Govt targets to complete 10,950 km national highways in FY16

NEW DELHI: Government has set a target of completing 10,950 km of National Highways for the current fiscal while 2,892 km highways have been constructed till October end, Parliament was informed on Monday.

"It is targeted to complete 10,950 km of National Highways during 2015-16," Minister of State for Road Transport and Highways Pon Radhakrishnan said in a written reply to Rajya Sabha.

The minister added that 2,892 km have been constructed till October 31, 2015.

"The targets for construction are fixed scheme wise. Allocation for the development of highways for the current year under the various schemes of the Ministry is Rs 81,114.59 crore," the minister said.

The government had earlier said it has set a target of awarding 10,000 km of highways in 2015-16.

The source of funds for construction of national highways include budgetary support from the government, part proceeds of central road fund, plough back of toll revenue, market borrowings and equity from the developers, it had said.

It had said 100 per cent foreign direct investment is permitted in highways sector.

SOURCE: ETRealty.com

Centre clears infra development plan for nine cities under AMRUT

RAIPUR: Centre has approved a working plan for Chhattisgarh where a total of nine cities would receive a major infrastructural facelift under the Atal Mission for Rejuvenation and Urban Transformation (AMRUT). 

The Urban Development Ministry sanctioned the plan during a high-level meeting of its officials in New Delhi yesterday, a government spokesperson said here today. 

Under the Rs 1,998 crore plan, the Centre will provide Rs 870 crore in next three years while the rest of funding will be borne by the state government and its civic bodies, the official said. 

In yesterday's meeting, Director of state's Urban Administration and Development Rohit Yadav made an elaborate presentation on the action plan to be implemented for Raipur, Durg, Bhilai, Rajnandgaon, Bilaspur, Korba, Raigarh, Ambikapur and Jagdalpur which are short-listed by Centre to be covered under the mission. 

The Centre has identified 482 cities and towns, each with a population of one lakh and above as AMRUT cities for ensuring basic infrastructure like water connections to all urban households, sewer connections and sewage management, storm water drains, urban transport in the country. 

The official said the cities would also be provided better public transport, parking facilities and new centres would be established for recreation and development of new parks and green zones would be taken up. 

SOURCE: THE ECONOMIC TIMES

Green signal to Rs 11,654 crore for infra upgrade

'Proposals approved include investments worth Rs 3,120 cr in 102 cities and towns'

The Centre has cleared proposals worth Rs 11,654 crore which are aimed towards improving basic infrastructure and facilities in 272 cities and towns.

The proposals approved include investments worth Rs 3,120 crore in 102 cities and towns that were cleared by an inter-ministerial panel headed by urban development secretary Madhusudhan Prasad on Thursday.

The government’s investment on cities and towns would be done as part of Atal mission for rejuvenation and urban development (Amrut) programme.

Amrut is one of the government’s flagship programmes to spruce up our cities and towns. Named after former prime minister and veteran BJP leader Atal Bihari Vajpayee, Amrut will go parallel to the 100-smart cities campaign launched by prime minister Narendra Modi last year.

Amrut was announced to improve water supply, sewerage network services, storm water drains and make available public spaces like parks, playgrounds, community centres and basic healthcare facilities.

An official news release said that the government has given green signal for Rs 438 crore investment in 18 cities identified in Haryana during the next fiscal year. Similarly, nine cities in Chhattisgarh would get Rs 573 crore and a sum of Rs 416 crore has been earmarked for 12 cities in Telangana and Rs 588 crore for nine cities in Kerala. The largest chunk of funds is being set aside for West Bengal – a sum of Rs 1,105 crore meant for 54 cities and towns across the state.

The Centre has also approved investments worth about Rs 2,386 crore towards water supply projects in 58 cities: Rs 495 crore for sewerage projects in 17 cities, Rs 106 crore for storm water drains in nine cities, Rs 61 crore for urban transport in nine cities and Rs 72 crore for development of parks and green spaces in 102 cities during this financial year.

Urban development secretary Madhusudhan Prasad told Financial Chronicle on Thursday, “States have complete freedom and flexibility in designing and execution of basic urban infrastructure facilities”.

For all the projects approved, the government will pitch in with 50 per cent of the funds while an equivalent amount will have to be mobilised by states.

