Expect new property tax bill in next 15 days Citizens Will Get 21 Days To Raise Objections

Mumbai: Your property tax bills, calculated on the basis of the newly implemented capital value-based system, are expected to reach your doorsteps in the next 15 days.      The Brihanmumbai Municipal Corporation (BMC) has already started sending out the bills along with a special notice, asking citizens to check the tax calculation for their property and report problems, if any, within 21 days of receiving the bill. "We have set up a helpdesk in every ward office," said additional municipal commissioner Rajiv Jalota.      Atotal of 2.7 lakh properties in the city will receive the bill. The last date for payment is March 31. The BMC had roped in a firm to develop a software that will allow citizens to compute their property tax online. While work on the software is already underway, the online system is expected to be up and running in a few months.      A property's capital value is calculated by taking into consideration elements like the building's age, the area in which the property is located, the nature of construction and ready reckoner rates. A property's capital value multiplied by the rate of tax will give you the property tax.      The bills, however, spell bad news for owners of buildings, residential as well as commercial, which have come up after 2010 as they will have to pay property tax arrears from April 2010 in this financial year. For older buildings which have been receiving provisional bills, the final bill will be adjusted to reflect the outstanding or refund amount calculated according to the new system.  THE NEW SYSTEM  Earlier, property tax was computed on the basis of the rent paid by tenants. Rents for old buildings in south Mumbai are frozen at amounts that existed in the 1940s. As the BMC cannot increase this amount, the property tax paid by south Mumbai residents was far less than that paid by those living in the suburbs. The new capital-value based system has been implemented to bring parity in the taxation Under the capital value-based system, the tax payable by the owner of a property is based on the property's current market value. The property tax will now be calculated based on 5 factors —the price of the property, the area it's located in, the age of the building, whether it is a commercial or residential property and the type of construction (concrete, wooden structure etc)

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Mumbai: Developers might legally sell parking spaces

The proposed Maharashtra Housing (Regulation and Development) Bill includes some clauses regarding legalizing the sale of parking spaces. This entails that the total price of the flat shall include price of the limited common areas and facilities while parking space should be shown separately, to be paid by the flat's owner. Such measures will allow builders to legally sell parking spots and also curtail the practice of some people who after purchase of a property in a housing complex, later sell higher value.

 

As per a Supreme Court directive passed in 2010, parking space(s) cannot be sold separately as such space(s) forms part of common areas and facility and are not considered to be individual units. However, the  practice by which builders find a way around this ruling is by including its cost within the sales agreement and then asserting that the parking is free of cost.

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BMC razes over 200 shanties in Bandra

Mumbai: The civic body demolished more than 200 hutments in Bandra Reclamation on Friday. 
    The illegal hutments proliferated within a fortnight, claim activists. 
    Congress legislator Baba Siddiqui claimed he had raised the issue and asked the ward officials to initiate action on December 15. 
    However, BJP MLC Ashish Shelar said he raised the issue in the Council on Tuesday and wrote to chief minister Prithviraj Chavan. "Home minister RR Patil said he will use the police to evict and demolish illegal shanties," said Shelar. 
    "The CM has given an order to take immediate action and submit a report. The CM had directed this order to the municipal commissioner and Mhada vicepresident," he added. 
    "It's good that the slums were demolished or else politicians would make arrangements by issuing fake documents to have a sizeable vote bank. Home guards should be deployed at the site to ensure that the squatters don't return," said activist Aftab Siddique.

CRACKDOWN: Politicians are vying to claim credit for the civic action

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Bandra to get two tunnels, another flyover

Mumbai: Expect to save 15-20 minutes if you are a regular traveler via the Kalanagar junction, especially to and from the city's business park, the Bandra-Kurla Complex (BKC). 
    To ensure seamless connectivity to the business hub from the Bandra-Worli Sea Link (BWSL) as well as the airport, and to decongest the busy Kalanagar junction on the Western Express highway, the Mumbai Metropolitan Region Development Authority (MMRDA) will float a tender by next month to build two tunnels and a flyover connecting BKC. 
    MMRDA consultants have proposed two tunnels, one from BWSL to BKC and another from BKC to Nandadeep Garden, near the Kherwadi junction, for better connectivity to the airport. A flyover from the Bandra rail overbridge near the BWSL, with two arms, one landing at BKC near Kalanagar and the other heading to Dharavi, has been planned. Expected to cost Rs400 crore, the project will take two years to execute.

