Bangalore

Bangalore
Properties in Bangalore

Friday, January 24, 2014

Why Bangalore is Investor's Paradise in Real Estate.

Despite of India's poor inflation control in  the years 2012 and 2013 and overall slow down in the global business sectors still Bangalore is the ultimate investor's paradise in real estate in India. Central Statics offices data clearly indicate bad inflation control which is official publisher of Government of India.

I list following factors to explain why Bangalore is investors paradise in Real Estate in India

1 NRI investment has increased significantly in buying new properties for self use who would plan to return to  India. Reinvestment from NRI  from the property sold to save tax on capital gain. NRI  who have considerable assured regular local  income are investing in new properties.This section belongs  to Top level IT professionals who are outside India from the last 10-15 years. This may not hold good for other cities like Mumbai or Delhi.

2 Increasing price over a period of time has forced first time property buyers to go for it as early as possible. Fear factor of Price making salaried employees to purchase at the earliest.

3 There has been no decline in recruiting new employees either in IT or IT enabled services. Still Bangalore is the number one IT/ITES outsourcing destination in the global market place.

India is likely to witness the second highest demand for office space in 2014 among the top 30 cities in the Asia-Pacific region, according to a report by property consultancy Cushman & Wakefield, which says Bangalore is expected to be the biggest market in the country due to the expansion of IT, ITeS and multinational companies. This is clear indication of new employment opportunities.

5 Travelling time likely to cut down by 40% by 2015 to any part of Bangalore from CBD or Residential areas to work places/business places. This is due Metro and completion of all roads like inner ring road, outer ring road ,Feeders to metro junctions and to NICE road.

 6 Bangalore's cosmopolitan culture blended with its own traditional culture gives space to everybody to live in harmony.

7 Whether you are from Northern or Southern part of India , all dreaming to have property investment in Bangalore.

By Vidyadhar Naik-Property Consultant-Bangalore

Wednesday, January 22, 2014

Bangalore CDP Challenging one for BDA

Bangalore CDP Plan Implementation:

Let me explain in brief about CDP .


What is CDP ?

CDP means Comprehensive Development Plan.  This plan includes various factors of present and future growth of a city keeping in mind city’s natural environment and heritage. As per  Karnataka Town and Country planning Act 1961,section 25 CDP should be revised every 10 years. The first CDP plan was made in 1984. Let us not get into details of subsequent CDP plan made/revised for Bangalore city. Let me directly to Jump to CDP 2035.

CDP 2035: Bangalore Development authority is entrusted  to prepare CDP 2035.
As per BMR (Bangalore Metropolitan Region) following are the authorized civic agencies.


Let me also explain about BMRDA. Bangalore Metropolitan Region Development Authority (BMRDA) is an autonomous body created by the Government of Karnataka under the BMRDA Act 1985 for the purpose of planning, co-coordinating and supervising the proper and orderly development of the areas within the Bangalore Metropolitan Region (BMR) which comprises Bangalore urban district, Bangalore rural district and Ramanagara district.

As per the Structure Plan, apart from BMA (BDA jurisdiction), the rest of the Bangalore Metropolitan Region [BMR] is divided in to five Area Planning Zones (APZ’s) and six Interstitial are proposed along the corridors, which are (1) Bangalore-Bidadi (2) Bangalore-Nelamangala (3) Bangalore-Devanahalli (4) Bangalore- Whitefield, Hoskote (5) Bangalore-Anekal, Sarjapur-Hosur.
The Area Planning Zones (APZ’s) are areas  where urban development is permitted subject to certain regulations.
 The Interstitial Zones are the areas lying between APZ’s where urban activities are restricted giving more emphasis to environmental – issues like conservation of forest area, agriculture etc.

Till now the CDP plan was taking care mainly on  change of land use and zoning regulations. Of course this is very  much core area of CDP. We have seen many illegal residential layout built on Agricultural land and also industries. CDP will clearly define which are residential /industrial/green belt areas.