The Centre and the state governments together will invest about Rs 11,654 crore to make available 135 litres of clean drinking water per person each day and provide sewerage linkages in all the 272 cities.

Government approves Rs 3,120 crore for infrastructure boost in 102 AMRUT cities

NEW DELHI: Government today approved an investment of Rs 3,120 cr for boosting urban infrastructure in in 102 cities across five states, including enhancing water supply, sewerage network, non-motorised transportation system and availability of public spaces. 

The Urban Development ministry approved the investment under the Atal Mission for Rejuvenation and Urban Transformation (AMRUT), a statement released here said. 

An inter-ministerial Apex Committee chaired by Urban Development Secretary Madhusudhan Prasad approved state-level Annual Action Plans for 2015-16 for five states, the statement. 

The annual action plan for Haryana, which has 18 AMRUT cities was approved with an investment of Rs 438 cr while Rs 573 cr was approved for Chattisgarh (9 AMRUT cities). 

Besides, Rs 416 cr for Telangana (12 cities), Rs 588 cr for Kerala (9 cities) and Rs 1,105 cr for West Bengal which has 54 Atal Mission cities, have also been approved the statement said. 

Total investment in water supply projects in 58 mission states will be Rs 2,386 cr, sewerage projects - Rs 495 cr in 17 cities, storm water drains - Rs 106 cr in 9 cities, Urban transport - Rs 61 cr in 9 cities and Rs 72 cr for development of parks and green spaces in all the 102 cities, the statement said. 

The Apex Committee approved investments in different basic urban infrastructure areas as proposed by respective state governments. Ministry of Urban Development will provide an assistance of Rs 540 cr. 

With today's approval, the ministry has so far cleared a total investment of Rs 11,654 cr in 272 Atal Mission cities for improving infrastructure for ensuring water and sewerage connections to all households in such cities, besides, enabling water supply as per the norm of 135 litres per capita per day for urban areas. 

At present only about 50 per cent of urban households are provided with water connections and water supply is about 75 lpcd. Availability of sewerage connections is very low. Atal Mission seeks to bridge this deficit. 

As per the State Annual Action Plan (SAAP) for 2015-16, presented by the Haryana government, water supply at present in the 18 mission cities is below the norms. It is only 43 litres per capita per day (lpcd) in Jind, 88 lpcd in Sonipet and a maximum of 130 lpcd in Gurgaon. 

In other mission cities of Rohtak, Ambala Cantonment, Thaneswar, Sirsa, Hisar, Palwal, Karnal, Yamuna Nagar, Kaithal, Bhiwani, Ambala City, Rewari, Panipat, Bahadurgarh and Jagadhari, present water supply is in the range of 102 lpcd to 127 lpcd, the statement added. 

GST TO PRESENT REALTY WITH REALITY

The Indian real estate sector is expected to grow and touch $200 billion by 2020. For over last one decade, housing sector itself has had a 5-6 % consistent contribution towards Indian GDP along with being one of the primary contributors towards employment generation. This sector can be broadly classified into four sub-sectors; housing, commercial, hospitality and retail. As the country moves towards urbanisation, this sector’s growth will be well complemented and the demand for housing and commercial divisions is bound to move north. The much awaited Goods and Service Tax (GST) is to be tabled in the upcoming winter session of the parliament commencing from 26^th November, 2015 and ending on 23^rd December, 2015; and if implemented it can prove to be a real game changer if formed and executed in a planned manner. Apart from GST, Land acquisition bill and real estate bill will be two key bills to look out for.

 

Looking at how much growth it can bring towards the realty sector of our country, Mr. Deepak Kapoor, President CREDAI-Western U.P. & Director, Gulshan Homz avers “Implementation of GST will basically work on three major elements for this sector; simplification of tax structure, reduction in construction costs and better transparency. Speaking about its contribution post acceptance, we are predicting a nationwide realty sector growth by almost 15-20 percent than projected in the course of next 5-7 years. There will be a quick reaction towards the sector by its customers as demand is bound to increase due to reducing costs and improving transparency in the sector that has been the hurdle making this sector suffer for long now”.

