NRIs warm up to Indian realty

Ireo Gurgaon Hills

Ireo Gurgaon Hills

It’s a great time to be a non-resident Indian if you want to invest in property in the country. One US dollar sent to India fetched Rs 44 in 2011 and Rs 52 in January 2012. In June 2013, it is getting you Rs 60, a gain of Rs 8.

Not surprisingly then, they all want to invest in the Indian property market since they earn in foreign currency and the weak rupee has increased their buying capacity manifold.

Most developers TOI spoke with claimed a 20-25% spurt in inquires from NRI’s over the past one month. According to real estate companies, brokers, analysts and consultants, this has triggered a substantial rise in the volume of property-related enquiries from NRIs.

“In the past one month, the number of NRIs showing interest in my projects have increased. It is too early to say how many inquires will translate into sales. In this sluggish period, it takes about 30 to 45 days to conclude a sale,” said Vimal Shah, president of Maharashtra Chamber of Housing Industry, and MD of Hubtown.

“NRI interest in our properties and this was evident in the footfalls that we have seen at our stalls in recent real estate exhibitions at Abu Dhabi and Dubai,” said R Karthik, Lodha Group’s chief marketing officer. “The share of sales to NRIs has grown from under around 7% in FY11 to over 15% in FY13, and the trend continues to be equally strong in FY14.”

Read more: The Times of India

Repatriation of real estate proceeds allowed only twice

There are no tax implications at the time of purchase of a property. However, the Finance Act 2013 has introduced a provision with effect from 1 June 2013 to withhold tax at source on behalf of the seller at 1% if the property is acquired from an Indian resident for a value exceeding Rs.50 lakh.

When you sell the property, income tax will be levied on the capital gains. The rate of tax would depend on whether the gains are long term or short term. Long-term capital gains (LTCG) are computed by reducing the indexed cost of acquisition and improvement from net sales proceeds. Short-term capital gains (STCG) are computed by reducing the cost of acquisition or improvement from net sales proceeds. Net sales proceeds represent sales proceeds as reduced by expenses in connection with the sale such as brokerage and legal fees.

The tax liability on STCG is as per the regular tax slab rates, whereas the tax liability on LTCG is 20%; each to be increased by applicable surcharge and cess.

The tax treatment would remain the same irrespective of whether the sales proceeds are credited to you NRO account, NRE account or directly repatriated.

Read more: Mint

Dissecting the role of real estate regulator in India

The Central Government Cabinet approved the Real Estate (Regulation & Development) Bill on 5 June 2013. The aim of the bill is to create a Real Estate Regulatory Authority and an Appellate Tribunal that will act as a watchdog for the housing sector, primarily towards protecting consumer interests while creating an alternative redress mechanism for any disputes that may arise. The bill demands greater disclosure from the developer community and a higher level of project accountability to remove the information asymmetries from the housing market.

Like the US, where local city laws hold primacy over county and national laws in matters relating to real estate, land and urban planning, including housing, is a state subject in India. In a quasi-federal state like India, states act as independent, autonomous agents in respect of subjects that are under their purview.

While the US does not have a single window regulator, this bill seeks to remove this obstacle by letting the states set up their respective Regulatory Authority. Another major positive step is the compulsory registration of real estate agents, which is likely to provide another level of protection to buyers while also preventing concerns regarding money laundering by the non-organised broker community. A major bill provision is the standardisation of area measurement, with carpet area to be the measure when this bill is enacted.

Read more: Money Control

Industry all praise for ‘Mr. Digitisation’ – I&B’s Uday Kumar Varma

Come 30 June and the very eventful term of ministry of Information & broadcasting (I&B) secretary Uday Kumar Varma is slated to come to an end.

Indiantelevision.com has already reported on the possible candidates who are being spoken about in political circles as his replacement. (See: Who will replace I&B secretary Uday Kumar Varma?)

Varma, on his part has earned a remarkable name for himself in the industry for his commendable accomplishments in the past couple of years since he took over the secretary’s post in October 2011 from Raghu Menon who retired in end September of that year.

After all, it was Varma who kick-started the process of digitisation and gave it the required momentum. It is Varma’s perseverance that has made DAS a success so far. This dynamic I&B secretary has set precedents for his successors like very few before. Unlike many of his predecessors, Varma also didn’t shy away from cracking down on content related issues on news and entertainment channels.

Read more: Indian Television

Infrastructure

Cabinet to discuss common transport authority for NCR today

The Cabinet is on Thursday expected to discuss a proposal from the urban development ministry to form a National Capital Region Transport Corporation Ltd (NCRTC), which will coordinate with state governments on completion and operation of major transport projects in the National Capital Region (NCR), which includes the Metro and the Rapid Rail Transit System. The Cabinet is also expected to discuss a long-awaited plan to corporatise the state-run Delhi Milk Scheme (DMS).

NCRTC is expected to be incorporated with an initial capital of Rs 100 crore and will be headed by an independent chairman. Its co-chairman will be secretary in the department of urban development.

The ministry of urban development and the railways are expected to hold 22.5 per cent each in the corporation, while the NCR Board is expected to hold five per cent. The remaining 50 per cent is expected to be held equally by the state governments of Uttar Pradesh, Delhi, Rajasthan and Haryana.

For DMS, officials said a fresh proposal has been prepared after extensive studies and analysis by independent agencies. The cabinet had some time back given in-principle approval to the department of agriculture to corporatise DMS and directed it to prepare broad contours of the corporatisation plan and get it approved.

Read more: Business Standard

Employment

Hiring to remain steady in Q2 FY’14: Survey

Hiring activities are likely to remain moderate in the next three months as employers are adopting a cautious approach, says a survey.

According to the survey by recruitment tendering platform MyHiringClub.com, the country’s net employment outlook an indicator of recruitment intentions stood at 38 per cent in July-September, which was almost same in the first quarter as well, reflecting steady and stable environment for job seekers.

“The employment outlook in India is stable and steady in second quarter of current financial year. Indian employers indicated they intend to scale back their hiring plans,” MyHiringClub.com CEO Rajesh Kumar said.

However, Kumar said that recruitment activity in sectors such as FMCG, retail, banking, financial services and insurance, infrastructure and IT and IT-enabled sector would be positive in coming quarter.

On a quarter-on-quarter basis, the outlook has improved by a moderate one percentage points, and on a year-on-year basis it has seen an improvement by 12 percentage points, the survey conducted among nearly 5,000 employers in India noted.

Read more: Financial Express

A sector-wise comparison shows that employers in all nine industry sectors expect headcount to grow during the second quarter of FY’13. The most optimistic projections are reported in the FMCG sector, with a strong net employment outlook

Retail

Relief may be in store for global retailers

Global multi brand retailers eyeing India including Walmart, Carrefour and Tesco have a reason to cheer as foreign investors may not be required to compulsorily invest in back-end infrastructure every time they bring fresh investments into the country.

The Department of Industrial Policy and Promotion (DIPP) has decided to move a Cabinet note proposing that mandatory 50 per cent investment by foreign players into back-end infrastructure be limited only to the initial investment, a DIPP official told Business Line.

The note, to be submitted to the Cabinet Secretariat this week, would also bring clarity on all remaining issues related to sourcing from group companies and small & medium enterprises after they move out of the classification.

“The DIPP feels that investing in back-end infrastructure every time foreign investors bring in fresh investments may make their projects unviable. We have, therefore, proposed that the compulsory investment in back-end be limited to only the initial investment as was initially envisaged,” the official said.

Read more: Business Line

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