Now  CDP should clearly define and correlate its plan to various government departments like Electricity, Water supply, Telecommunication, Sewage and Drainage. Infrastructure. Industries  and also Forest etc.
Growing population, increasing vehicles, pollution and existing high density area of Central Business district are to be addressed from all angles. CDP does not mean plan for growing areas but also for unstructured developed areas of the city.

But City needs one short term CDP  /Emergency/Contingency plan to address immediate problems of public in 2014 itself. One should wait and see how ancillary use in residential areas will be handled by government. What are the hurdles BDA will have in Bangalore CDP process and implementation from legal point of view? What will be the role of MPC? (Metro Politian committee). How active participation of various citizen groups will help and guide through its think tank?
I conclude saying how Bangalore CDP will address all issues in 8005 square kilometer area, only coming days will throw the picture on this.

By: Vidyadhar Naik-Property Consultant.

Saturday, January 18, 2014

Mid Segment Housing Sale to increase in 2014-Bangalore

Mid Segment Housing Sale to increase in 2014-Bangalore


Bangalore is all set to see  increased  sale in housing from mid income group buyers in 2014. I list following factors for this expected good growth.
1Economic Environment:
CPI and Core Inflation value predicted to be under control. GDP likely to touch above 6 at the end of fourth quarter 2014-15 as per world Bank prediction. Over all it is going to be blend of transition and error correction year 2014-15 for India.
2 Housing Loan:
Housing Financial Institutions are getting equipped themselves with funds to support mid income group home buyers for housing loan. Recent arrangement of LIC HFL from overseas markets through external commercial borrowings (ECB) for $ 300 got approval from RBI is clear indication for this housing segment.
3 Infrastructure-Bangalore:
 20-minute ride between the Kempegowda International Airport and the Hebbal flyover is on the verge of becoming a reality. First section of the six-lane measuring 3.7 kms elevated expressway along the Bellary Road and leading to the airport from Hebbal flyover to Kogilu Cross, after Yelahanka was made available to public on January 1st 2014. The two other sections of the expressway will be ready and thrown open to the public in 30 days. There are at least 20 major roads which are to be completed by April- May 2014. This will help buyers to look for houses in around theses area which are connected to major real estate corridors of the city. Road infrastructure development on the peripheral of NICE road has opened up new Real Estate corridor.
Metro Phase I to be fully ready by March 2015. Commercial operations between Peenya and Malleswaram would start at any day from now. Phase I span a length of 42.3 km and consist of 2 lines. M. G. Road to Byapanahalli in operation. Peenya to Nagasandra, Sampige Road to National College, National College to RV Road expected to be completed by DEC 2014.
The State government has decided to go ahead with the construction of a state-of-the-art peripheral ring road around Bangalore at a cost of Rs. 5,800 crore It would be a six-lane or an eight-lane road and the total length would be about 65 km.
 State government trying its best and serious efforts to make infrastructure development of the city to fulfill its promises to Bangalore citizens and as well as keeping in mind coming MP Elections. These rapid developments would certainly reduce commuting time for Bangaloreans by 40% by the end of this year. Travelling time from dwelling places to work place or business place which is a major headache for Bangaloreans, likely to be solved in the next 12 months.
4 Civic agencies
 BDA/BMRDA/BIAAPA/BMICAPA have put their norms and regulations in place. These agencies appear to be clearer about their responsibilities and their governing laws. This would create more confidence in buyers especially in mid income group who are looking for transparent buying process systems.CDP Plan of 2014 give clear picture about zoning areas and regulations. Metro Politian Committee expected to solve problems of Real estate community by making technical process and implementation corrections to obey  and implement High Court order in 3-4 months.
5  Real Estate Community:
Above and all entire Real estate community which includes Government Policy makers, Different Associations, Builders. Developers, Corporate real Estate houses, Property advisors and Consultants are evolving towards organized Real Estate sector.
I would like to conclude saying that Governments, Local Civic agencies, Housing financial institutions and organized real estate sector will provide a platform of fair and transparent deal for all buyers especially mid income group buyers in 2014. Let us also keep watch on inventory of unsold properties of the  year 2013-2014. Whether the sale comes from Information Technology professionals or investors for gain, but 2014 will be better one for Bangalore Real Estate Market.
Vidyadhar Naik-Property Consultant-Bangalore
.


