GST – A positive development for Indian real estate sector

A revolutionary tax reform, the Goods and Services Tax (GST) will come into effect in India from July 1, 2017. With this move, different types of taxes—central, state and local will subsume into one single tax.

Like any other sector, real estate will also come under the ambit of GST. But, there’s lack of clarity on the rate of GST, whether it will remain at par with current applicable taxes or work towards enabling the government’s vision of ‘Housing for All’.

Other than the GST rate, the abatement rules as applicable under the service tax regime and the input tax credit facility for developers also play an important role. They will help determine if the effective tax incidence on real estate is lower or higher under GST.

The real estate industry, as of today has two primary levies, Service tax and VAT, with overlap of tax base and constant disputes on the rate of tax, given the multiple options available for discharge of taxes across States. This process has resulted in diverse practices being followed by developers, across geographies and even within each State.  With the GST regime, all these issues will be put to rest and the practices and positions will be common across India.  Hence, the taxes paid by a home buyers across various States would more or less be the same.

Presently, a home buyer pays service tax and VAT on purchase of residential units when booked prior to their completion. There are other elements of non-creditable tax costs, like excise duty, customs duty, CST, entry tax which are paid by the developer on his procurement side, building up into the pricing of the units.  All these tax costs add around 22%-25% of the price of the units.  GST implementation will replace the structure of multiple taxes with a single tax and ensure smooth flow of credits through the chain.  Hence, it is widely expected that GST would reduce the construction cost in the hands of the developer and aid in reducing or atleast maintaining the current level of prices in the real estate sector.

Highlights of GST for the realty sector

  • Under-construction homes to attract GST.
  • Leasing and renting of land and building would invite GST.
  • GST to be levied on EMI of under-construction property.
  • Tenancy and leasing would be considered as rendering the service under the GST bill.
  • Real estate to come under the GST ambit within one year of roll-out, which means stamp duties will continue to be levied till then.
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Industry experts believe NOW is the best time to invest in property?

Property investment has always been the one of the most lucrative assets. But there are many factors to consider before you invest in property. So is there ever a ‘good time’ to invest in property?

Demonetisation, Union Budget and various other policies have sent the Indian real estate sector on a whirlwind ride for the better! Industry experts believe NOW is the best time to invest in real estate in India.

The Union Budget 2017 brought about many positive measures for the real estate sector. Affordable housing was given infrastructure status. This will reduce the cost of funding for the builders, which in turn will benefit buyers. Moreover, the capital gains tax period was reduced to 2 years. This will levy less capital gain tax for people selling a house after 2 years of purchase.

Commenting on the Union Budget, Vineet Relia, Managing Director, SARE Homes said, “We welcome the move of the government to give infrastructure status to affordable housing.  This status will make it easier for developers to access low-cost funds via Foreign Direct Investment (FDI), External Commercial Borrowings (ECB) and domestic banking assistance. The need for collateral against loans will also stand reduced. Bank lending rates for housing loans coming down is a positive development and will help stir demand in the market and help clear up unsold inventory for the builders.”

Relia, further explains, “Another positive move is to provide developers tax relief on unsold stock as liability to pay capital gains will arise only in the year a project is completed. This will help the developers plan their liquidity better. The move of considering the carpet area of 30 and 60 sq meters instead of built up area of 30 and 60 sq meters will bring in more housing projects under the ambit of affordable housing and will encourage developers to introduce more such projects.”

All these factors contribute towards boosting India’s real estate market. So will you make the smart move and invest in property now or will you watch from the sidelines?

2016’s Realty reforms will pay dividends in 2017 and beyond

The year 2016 was a landmark year for the real estate industry. A series of reforms like The Real Estate Regulatory Bill, the Real Estate Regulatory Authority, the Prohibition of Benami Property Transaction Act, the Goods & Services Tax, and the demonetisation of Rs. 500 and Rs. 1,000 notes were announced. Despite initial concerns, these initiatives are set to transform realty in the long term.
 
