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Amit Puri
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Real estate (office) urged to contribute to new international standard

The International Property Measurement Standards Coalition (IPMSC) has launched a public consultation on the International Property Measurement Standards(IPMS) for office buildings. 

The three month consultation, closing on April 4, 2014, urged real estate (office) sector practitioners and stakeholders to contribute to the new international standard. 

The new standard, produced by the IPMSC Standards Setting Committee, has been described as the first of its kind and will provide a common language for measuring offices across international markets, benefiting real estate practitioners including investors, lenders, agents, valuers and occupiers.

"The international standard will ensure that property assets are measured in a consistent way, creating a more transparent marketplace, greater public trust, consistency in the reporting of property size, stronger investor confidence, and increased market stability," said IPMSC on Monday. 

At present, the way property assets - such as homes, office buildings or shopping centres - are measured varies dramatically from one market to the next. With so many different methods of measurement in use, it makes it difficult for global investors, occupiers and tenants to accurately compare space. Research by global property firm Jones Lang LaSalle suggests that, depending on the method used, a property's floor area measurement can deviate by as much as 24%. 
IPMS will be adopted by all 28 coalition organisations with firms around the world already lined up to implement IPMS from June 2014. The Dubai government is the first government to commit to its adoption. 

``The new standard is considered one of the most significant developments in the real estate profession in recent history and will go beyond office measurement standardisation to include other property types, such as residential, in the coming months,'' it added.

Source: The Times of India

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An NRI's guide to investing in property in India

With the rupee falling, real estate has been one lucrative investment option for non-residential Indians (NRIs). Also, whether the market is hot or not, many NRIs like to have a place back here in India. The RBI's regulations on it are fairly easy as well and you do not have to take any prior permission from the authorities. The rules for any such property transaction fall under the Foreign Exchange Management Act (FEMA).

An NRI or Person of Indian Origin (PIO) can own both residential as well as commercial properties in India and there is no restriction on the number of properties you can buy. However, you cannot purchase any agricultural land, farm house and plantation property. You can have ownership of such property only if they've been gifted or inherited.

Also, the monetary transaction must be in Indian rupees (INR) and through normal banking channels using an NRI account.

Funding the Purchase:

Lenders will be more than happy to fund your purchase provided you are eligible and the property papers are clean. It will be wise to get the papers verified by a lawyer before going ahead. Make sure to check the title papers of the property, especially if it is inherited or jointly held, and take a bank release in case it was at any point of time under mortgage. Also, take a no dues certificate from the seller at the time of purchase to ensure there is no water, electricity or any other pending bills with the authorities. For new constructions, land title should be clear and the builder should have taken all approvals and permits from the civic authorities in terms of construction. Also, education qualification and profession play a role in deciding your loan eligibility. Like, only graduate NRIs can avail home loans in India.

According to RBI norms, a maximum of 80% of the value of property can be funded by a financial institution. Rest has to come from the NRI's personal resources. Indian financial institutions give rupee loans and so the same needs to be repaid in rupees only. "Another option NRIs can use is to get funding overseas where interest rates are lower and is a good idea especially if you are still overseas and have income accruing there," says Anil Rego, CEO and Founder, Right Horizons, a Bangalore-based financial planning firm.

Since all transactions must happen through the banking channel, repayment has to be done by inward remittances. You can directly get the money remitted from NRO/NRE account in India or issue post-dated cheques or Electronic Clearance Service (ECS) from your NRE, NRO or Foreign Currency Non Resident (FCNR) account.

In case you let out the property you can use the rent to repay the loan as well. Cheques issued from a relative's local account can also be used to make the loan payments.

Passing the PoA:

If you are buying an under-construction property, your developer may ask for a power of attorney (PoA) favouring them. This is not unusual and would make documentation work slightly easier and quicker.

A PoA can be given to execute any contracts, deeds as well as mortgage, lease or even sell. So make sure the kind of authority you are giving to the person through the PoA. Just get it worded properly by a professional lawyer you trust.

Also, if and when you want to dispose the property, it is a good idea to have a PoA to be a resident India who may be able to act on your behalf to complete formalities such as registration, possession, execution of agreement of sale, etc.