Thursday, January 16, 2014

First thing NRI should know about their Bank accounts

 Types of Bank Accounts and Comparison Table

Features
NRO
NRO Fixed
NRE
NRE Fixed
FCNR(B)
Resident Foreign Currency(RFC)
Account Type
Savings & Current
Fixed
Savings and Current
Fixed
Fixed
Fixed
Currency
 Indian Rupee
 Indian Rupee
Indian Rupee
Indian Rupee
US Dollars, British 
Pounds, Euros, Japanese Yen, Canadian 
Dollars, Australian 
Dollars, Danish Krone, Swiss Francs, Swedish Krona
US Dollars, British
Pounds, Euros, Japanese
Yen
Minimum Monthly balance
Both Savings & Current INR 75000
First deposit minimum INR 75000
Both Savings & Current INR 75000
First deposit minimum INR 75000
UDS 1000
Euro 750
GBP 500
USD 5000
Euro 5000
GBP 3500
Joint Account
With resident Indians and other NRIs
With resident Indians and other NRIs
With resident Indians and other NRIs
With resident Indians and other NRIs
With resident Indians and other NRIs
Only with other returning 
Non-Resident Indians
Tax
Taxes applicable in India
Taxes applicable in India
Tax free in India
Tax free in India
Tax free in India
Taxes applicable in India
Repatriation
Restricted repatriation
(Post Deduction of
applicable tax)
Restricted repatriation
(Post Deduction of
applicable tax
Free Repatriation
Free Repatriation
Free Repatriation
Free Repatriation
Deposit of Rupee funds generated in India
Permitted
Permitted
Not Permitted
Not Permitted
Not Permitted
Not Permitted
Suitable For
You need an account for
making INR payments / investments in India from your India earnings

You need an account for depositing your income in India from sources such as rent, dividends, etc.

You wish to open the
account jointly with a person resident in India
You want to earn higher returns compared to a
savings/current account on your Rupee income earned in India
You need an account for making INR payments /investments in India from your overseas earnings

You want to maintain your savings in INR but keep them liquid

You wish to open an INR account jointly with another NRI

You want your Rupee
savings to be freely
repatriable.
You want to earn higher returns on your overseas savings as compared to a savings/current
account in India

You want tax free*
returns in India on your INR fixed deposits
You want tax free*
returns in India on your foreign currency fixed deposits

You wish to keep your
overseas savings in
India but do not want to convert them into INR
You wish to maintain
your overseas savings
or NRE/FCNR (B)
account balances in
foreign currency even
after you return to India and convert them into INR at a more favourable exchange rate at a later date.
Note: As per current local regulations the permissible remittance from the balances in NRO accounts is up to USD 1 million, per financial year. The remittances (net of applicable taxes) will be allowed to be made on production of an undertaking by the remitter and a Certificate from a Chartered Accountant in the prescribed format.

These are general information and author is not responsible for any changes take place in RBI rules and in turn banking channels in India.

Saturday, January 11, 2014

Capital Gain in Property Sale

People buying property for investment purpose and selling it after some time has become common among Indians in the last 10 years. I am writing this article to know the tax implications involved in property sale from the capital gain point of view.
What is capital gain?
capital gain is a profit that results from a selling of stockbond or real estate etc. The gain is the difference between a selling price and purchase price. Capital gains may refer to "investment income" that arises in relation to real assets, such as property; financial assets, such as shares/stocks or bonds; and intangible assets.

