in India

Author: Sachin Gupta | Find me on Twitter

Leasing a property is a legal process wherein both Landlord and Lessee discharge their duties in accordance with the lease agreement. Lease agreement is prepared on a stamp paper and is duly signed by landlord and lessee in presence of 2 witnesses.



Lease agreement can also be registered at the local registrar office in India. Some leases such as the one for office space properties are registered at the local registrar office.

Here is a sample lease agreement:




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Thursday, May 15, 2014

Looking to sell your property? Know more about Capital Gains Tax and Exemptions!

Author: Sachin Gupta | Find me on Twitter

If buying a property requires proper due-diligence to avoid unwanted hassles at a later stage, selling a property requires you to focus on Capital Gains Tax and Exemptions.

Under the Income Tax Act of 1961, Sections 45 to 55A deals with Capital Gains.



Capital Gains Tax are categorized as:


  • Short term Capital Gains (Holding period - 36 months or less)
    • A short-term capital gains/loss will be treated and taxed in the same manner as any other income/loss.
    • Short-term Capital Gains from Property sale are included in the investor's income and are taxed as per the slab rate.



  • Long term Capital Gains (Holding period - more than 36 months)

Long-term Capital Gains is computed as below:
LTCG = Full value of consideration received or accruing - (indexed cost of acquisition + indexed cost of improvement + cost of transfer + Expenditure incurred wholly and exclusively in connection with such a transfer)

Long-term capital gains are taxed at a flat rate of 20 per cent for individuals and foreign companies, and 20 per cent for domestic companies.

An example of Long Term Capital Gains Tax on Property in India:

Cost of purchasing a property in November 2008 - Rs 50 Lacs

Cost of selling the property in August 2013 - Rs 1 Crore

Inflation Index for fiscal year 2008-2009 – 582 and for fiscal year 2013-2014 - 939 (see from the attached cost inflation index chart*)

Purchase Cost after adjusting for indexation – 50 Lacs x (939/582) = Rs 80.67 Lacs

Long Term Capital Gains = 1 Crore – 80.67 Lacs = Rs 19.33 Lacs

Tax on Long Term Capital Gains = Rs 19.33 Lacs x 20% = Rs 3,86,597.90

Education Cess = 386597.90 x 3% = Rs 11597.94

Total Tax on Long Term Capital Gains = Rs 3,98,195.90


Tax exemption on Long-term Capital Gains under the following conditions:


  • If the sale relates to a property other than one residential accommodation and is reinvested in any residential property within a period of one year before or two years after the date of transfer.
  • Alternatively, such re-investment may also be in construction of a residential house within three years after the date of transfer to be eligible for claiming this benefit.
  • The house so purchased or constructed should not be transferred again within three years after the purchase or construction. Quantum of exemption will be the amount invested in the new property or the long-term capital gains, whichever is less. 

Or

If only the capital gains (and not the total sale proceeds) is invested for a period of three years in specific Bonds of National Highways Authority of India or Rural Electrification Corporation Limited or bonds redeemable after three years issued by National Housing Bank or Small Industries Development Bank of India or NABARD, as may be specified by the Government from time to time (Section 54 EC) within a period of six months from the date of transfer of the asset.

Quantum of deduction:

If the amount of capital gains is equal to or less than the cost of the new house, the entire capital gains shall be exempt.
If the amount of the capital gains is greater than the cost of the new house, then the cost of the new house shall be allowed as an exemption.

* Cost Inflation Index chart for calculations of Long Term Capital Gains Tax in India



Cost inflation index for calculations of capital gains tax in india from Green Realtech Projects Pvt. Ltd


However, Budget 2014 has altered the definition of Capital Gains Exemption. If you own a property such as ancestral home or a bigger home, and if you sell it and buy more than one smaller apartment, then, in that case, you will be exempted from Capital Gains tax on the first apartment and you are liable to pay capital gains tax on second or third apartment.

As an example, let’s say, you own a property worth Rupees 2 crores in July 2014. And you want to sell it to buy 3 smaller apartments.
Assuming, the cost of buying this property in May 2003 was Rupees 20 Lacs.
Inflation Index for fiscal year 2003-2004 – 463 and for fiscal year 2013-2014 - 939 (see from the attached cost inflation index chart*)
Purchase Cost after adjusting for indexation – 20 Lacs x (939/463) = Rs 40.56 Lacs
Long Term Capital Gains = 2 Crore – 40.56 Lacs = Rs 1.59 crore

However, if you wish to purchase 3 apartments of 65 lacs each, then, according to Budget 2014, capital gains tax exemptions will be applicable only for one residential apartment.

In other words, your Long term capital gains will be = 2 Crore – 40.56 Lacs – 65 Lacs = 94.44 Lacs
And long term Capital Gains tax will be = 94.44 Lacs x 20% = Rs. 18.89 Lacs

However, after selling your property, you invest the amount in one bigger property worth Rupees 2 crores or more, then, you will be exempted from Capital Gains.

Until this Budget, anyone in India selling immovable property, or other long-term assets and using the money to purchase a residential house within three years of the sale was not required to pay capital gains tax (20 per cent) on the sale proceeds.