  Regulations on Sale of Property by NRIs:

Under the FEMA rules, if you are an NRI, you can sell any residential or commercial property you have bought or inherited to anyone you want. If you have any inherited agricultural property, plantation or farm house, you have to search for a resident Indian to buy it. However, you are allowed to gift them to another NRI or the person of Indian origin. There are some specific RBI guidelines on the repatriation of sale proceeds which need to be adhered to.

You need to decide on whether you want money as repatriateble or not. "If you want to repatriate, it needs to come in foreign currency from an overseas account, NRE or FCNR account. One can repatriate up to the amount invested in the property," says Rego.

"The other condition is that repatriation cannot exceed the foreign exchange amount paid for purchase of property through banking channels. Refund of application money, bayana, advance on cancellation has no limitations," says Sudhir Kaushik, co-founder and CFO of Taxspanner.com

Also, it must be noted that an NRI cannot repatriate proceeds of more than two properties.

Tax implications

A property is also a good tax saving tool for both residents and non-residents. The benefits for a non-residential Indian (NRI) are very similar to the tax benefits of a resident Indian. An NRI is entitled to all tax benefits related to purchase of property that a resident Indian is. So, you can claim a Rs 1 lakh deduction under 80C.

There are added advantages of buying a house on loan if you are an NRI. Unlike a resident Indian, who can claim a deduction only up to Rs 1.5 lakh for home loan interest, there is no upper limit on this for an NRI. Like residents, other deductions such as stamp duty, registration charges, municipal taxes paid during the year and a flat 30% of the rent (excluding municipal taxes) deduction for maintenance is available to NRIs as well.

NRIs also have to pay a withholding TDS at the rate of 1% if you buy a property worth more than Rs 50 lakh. You'll be exempted from wealth tax if the property is vacant and declared as 'self-occupied'. Else you'll have to rent it out for at least 300 days a year to avoid paying wealth tax. This rule is for the first property only. For subsequent vacant properties, you'll have to pay tax at the rate of 1% of the value (net of outstanding loans) in excess of Rs 30 lakh.

"In case any person is interested in more than one house property, then purchase in the name of parents, a major child or form a HUF to avoid wealth tax," says Sudhir Kaushik of Taxspanner.com

  Vacant properties are considered 'self-occupied' and hence you do not have to pay any tax on them. However, if there is more than one vacant property, you can show only one of them as self-occupied and the rest will be deemed as let-out and added to your taxable income.

Similarly, if you actually rent out the property, the income from it taxable in India and you'll have to file your returns here. You may have to show this income in your country of residence and pay taxes there as well unless you are a resident of a country with which India has a Double Tax Avoidance Agreement (DTAA).

When you decide to sell the property, you'll have to pay capital gains tax as prescribed under the Income Tax Act. You can get long-term capital gains benefits if you hold a property over 36 months.

"If a property is held for 3 years, it is treated as long-term capital gains and taxed at 20%. Short term capital gains (any term shorter than 3 years) are added to income and taxed at the normal rate of tax. There would be a 20% TDS for NRIs on sale of property," Anil Rego of Right Horizons.

Also, you can claim exemption by investing in another property. Capital gains may also be taxable in your country of residence if it doesn't have a DTAA with India.

Source: The Economic Times

Indian economy to grow at 4.9 percent in 2013-14

The Indian economy is expected to grow by 4.9 percent in the financial year ending March 31, 2014 as compared to 4.5 percent expansion recorded in the previous year, government data showed Friday.

The country's Gross Domestic Product (GDP) at factor cost at constant (2004-05) prices in 2013-14 is likely to be Rs.57.5 lakh crore as compared to Rs.54.8 lakh crore in the previous year, registering year-on-year increase of 4.9 percent, according to data released by the Central Statistics Office (CSO).

The government recently lowered the economic growth number for 2012-13 to 4.5 percent from the earlier projection of 5 percent.

For the current fiscal, the sectors which are expected to register more than five percent growth are financing, insurance, real estate and business services; community, social and personal services; and electricity, gas and water supply.

The agriculture sector is expected to grow at 4.6 percent, manufacturing is projected to contract by 0.2 percent and mining output will drop by 1.9 percent year-on-year in 2013-14.