Simplification of Tax Structure

One of the major issues that GST can address is to present this sector with uniformity of tax practices. There have been countless instances where duplication and multiplication of taxes has somewhere dented the credibility of this sector. Presently, the realty sector has two key levies in the form of VAT and service tax, with overlay of tax base and continuous disagreements for the rate of tax, given the several options available for discharge of taxes across states. All these reasons have resulted in varied practices being followed by developers across different regions and within states. “With the dawn of concepts like hustling in service tax coupled with reductions and various mandatory charges collected by developers these days, highlights the importance of having a same tax base which can be only answered by GST. A single tax rate across the country will promote fair practices which will further encourage transparency and less evasion in the sector that supports in future growth of demand for real estate” states Mr. Ashok Gupta, CMD, Ajnara India Ltd. Adding to the view, Mr. Kushagr Ansal, Director, Ansal Housing says “Now days, there are developers and builders who are constructing projects in different states and thus have to abide by the state specific VAT laws, service tax and corresponding compliances. The presence of several indirect tax components faced by the developers at present are a major cause that bring tax inefficiency in this sector. Thus, the acceptance of GST will finally help in restricting these problems and create a simplified tax structure which can be followed by developers not worrying about which region or state they plan to construct and deliver at”.

Reducing the cost burden

Currently, the homebuyers of this sector are under the pressure of two forms of taxes; service tax and VAT on the purchase of residential units when booked prior to its completion. There are numerous components of non-creditable tax costs such as CST, entry tax, customs duty, excise duty, etc. which is duly paid by the developer on its procurement side which are basically ingredients for the cost pricing of the units. “All the non-creditable tax costs borne by the developer add upto almost 25 percent of the price of units. The proposed GST plan should replace these multiple taxes stinging the buyers through high cost price of units by a single tax thereby also ensuring smooth flow of funds through the chain. Thus, it is widely anticipated that inclusion of GST should either reduce the construction cost for the developer or if not reduce, then atleast help in maintaining the current price levels in the sector”, elucidates Mr. Ankit Aggarwal, CMD, Devika Group. Speaking on the other hand, Mr. Vikas Bhasin, MD of Saya Group does agree if the lower side of GST gets implemented then it will be a boom for the sector, but what if it’s the other way around. In that case he explains “There is no doubt that multiplication of taxes will be curbed through GST, but the only question will be what rate gets decided. The only dampener for this sector can be high GST rates, such as 27 percent GST that has been making the rounds as this will counterpoise any possible gains on incremental credits. Also, stamp duty is not proposed to be incorporated under GST and will thus continue to remain as it is at present. Therefore, decreased cost of construction will take place once a lower bracket of GST is applied as the developers will be liable to pay much less than today, thereby allowing cost of units to fall which will directly benefit the end users”.

What future it holds?

“The first and foremost decision has to be on a single GST structure as the situation may get further complex with states having power to notify differential SGST rate, as the present model indicates a separate tax rate schedule for both, centre and state levels, that is CGST and SGST respectively. In such cases, local developers will have a tough time in the middle and isolation is bound to happen for states opting higher tax bracket. Thus, realty markets for such regions will fumble if single GST structure is not made applicable”, illuminates Mr. Rupesh Gupta, Director, JM Housing. It has been correctly pointed out that a single GST will be the real need of hour in order to create smooth functioning of this sector. “A well-defined GST implemented for the country will bring about a relief for this sector and its customers. Commercial realty players will be hugely benefitted as all the lost Cenvat credit, which is in current regime a cost to commercial developer can be availed if GST is applied in a free flow manner that will also help in reducing costs. A much simplified single tax rate, reduced construction costs and better transparency in the sector will be much welcomed by the developers and its customers”, shares Mr. Mukesh Khurana, MD, Rudra Buildwell.

With increased limpidity and streamlined tax procedures, most small and mid-scale developers will also come into picture, as in order to control corruption; filtration process will make many developers visible. “In a nutshell, GST seems to be a benefactor for the realty sector, provided a single tax rate gets followed and increase in the margins moves into the hands of the developers. Now whether this benefit will be rightfully passed on to the customers will be a question remaining to be answered, as this sector is driven more by market dynamics than costing principles. Although, fair tax practices will pave way for greater transparency which will allow real estate transactions to form an integral part of the proposed GST design”, concludes Mr. Vikas Sahani, CMD, Property Guru.