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Thane dist to be split into 2 at cost of 500cr

Nagpur/Thane: Thane is set to lose its tag of being the nation's biggest district with diverse demographics and unique landscapes. The government has unveiled plans for a two-way split of the district. A new administrative district, Palghar, will be created. The challenge for the government will be to divide Thane district's 13 regions.      "There is no ambiguity about the bifurcation process. By April-May, the government will make a formal announcement to split the district. The existing distri ct will have jurisdiction over urban areas like Thane city, Navi Mumbai, Mira-Bhayander, Kalyan-Dombivli and Bhiwandi, and also the mofussil pockets of Shahapur and Murbad," a functionary of the ruling Democratic Front told TOI.      The proposed Palghar district would supervise development work in the tribal talukas of Jawahar, Mokhada, Vikramgad, Wada, Talasari and Dahanu.      The move is a well-thought strategy to create new administrative headquarters with a smaller area of operation to facilitate concentration of development and welfare funds. Thane's population diversity leads to clashing fund claims  Mumbai: For the bifurcation of Thane, the government is scheduled to make a budgetary provision of Rs 500 crore in the next fiscal for infrastructure development in the new district of Palghar, a source said.      "Present-day Thane is diverse and difficult to administer, not only because of its size, but also because of its unique mix of populations," an official said.      The Thane region has witnessed a realty boom over the last 10 years as staying in Mumbai has become increasingly unaffordable because of a premium on space in the island city. "Mumbai's neighbouring towns—Thane, Navi Mumbai and Mira-Bhayander—soon caught people's fancy. The subsequent population boom triggered demands for a greater share of development funds to upgrade social infrastructure," an official said.      With more than 70% of Thane district's population living in urban areas and thus cornering a bulk of development funds, the tribal talukas have always complained of neglect. "With no industrial development in the tribal talukas, basic requirements such as water, higher education and employment facilities continue to be scarce. Moreover, an adivasi from Jawahar or a farmer from Dahanu has to travel 100-150 km to reach the district headquarters to sort out even minor revenue- or welfare-related issues. All this will now be over with the government firm on its decision to set up district headquarters at Palghar for the tribal region," the official said.  DIVERSITY FALLOUT  Thane's population diversity is one of the reasons for the impending bifurcation of the district 12% | Tribal  72% | Urban and semi-urban  16% | Rural  The varying priorities of these population groups results in a clash over claims on development funds

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80,000 people/sq km even in plush towers

Mumbai: That Mumbaikars are forced to live cheek-byjowl was re-emphasized when the Census revealed the city packed more than 20,000 persons per square km. The experience of life in aamchi Mumbai might be worse when actual living or working space are 
factored in, pointed out a project undertaken by travelling urban think tank BMW Guggenheim Lab. 
    Shanghai-based architect Neville Mars of the Lab set out to study congestion and found that even plush highrises in Mumbai could have a stacked population index as high as 80,000 people per sq km. Slum pockets could be twice as congested with as many as two lakh people in the same space. The index was computed as a ratio of population density to FSI index of area clusters.'Decongestion of city is critical' Stacked Population Index: Middle-Class Colonies House 40,000 Persons Per Sq Km And Workplaces 30,000 
    The finding that even plush highrises in Mumbai have a stacked population index as high as 80,000 people per sq km has come at a pertinent time, given that the civic corporation is in the process of drawing up a new development plan for Mumbai. 
    Shanghai-based architect Neville Mars, who carried out the study in Mumbai for travelling urban think tank BMW Guggenheim Lab, said the disparity and spatial split of the city could no longer be ignored. Going by his findings, "people have as little as 0.4 square metre per person in certain slums while those in highrises might enjoy as much as 57.5 square metre per person." Mars hoped the index would inform policymakers about the need to factor in the organic growth of slums in urban planning. 
    The index studied different typologies, including residential buildings and slums, industrial clusters, offices and mixed used areas (see box). They mapped the city through Google Earth and sliced neighbourhoods into a matrix of 500 metre by 500 metre, which were then analyzed for their average occupancy. Even middle-class housing colonies showed up a density of 40,000 persons per square kilometre. Workplaces aren't any better off with offices and warehouses showing an SPI of 30,000 persons per square kilometre. 
    Saying the index was a new way of looking at urban dynamics, demographer D P Singh of the Tata Institute of Social 
Sciences said it once again underscored the need to decongest Mumbai. "Both the Census findings or the new index, which looks at population density in formal and informal settlements indicate that decongesting Mumbai is the need of the hour. That is the only way we can assure the mass of our citizens better living conditions in terms of housing, water and sanitation systems." 
    Urban policy and governance expert Amita Bhide said the issue of congestion could be looked at through several dimensions. It could be seeneither in terms of private spaces, which include homes or offices and public spaces such as roads, parks, parking amenities and even burial and cremation grounds. "Somehow, slum redevelopment or luxury construction have brought a lot of attention to congestion in private spaces," said Bhide, pointing out that the city would pay a tremendous price for ignoring its public spaces. 
    "The city's capacity to absorb or accommodate people is being tested to its limits," she said, hitting at the crux of the issue.