 Source: Business Standard

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Real estate (office) urged to contribute to new international standard

The International Property Measurement Standards Coalition (IPMSC) has launched a public consultation on the International Property Measurement Standards(IPMS) for office buildings. 

The three month consultation, closing on April 4, 2014, urged real estate (office) sector practitioners and stakeholders to contribute to the new international standard. 

The new standard, produced by the IPMSC Standards Setting Committee, has been described as the first of its kind and will provide a common language for measuring offices across international markets, benefiting real estate practitioners including investors, lenders, agents, valuers and occupiers.

"The international standard will ensure that property assets are measured in a consistent way, creating a more transparent marketplace, greater public trust, consistency in the reporting of property size, stronger investor confidence, and increased market stability," said IPMSC on Monday. 

At present, the way property assets - such as homes, office buildings or shopping centres - are measured varies dramatically from one market to the next. With so many different methods of measurement in use, it makes it difficult for global investors, occupiers and tenants to accurately compare space. Research by global property firm Jones Lang LaSalle suggests that, depending on the method used, a property's floor area measurement can deviate by as much as 24%. 
IPMS will be adopted by all 28 coalition organisations with firms around the world already lined up to implement IPMS from June 2014. The Dubai government is the first government to commit to its adoption. 

``The new standard is considered one of the most significant developments in the real estate profession in recent history and will go beyond office measurement standardisation to include other property types, such as residential, in the coming months,'' it added.

Source: The Times of India

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No bar on purchase of private land: Ramesh(Rural Development Minister) to industry

With the new Land Acquisition Act coming into force, government on Wednesday sought to allay apprehension of the industry, saying there is no bar whatsoever on purchase of private land.

"You want land? Go buy the land," Rural Development Minister Jairam Ramesh said when asked about his message to private industry on a day the new law came into force.

Investors had expressed apprehension that the new law, which replaced over a century old act, would make land acquisition more expensive for industrial and infrastructure development.

Ramesh said that the new act applies only to the land acquired by central and state authorities for any public purpose.

He, however, said that there is no bar whatsoever, on purchase of private land.

According to him, industry must look beyond land acquisition by government and explore land purchase opportunities.

"From today onwards, no land can be acquired under 1894 Act. From today onwards, all land will be acquired under the new Act," the minister said asserting that the new law was enacted to address "widespread and historical injustices" done to tribals and farmers who were subjected to forceful displacement while acquiring land using the old Act and land acquisition more transparent.

Ramesh said from today, the government will not acquire any land for private investors for their private projects.

"A private builder building condominium cannot expect government to acquire the land. Why should government acquire land to a private builder to build country homes for the well-offs," he said.

The historic Act to provide just and fair compensation to farmers was passed by both Houses of Parliament last year with overwhelming majority during its Monsoon Session. It had received Presidential assent on September 27. 

Ramesh said if a private project is fulfilling a public purpose, 80 percent consent is required.

"If it is a PPP project, 70 percent consent is required," he said, adding that no land acquisition can take place without provisions for Rehabilitation and Resettlement.

He said the Rural Development Ministry is now taking steps to ensure preparation of rules that are intended to bring clarity to certain key processes defined in the parent law.

He said the rules, as finalised by the Law Ministry, have now been notified officially in the Gazette for the formal consultation with the public.

"While we have carried out a process of consultation prior to the preparation of these draft rules, the law requires a formal declaration to seek comments from the public for 45 days," Ramesh said.

He said these rules will lay down processes for the conduct of Social Impact Assessment and will also provide details for obtaining the consent of affected families.

The minister, however, said that the new law can function and operate even without the rules coming into force.

"Given that the law was drafted as a complete and self-containing statute, the absence of rules is not a detriment to the law being invoked," he said.

He said that the retrospective clause in Act will apply in three circumstances. According to him the clause will apply where Land Acquisition proceedings under the old Act has started and the award has not been announced.

The clause will also apply in a circumstance where the award has been announced for the acquired land five years ago but its physical possession has not taken place.

It will also apply in case land acquisition proceedings have started five years ago under the old Act but a majority of the farmers have not been paid the compensation.

In such circumstance the compensation will have to be paid under the new Act.

Source: Zee News

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