To begin with, both the Real Estate (Regulation and Development) Bill, 2016 and establishment of the Real Estate Regulatory Authority (RERA) will prove to be game-changers for the industry. Once these norms are fully operational, it will promote professionalism and transparency and create a more level-playing field between buyers and builders. For instance, the Real Estate Bill mandates the same penalty of 18% for builders delaying possession or buyers postponing payment. Thanks to such even-handed measures, the high trust deficit that exists between both stakeholders would be reduced considerably.
 
The other game-changing reform is GST or Goods & Services Tax. On the anvil for more than a decade, GST would help subsume a series of Central taxes and State-level levies that have hobbled the industry for decades. Service tax, VAT and stamp duty have been some of the major levies leading to higher prices for customers. The new GST policies will make property more affordable for buyers across all categories.
 
Similarly, the Benami Transactions (Prohibition) Amendment Act, 2016, which gives it powers to confiscate benami properties. These are real estate assets under fictitious names or in another person’s name in order to avoid taxes and thereby conceal unaccounted wealth. This Act will help reinforce the fight against tax evasion.
 
Besides these longstanding measures, the surprise demonetisation of Rs. 500 and Rs. 1,000 notes led to 86% of the currency in circulation suddenly being declared non-legal tender. Although there are many dire predictions about it’s negative impact on real estate, it is necessary to take a pragmatic long-term perspective. Demonetisation will bring about transparency, which will be good for the industry because the prices will reflect actual market dynamics rather than being driven by other factors. Ultimately, every reform and initiative taken to boost transparency and promote online transactions will benefit the economy at large, including the real estate industry.
 
Though 2016 was lackluster for the sector, introduction of policy reforms has brought some solace with the fraternity, which will augment the status quo of real estate in the coming year. We are confident that as professionalism, global best practices, transparency and market-based pricing become the norm, the real estate market will turn more attractive for investors in India for 2017.
 

Cleaning Tips for Diwali

5 Tips for Diwali Cleaning

A stunning display of fireworks, lights at every window, and sweets to tempt your taste buds – that’s Diwali! Every year, we look forward to this season when the whole family gets together to celebrate the Festival of Lights. But before we enjoy, there’s work to be done, and it starts with cleaning. Because a clean home is important to welcome the Goddess of Wealth.

Here are 5 tips for Diwali cleaning:

  1. Remove the clutter.

Before you start cleaning, get rid of the unwanted stuff lying around the house, and stow away things that aren’t needed during this season – this includes your wardrobe! Designate one part of your home to store these things so that it’s easier to dispose once you are done cleaning.

  1. Create a chore calendar.

Cleaning your entire home cannot be done in one day. Pace yourself and dedicate a day to each room or task. For instance, one day could be dedicated to cleaning only the kitchen. Another day could be dedicated to sorting out the clutter.

  1. Clean one room at a time.

It is easier and a lot less tiring, if you clean one room at a time. This also ensures that you don’t miss any corners. Dust the furniture, and do a deep cleaning of cabinets, especially ones with knick-knacks and curios. Don’t forget windows and the fridge!

  1. Air out mattresses and carpets.

Give your mattresses, carpets and cushions a time out. Dust them and air them out in the sun for a few hours to kill germs. Once this is done, you can put fresh sheets and covers on them.

  1. Turn up the volume.

Make your chores a lot more fun by playing some of your favourite tunes. The music helps create a cheerful mood and makes cleaning less stressful.

  1. Hire a professional.

If cleaning isn’t your cup of tea, there are a plenty of professional services that do the work within a day! So while they clean your home, you can sit back and relax or go on a shopping spree.

RBI Rate Cut to Boost Real Estate during Festive Season.

The recent RBI rate cut of 25 basis points was a welcome move for real estate developers as this change will lead to a boost in sales during the festive season. On the other hand, experts caution that this increase is only a minor improvement in homebuyer sentiment.

Does this mean that home loans will now be cheaper? If banks pass on the benefits of the rate cut to buyers only then home loan EMIs will get cheaper. Speaking on this change, Vineet Relia, Managing Director, SARE Homes says, “[This] will infuse confidence in the system, thereby providing a boost to not only the real estate sector, but the overall economy ahead of the festive season as well.”