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Prime Altamont Road property of US consulate sells for 342 crore

Mumbai: Leading realty company Lodha Developer has finally acquired Washington House, the three-storey residential building owned by the US consulate on Altamont Road, for Rs 341.82 crore. Lodha beat three rival developers including Mahindra Lifespaces and Tata Housing whose bids ranged around Rs 300 crore, which was far below the reserve price of Rs 350 crore fixed by the consulate. 
    Dubbed as the billionaires' lane, Altamont Road is among the 10 costliest addressess in the world and is home to some of the richest Indians, including Mukesh Ambani and several Bollywood stars. 
    Property experts say Lodha's bid, although below the reserve price of Rs 350 crore, is in tune with current sluggish market conditions. "Though the property is located in an upmarket locality, the economic market is not in tune with the ground conditions. The consulate must have therefore, thought it prudent to accept the best price,'' said an expert. 
    The three-storeyed Washington House covers 2,702 square metres, or nearly three-fourth of an acre. It is listed as Grade III property and falls under the Coastal Regulation Zone II. The plot has aroad reservation of about 293 sq mt. 
    Early on Tuesday afternoon, Abhishek Lodha, managing director of Lodha Group, sealed the agreement by handing over the full and final payment of Rs 300 crore to the consulate. The developer had earlier paid Rs 40 crore. 
    The sale agreement was then signed and registered at the Old Customs House, Fort, in the presence of Lodha and Paul C Cox, a senior official and the authorized signatory from the US embassy. Lodha reportedly paid a stamp duty of about Rs 17 crore to get the property transferred in his name. Under the rules, the ministry of external affairs had on May 3 approved the consulate's request to sell the property to Lodha. 
    With a developable space of almost 1.2 lakh sq ft—including unconsumedFSI—Lodha is all set to construct a super-luxury residential tower of 30 floors. Confirming the sale, Abhishek Lodha said the deal was in line with thecompany's growth strategy. "We have already appointed well-known Iranborn German architect Hadi Teherani to design the building. 
    Considering its location —on top of Altamont Road and offering an unparalled view of the Arabian Sea—we are planning to house exclusive apartments of 3,000-4,000 sq ft per floor,'' said Lodha, who is set to launch the project as early as March 2013. Property rates in the immediate vicinity currently range over Rs 70,000 a sq ft. 
    Meanwhile, the US consulate sought time till Wednesday to respond to queries on the deal. 
THE WASHINGTON HOUSE DEAL 
Property | Washington House Location | Altamont Road Owner | US consulatePurchaser | Lodha Developer Area | 2,702 sq m, or 3/4th of an acre Type |Ground plus three-storey Use | Residences of US consulate staff Sale price |341.82 cr 
Reserve price | 350 cr 
Stamp duty | 17 cr 
What next | Lodha plans to construct a 30-storey luxury residential tower on the plot 
Prevailing property prices in the area | Over 75,000 a sq ft LINCOLN HOUSE 
    The American consulate properties have generated considerable interest in Mumbai's real estate circles. It is said that Tata Housing has envisaged keen interest in purchasing another consulate property, Lincoln House, which has been put on the block in Breach Candy. Spread over 2 acres, or 8,345 sq m, the consulate has set a reserve price of Rs 850 crore for the sprawling seafacing property. The consulate has relocated to its new premises in Bandra-Kurla Complex 
    The property has a large piece of open land in its sea-facing backyard, which currently houses a tennis court and a small garden patch. Like Washington House, Lincoln House, too, is a listed Grade III property and falls under CRZ II. The US property sales will have to be cleared by the Union external affairs ministry and state/local authorities SOME OF MUMBAI'S OTHER BIG-TICKET PROPERTY DEALS OF 2012 
    A 3,320-sq-ft, 28th floor flat in Tahnee Heights on Nepeansea Road sells for around 39 crore, at 1.2 lakh a sq ft. Developers Bhimjyanis sell the flat to Jindal Drugs (S K Jindal) 
    A 2,550-sq-ft, 13th floor flat in IL Palazzo, Malabar Hill, is sold by Citibank to a diamond merchant for about 28 crore. The flat goes at between 1.10 lakh and 1.13 lakh a sq ft 
    In a major deal, steel magnate Sajjan Jindal purchases a building and a bungalow spread over an acre on Nepeansea Road for about 500 crore 
    Standard Chartered sells a duplex 3,638-sq-ft flat in Worli's 28-storey Samudra Mahal for 40 crore, at 1.1 lakh a sq ft, to a senior management executive of Citigroup