But the Finance Minister has now tweaked this section to specify that only “one residential house in India” would be eligible for the tax break, instead of “a residential house”.


Source: National Housing Bank


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Thursday, May 8, 2014

List of Town and Country Planning Department for various states in India

Author: Sachin Gupta | Find me on Twitter

Town and country planning is an integral institution of state’s urban development. The Department of Town and Country Planning is responsible to regulate the development and also to check the haphazard development in and around towns in accordance with the provisions of state’s formulated urban development policy.

In order to involve the private sector in the process of urban development, the Department grants licenses to the private colonizers for development of Residential, Commercial, Industrial and IT Park/Cyber Park Colonies in accordance with the provisions of the State’s Development and Regulation of Urban Areas Act. These licenses are granted to the owners having clear title of land in their favor.

Private real estate developers or colonizers are expected to pay fee to ‘Town and Country Planning Department’ for land conversion, and License grant.

The Town & Country Planning Department is meant for the preparation of master plan for cities and towns, along with Zonal Development Plan. Department is also technical adviser to all the Development Authorities, Regulated Areas, Urban Local Bodies of the State. Other than this, the department is also involved in framing of the State Housing policies. Various Buildings Bye Laws, Zoning Regulations with reference to the administrative control of Housing and Urban Planning Department of the State come under the ambit of Town and Country Planning Department.

Customers who buy apartments from private developers should visit the local state ‘Town and Country Planning Department’ website to verify the project License number and other related approvals.

Here is the list of Town and Country Planning Department for Indian states.





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Monday, May 5, 2014

Secunderabad gears up for transformation

Hyderabad has always been the first to see widespread development and infrastructural growth. One half of the twin city, Secunderabad came close second to Hyderabad for all major projects and plans by the state government. Despite the fact that both these cities come together to form the 6th largest urban agglomeration in India. But things have changed now, with Hyderabad getting densely populated and with little or no land availability, it has given an opportunity for Secunderabad to flourish. In the past few years there has been vast improvement in the area with better infrastructure and other basic amenities.

Connectivity and social infrastructure has remained an important asset for this city. It is connected to Hyderabad via Tank Bund Road, one of the most important arterial roads. This erstwhile British colony has also remained abreast with all major educational and healthcare facilities for its residents. Largely a cantonment area, it is also headquarters to the South-Central Railway- the largest railway junction in the state and many other defense units. Most Secunderabad properties have hence been a part of the public sector, owing to a number of government establishments.

Today this city has opened up to private commercial investment. Secunderabad has seen a surge of IT companies like ITC, Infosys, and Mahindra Satyam in the past decade. Like Hyderabad, it has also greatly benefited by the IT/ITES sector. Real estate in Secunderabad has been the biggest beneficiary of this trend. It has resulted in a major escalation in prices of both residential and commercial real estate. Land owners and property owners have greatly benefited from this, thereby fetching manifold ROI (return of investment).

Hyderabad 'Metro Rail’s Corridor 3' runs across Secunderabad at the railway junction and Parade Grounds area. This corridor which is running from Nagole to Shilparamam will be an important factor in determining the changing real estate scenario here. The city has been facing political and economic turbulence for the past few years. The prices have seen a good pace since the settlement of the Telangana issue, but post-election stability will have a great impact. This whole issue of Telangana came to rest in Feb 2014 with investors and Realtor heaving a sigh of relief. The completion of Hyderabad metro by December 2014 will improve the realty market too.

Populated mostly by individual homes, Secunderabad has seen a growing trend of apartments and gated communities. A recent development in the local real estate division, the residents have shown a good response to multistory apartments. The last quarter of 2014 will see the announcement of many new projects in the area to cater to the growing population wanting to live closer to the entertainment hub of Hyderabad. Flats in Secunderabad will see a huge price appreciation mostly after the completion of the metro rail project.

This infrastructure development will bring the twin cities together, as the transportation will not be a hindrance anymore. Things are looking up for Secunderabad this year with many important projects by top builders in the pipeline.


This is a guest post by Ramesh Yadav

Friday, May 2, 2014

List of Housing Boards in India

Author: Sachin Gupta | Find me on Twitter

To boost housing projects all over India and to achieve the goal of urban and housing development, Housing Boards have been formed in various States of India. These boards work towards expansion of the property market and development of well-planned and ideally located colonies. Incorporated by the Government of different States after hard work and strenuous efforts of many months, the mandate of the Housing Boards is to carry out well organized as well as aesthetically designed development programs all over the nation.

The objectives of the Housing Boards of India are:

  • To provide housing solutions to needy citizens at reasonable prices.
  • To construct houses and to allot them under the categories of high-income group, middle-income group, and low-income group.
  • To select the sites for housing and decide the services to be provided.
  • To formulate schemes for self-financing that helps the middle and high-income groups.
  • To construct commercial complexes, multi-storied buildings, and shops and then to lease them out so as to secure financial resources.

Here is a detailed list of housing boards across India:



Source: National Housing Bank


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