With this move, home loan EMIs are likely to get lighter on the pocket and may help boost homebuyers’ confidence this festive season.

This is the second rate cut this year, and falling inflation is the main reason for the move. What are your thoughts about the rate cut?

Happy Customer #325

Come home to Ashberry Homes

Home is where we breathe pure air,

Home is where we get to cherish little things with the family,

Home is where we live a content & fulfilled life,

Home is right here at Ashberry Homes.

– Mr. Manjeet Singh and Mrs. Primaljeet Kaur

 

Watch Mr. Manjeet Singh and Mrs. Primaljeet Kaur, the happy SARE community member talk about their search of a perfect home in Amritsar, and how Ashberry Homes lived upto every expectation, providing them with a beautiful home amidst green surroundings and a carefree environment for their kids to grow and make joyful childhood memories.

Watch the happy couple appreciate healthy and peaceful living right here at SARE Homes:

If you’re also looking for an open, serene home planned away from the noisy city life, encompassed with luxurious facilities and secure environment, visit us here: (http://www.saregroup.com/projects/amritsar/ashberry-homes/)

NH-24 will improve real estate scenario

The much awaited work on NH-24 has begun, and it will act as a catalyst for realty demand and boost the property prices of residential projects along its stretch. It will improve connectivity and ease commuting for people living in Delhi, Noida, Ghaziabad and other parts of NCR.

With better connectivity as well as shorter commuting time, the stretch along NH-24 will attract more real estate developers and investors. So far, poor connectivity and traffic jams and congestion have been some of the major concerns, leading to low buyer interest in residential projects coming up along NH24.

This project will improve quality of life and boost realty market in Ghaziabad and along NH24. It will also help decongest the expressway that connects Delhi and Meerut and provide a much-needed relief to office goers from Noida and Ghaziabad. The NH24 project is also expected to attract future investments in Ghaziabad and Noida and enhance the concept of community living.

The NH-24 Expressway may also emerge as a hub for affordable housing, benefitting the investors and end users alike.

‘Fundamentals strong but funding challenges remain’

Transparency in policies and clarity in regulations are needed to attract more funds into the Indian realty market and restore its credibility, says David Walker, MD of SARE Homes

 

South Asian Real Estate (better known as SARE Homes), a 100% FDI-funded group, believes that despite its cyclic ups and downs, the fundamentals of India’s housing market remain convincing. The company’s MD, David Walker, speaks to Housing News.

Q: To what extent, is the funding gap affecting the execution and timely delivery of projects in the Indian realty market?

A: The real estate and construction industry, are capital-intensive. So, availability of adequate funding, is critical for success. In the residential segment, the funding generally comes from customers, according to a construction-linked plan. When the market is weak, it leads to irregularity in the inflow of funds from customers, which, in turn, affects construction and delays the completion of projects. To tide over such periods, it is important to have adequate long-term funding for the project, to ensure smooth implementation.

Q: Don’t you think that the volatility of the Indian rupee and reports of price corrections, will deter investments into Indian real estate?

A: While the Indian currency has weakened over the last few years, it has been much more stable, since Raghuram Rajan took over as the RBI Governor, in September 2013. Prices of high-end and luxury homes have weakened over the last few years. However, the fall has been less, in the middle-income housing segment, where the margins are much lower. A weak rupee and the fall in the price of houses, presents an ideal investment opportunity for buyers, to take advantage of price appreciation over the next three to five years.

Q: What, according to you, is the ideal funding formula in Indian realty?

A: Generally, equity capital is used to finance land acquisition and the cost of construction is met, from milestone-linked payments from customers. It is also important to supplement this, with finance from banks, to ensure that construction progresses smoothly, even if there are any interruptions in the inflow of funds from customers.

Q: Are foreign funds still interested in the Indian real estate?

