Joint Venture Real Estate Projects Under WBHD Radar

West Bengal housing department will now review the formation of joint venture real estate promoting companies. Specifically the brokerage and development companies of giant commercial properties like- shopping malls, hotels in New Town and Rajarhat and some other recent developed Property in Kolkata north. Housing minister and Mayor of Kolkata Mr. Sovan Chatterjee said, ‘’The alleged violations were being looked into and action would be initiated against firms that had violated the JV norms to go in for commercial development in the satellite township during the Left Front regime.’’

According to the government statistics there are seven big-shot real estate companies which had tied up with the state government complied by the JV norms. Meanwhile the government has summoned a few of those real estate firms in charge of their contribution in transgression of JV agreement with the state government. Rest of the JV partner real estate firms is also being kept account. Speaking about the JV agreement the housing minister also stated,’’ These JV firms have developed malls and hotels on the land earmarked for housing projects for the masses.’’

Chatterjee also put light on the fact that development and brokerage companies which singed JV with the state government for promoting lower income group and middle income group housing shifted into endorsing commercial development thereafter without notifying the state government and violating the JV agreement. In the JV firms the private companies had 50% stake functioned with the land equity offered by the state government. There after LIG apartments are sold under the cost price and MIG flats just at cost price and HIG condos at a quality range.

After TMC government came into the ruling position in 2011 chief minister has declared that JV firms would be under investigation for alleged violations and stopped allotted lands to such real estate companies. As an aftershock these companies has stopped their duties. It’s not like that JV firms don’t do business, just that there has been no activity regarding the same purpose. As per the official updates 2 major real estate firms that had close association with their earlier ruling government, as the members of the board of directors of these firms were in the family relations of the erstwhile ruling party head honchos.

Digging the past the minister said, “We will probe into the irregularities and take action against the errant firms. We don’t want to name any particular persons involved in such irregularity.” On the contrary JV companies came with the fact that the land which had been allotted to them for commercial real estate development has been used for the same as per the official records. They also mentioned that there was a provision to embark on 10% related activities. Development of malls and hotels were also scheduled as per government agreement.

As per the director of one of such firms “There has been no change in land purpose. All the projects where malls and hotels have been developed were allotted for the very purpose. The housing department had raised the issue two months ago, following which we went with documents and clarified the matter.” 

Developers To Cast Off Inventory Properties To Boost New Property Sale

Due to the continuous market slow down in real estate sector developers have adopted a recent sale boosting strategy where they are consciously tapering off the on hand inventories. Recent statistics of realty sale in India proves that more new-built residential apartments are sold in India across the top seven realty market of the country in the first three quarters of 2016. Simultaneously there have been remarkable new developments taken place during this period. This is the record selling that has occurred within past 8 years.  Experts opine that this the point of time while developers are promoting the sale of new constructions where on the other hand they have be constantly trying to lessen the inventory level. Since Kolkata has been always reasonable to every class of home-buyer it’s seen that there has been an upsurge in the sale of flats near Kolkata airport in the second half of 2016.
According to JLL India Nearly 1.20 lakh housing units were sold across Mumbai Metropolitan Region, Delhi-National Capital Region, Pune, Bengaluru, Chennai and Kolkata between January and October whereas 1.06 lakh new constructions came in front.
Ramesh Nair, chief operating officer of JLL India said, ‘’ With demonetisation and several other regulatory reforms like Real Estate Regulatory Bill, the Benami Transactions Bill and the GST, the time may now be ripe for market which will see the genuine buyer coming back.’’ As per Nair demonetization will have short-term impact on national real estate market and the sale of newly launched apartments across the major cities of the country. Realty index has fallen 14.8% since November 8 after the declaration of ban on higher currency notes. Nevertheless real estate sector has been the witnessing sloth market since past few years, demonetization came as an add-on.

According to the Edelweiss Securities latest report, ‘’ “Companies, specifically in the mid-cap space, that have locked strong pre-sales over the past few years should benefit from earnings scale up despite a slow physical market. This will be driven by pending recognition of sales already executed along with prospects of improved macro-led rise in new sales.’’ The report also suggests that it has a ‘buy’ rating on companies like Oberoi Realty , Sobha, Sunteck Realty , Godrej Properties and Brigade Enterprises. The developers’ balance sheet will maintain to perk up due to domestic accruals and supervision. This will facilitate them to set out surplus funds towards value accretive land or project acquisition and help mature their net asset values.

In 2016 the first quarter saw some outstanding launch numbers than sales, followed by slowdown in consecutive quarters. During the third quarter, the number of apartments sold across India exceeds the new launch by 10,000 units.

“Overall, this trend seems here to stay for some more quarters. It would be interesting to see if 2016 sets a new benchmark in units launched versus units sold, surpassing the historic year of 2008 for good. This data should also serve as an eye opener for fence-sitters expecting a price drop, which may not hap pen. The negative sentiment gripping this sector from the last one year or so may well be misplaced. “Nair said.

Alternatives Before Central Government If GST Not Put Into Action Within Sept 2017

A national economy fillips when the taxes are property paid. India is one of those countries where there are individual types of taxes have been in the system for the decades. Research says that GST implementation can simplify the tax paying sector as this is one of a kind single paid proposition against the preceding categories.  But it seems like that the central government is unable to cater sufficient volume of money by the end of 2016 as the PM announced during his money-ban speech. Now if GST execution misses the deadline of Sept. 2017 then this could bring some worst case scenario according to the current finance minister of India.

At a Glance GST-
• Single tax to replace multiple levels
• Single tax duty on goods and service
• Automated process to lessen human interface
• Diminish compliance cost of the taxpayers
• Lesser logistic and inventory cost

GST should be implemented as early as possible to bloat Indian economical infrastructure. Agriculture and real estate are two prior sectors from which the nation earns its revenue. After currency ban these two sectors are affected in a big way. With the demonetization movement the parliamentary logjam has been an everyday issue causing by the oppositions insistent attacks. Meanwhile this GST issue has been overlooked and deferring throughout this inside-out. There will be no tax law if this time limit has been surpassed by the system. "If the GST doesn't come into force by September 16, there is one view that existing specified tax legislations would cease to have effect. Hence, the government is working towards ensuring that GST is implemented before 16th September. It needs to be seen that if the same is not achieved whether the Government has an alternative plan," said Dharmesh Panchal, India - West Indirect Tax leader, PwC.

Many big companies and conglomerates were helping vendors, suppliers and distributors to be GST prepared before the currency-ban. Some of these companies provided special chartered accountants and technical experts to these small and mid scale industries. Small companies that don’t have any direct involvement with these big industries they might have to handle the tax complexity and technology by themselves."Companies, mainly medium and small ones, are tackling the impact their businesses have faced due to demonetization. Even the biggest of the companies have put GST on their low priority list. Everyone is expecting that it (GST) would be postponed," said a senior tax expert.

Industry trackers and market experts has pointed out a couple of ways on the options that government has if they miss the deadline of GST implementation date of the H2 2017. They opine that the government may not bum any circuitous tax as the in progress taxes will go off with the GST execution.  As demonetization has impacted government’s planned timeline for GST implementation government can’t purposely cease existing tax rules. Reports suggest that many small and medium industries like- transport, logistics, chemical manufacturing firms, iron and steel industries won’t be able to comply GST by next year. In that case government should go for status quo ante or seek presidential extension for GST implementation. "The dilemma the government faces is that whether to go ahead with GST and deal with the further impact on the economic growth or postpone the GST and tackle the blushes," a tax law expert said.

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