Types of capital gain:
Short Term Capital Gain: If property is held for less than three years before selling it, then it is considered a short-term capital gain (STCG) and one has to pay tax according to your normal income-tax slabs

Long Term Capital Gain:
 If property is sold after three years, then it's considered long-term capital gain (LTCG) and one has to pay 20% of the profit as tax.

What is Cost Inflation Index?

It is a measure of inflation that finds application in tax law, when computing long-term capital gains on sale of assets. The cost inflation index is issued by Central Direct Board of Taxes (CDBT). Asset purchased in 2014 normally would be higher than the year 2009. This is due to declining price of rupee year after year.

CII Chart

Year
Index

Year
Index
1981-1982
100

1997-1998
331
1982-1983
109

1998-1999
351
1983-1984
116

1999-2000
389
1984-1985
125

2000-2001
406
1985-1986
133

2001-2002
426
1986-1987
140

2002-2003
447
1987-1988
150

2003-2004
463
1988-1989
161

2004-2005
480
1989-1990
172

2005-2006
497
1990-1991
182

2006-2007
519
1991-1992
199

2007-2008
551
1992-1993
223

2008-2009
582
1993-1994
244

2019-2010
632
1994-1995
259

2010-2011
711
1995-1996
281

2011-2012
785
1996-1997
305

2012-2013
852



2013-2014
939

What is Property Acquisition Cost?
Property Acquisition Cost= Basic sale value + Improvement Cost + Stamp Duty + Registration Cost + Legal fees + Advertisement Cost + Brokerage + Others (Others: Any other cost involved in the process of acquisition    of a specific property)
What is Indexed Cost?
Indexed Cost     =         Actual Cost *      Cost Inflation Index of the Year of Sale/Cost Inflation Index of the Year of Purchase

Typical Example of Long Term Capital Gain Tax Calculation

A purchased property in July 2008 for a basic sale value of INR 3000000. He also paid in the process of acquiring the said property, Brokerage: INR 30000: Legal Fees: INR 15000: Registration and Stamp Duty: INR 200000. A spent INR 100000 for improvement of the purchased property in September 2009.A sold the property in January 2014 to B for INR 5500000. A paid brokerage INR 55000.

Acquisition Cost= 3000000+30000+15000+200000=3245000

CII value 2008-2009 = 582
CII value 2009=2010 =632
CII value 2013-2014 = 939

Indexed Cost  of acquisition         =         Actual Cost *      Cost Inflation Index of the Year of Sale/Cost Inflation Index of the Year of Purchase
                                                                =         3245000*939/582=5235489.4
Indexed Cost of Improvement =         Improvement Cost* CII of 2013-2014/CII of 2009-2010
                                                               =          100000-*939/632=148575.94

Calculation of long term capital gain

(Sale value-brokerage)-(Indexed Cost of acquisition + Indexed cost of Improvement)
(5500000-55000)-(5235489.4+148575.94)=609346.6

20% of 609346.6=12186.93 is the amount to be paid by A as long term capital gain tax.

Long Term Capital Gain Exemptions

a) The capital gains from the sale of a house if the taxpayer invests the gains in a residential property within two years from the date of sale or constructs another house within three years from the date of sale. One should not own more than one house, besides the house one is investing in.
b) Investment in Bonds issued by NHAI and REC with a maximum limit of INR 5000000 and a lock-in period of three years.

Capital Gain Account Scheme (CGAS)

If a property has not been identified and purchased before the return has been filed or before the due date for filing the tax return, whichever comes earlier, the money has to be deposited in a special account known as the Capital Gain Account Scheme (CGAS). Any withdrawal from CGAS should only be for payments to be made in relation to the purchase of the new property.

Types of Capital gain Account Scheme

Savings deposit account: Suitable for people who are planning to construct a house over a period of time with different stages of withdrawals. The amount withdrawn should be used for housing purpose only within 60 days from the withdrawal date.
Term deposit account: Suitable for for purchase of house with one time payment. Amy withdrawal from this account in a pre maturity period attracts penalty.