A: The fundamentals of the Indian real estate sector, make it attractive to foreign funds. However, this is offset by India’s low ‘ease of doing business’ ranking. The government has made it a priority to improve this ranking, which will make the Indian real estate market more attractive. The government’s target, of developing 100 smart cities, will also require huge funding, which will automatically involve foreign investors.

Q: Many international investors and private equity funds have burnt their fingers in the Indian real estate market. Do you think a better regulatory framework will change their outlook in the future?

A: A better regulatory framework is anyway required, to streamline processes and infuse a sense of security among investors. Also, better clarity in realty norms, will attract foreign funds.

Q: To what extent is investment in the sector being affected, by lack of proper regulation and taxation?

A: Developed countries have transparent policies and clarity in regulations, along with adequate infrastructure. A secure regulatory environment, will encourage capital inflows into the country and bring credibility to the sector.

Q: How can foreign funds and clean money help the end-users?

A: Adequate flow of funds helps in timely execution, thereby, leading to timely delivery of projects. Moreover, end-users prefer reputed developers, to avoid the risk of losing their money. The presence of foreign investors, also helps to bring in good practices, credibility and transparency, which are appreciated by customers.

SARE Homes: Our Happy Customer

It’s a pleasant feeling to know that people want to retire at SARE Homes. They look forward to spending their retirement days, sharing quality time with their family members, breathing the purity of nature and enjoying the little luxuries offered at SARE townships.

Watch Mr. & Mrs. Sukumar, a retired couple share their story of being home at SARE Crescent ParC, OMR, Chennai and talk about their experience of residing in a thoughtfully designed township with modern facilities, environment-friendly amenities, power backup and round-the-clock security.

Watch them cherish their life after retirement at SARE Homes.

If you also want to live your silver years away from the hustle-bustle of the city life and tap into the abundance of nature, visit us here: http://www.saregroup.com

5 House Plants That Promote Positive Energy

If you’re still confused on which indoor plants to look out for your home, we bring you the top 5 most recommended house plants. These house plants don’t just improve the air quality, promote positive energy, but even add charm to your home interiors.

Whether you live in a grand villa or a high-end luxury apartment, these house plants will promote good health and scale up the green quotient of your home.

  1. Money Plant: Also known as Devil’s Ivy and Golden Pothos, the money plant is the most common of all the houseplants. These plants are abundantly available and grow very quickly. NASA had identified a number of plants that cleanse the impurities out of the air and the money plant was found to be one of them.

plant-moneyplant

Image courtesy: giftsflorists2000.com

  1. Tulsi or Holy Basil: Another common houseplant, Tulsi has mythological and religious significance for the Hindus. The plant is considered to be an incarnation of the Goddess Tulsi, offering divine protection. Commonly called sacred or holy basil, it is the principal herb of Ayurveda, the ancient traditional holistic health system of India. Keeping this holy basil plant at home improves vaastu, wards off evil spirit, brings good luck and prevents insects and mosquitoes from entering the house.

tulasi_623711f

Image courtesy: thehindu.com

  1. Bamboo Plant: A symbol of good luck, the bamboo plant is widely used in both homes and offices as it is considered to be a great Feng Shui element. It stands for solidarity and oneness in the family. Bamboo brings together all the five elements of Feng Shui, which are wood, earth, water, fire and metal. Even, the specific number of bamboo stalks play an important role, say, 3 stalks for happiness, 5 for health and 8 stalks for wealth and abundance.

T100-2A

Image courtesy: flowersbysears.ca

  1. Areca Palm: The spirited palm is readily available all over India. It’s not just easy to maintain as it needs watering once or twice in three days, but is also very effective in cleansing indoor air toxins.

Areca Palm_2 (Copy)-560x437

Image courtesy: jogindernursery.com

  1. Plumeria Plant: This will bring in colour to your patio with red, yellow and white plumeria flowers. Easy to grow, this plant needs a warm, well-lit spot in a home or garden with minimal care and attention. The flowers are widely used to make beautiful garlands.

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Image courtesy: garden.org

Bring in these beautiful yet energizing house plants and liven up your space in an eco-friendly way.