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‘Scandal-hit’ city falls to new low as realty investment hub

Mumbai: The city's rating as a real estate investment destination has taken a further hit, and a "political scandal" is among the factors being blamed for it. Mumbai has dropped from No. 3 in 2011 to 

No. 20 on a list of 22 investment destinations covered by the Emerging Trends in Real Estate Asia Pacific 2013, published by the Urban Land Institute and Price WaterhouseCoopers. The report was released on Tuesday. The city was already down at No. 15 in the 2012 report. 
    The study has attributed Mumbai's low ranking to a "recent political scandal" in the state which, it said, had paralysed development over the past year. It does not name the scandal, but it is believed to be referring to Adarsh, in which government officials, politicians and armymen have found themselves in the dock. 
Washington House is Lodha's for 342cr R ealty company Lodha Developer has finally acquired Washington House, the three-storey residential building owned by the US consulate on Altamont Road, for Rs 341.82 crore. P 2 EMERGING TRENDS REPORT 'Jakarta best city for realty investment' 
Mumbai: Not just "political scandal", Mumbai's fall as a real estate investment destination has been attributed to lack of transparency too. A Price WaterhouseCoopers official said transparency was another reason realty investments in Mumbai had come to a standstill when the BMC overhauled building rules to make them more stringent for unscrupulous developers who used to manipulate habitable and non-livable spaces in their buildings. 
    The Emerging Trends in Real Estate Asia Pacific 2013 report quotes an investor, who said, "In a way, it has been a blessing in disguise as it has allowed the city to work out its oversupply problem." 
    Property valuations in Mumbai are unlikely to rebound until these issues are fully resolved, the report said. According to it, local developers are more "aggressive, and so, more stressed" because they appear willing to borrow money at expensive rates. "Mumbai is likely to be a good destination for opportunistic capital looking to leverage against developer stress,'' the report stated. 
    It's not jut Mumbai that has seen a dip in its ranking. Delhi has slipped from 5th slot in 2011 to No. 21, while Bangalore has 
tumbled from No. 10 in 2011 to No. 19 because of its "over-reliance" on the sluggish global IT industry. 
    According to the study, the top investment markets for 2013 are Jakarta, Shanghai, Singapore, Sydney and Kuala Lumpur. Jakarta has been described as a 'surprising' choice, given the city's lack of investment grade stock and its economy which, while growing, lacks the enterprise, scale and infrastructure of its more developed neighbours. However, it said the city was seen by real estate professionals as the most favourable emerging market in the region with business transactions being simpler and more transparent than in other markets like Vietnam. "Demand for property is strong, resulting in year-to-year office rents leaping by 29%," it said. Jakarta had been ranked a lowly 14th in 2011. 
    For the third year, Shanghai is at the number two position. "However, Shanghai is not as appealing to foreigners today as it was earlier. This is partly because markets have become saturated and Chinese regulators are now not as welcoming as they once were," it said. Although sales have dropped in the commercial sector, the city remains firmly on the radar for domestic buyers and many foreign funds with a mandate to invest in Chinese real estate.

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Govt takes back 3,000cr plot from builder

Mumbai: In a first-of-its-kind verdict in the recent past, Mumbai suburban collector Sanjay Deshmukh on Monday revoked the allotment of a 66-acre piece of land near Kanjurmarg station to leading developer Jolly Brothers. The order was cancelled on account of violation of lease conditions. 
    A senior bureaucrat told TOIthat Deshmukh, during the quasi-judicial proceeding, heard the contention of both Jolly Brothers' nominee and the revenue department. He then passed an order that the allotment of the land, reportedly worth Rs 3,000 crore, be cancelled. 'Bungalows on land for guards, workers' 
Mumbai: Suburban collector Sanjay Deshmukh has said builder Jolly Brothers must return a 66-acre plot to the government. The revenue department, during the proceedings, was represented by the tehsildar. 
    The 66 acres were allotted to the developer for industrial use by the revenue department on June 21, 1995. However, when the tehsildar visited the site recently, he saw that Jolly Brothers had not only constructed seven bungalows on a part of the land but had also entered into an agreement with Vijaynagar Enterprises to develop the land for residential purposes. He also found the office of another builder—Ajmera Developers—on the site. 
    Jolly Brothers submitted before the collector that there was no breach of lease conditions and the seven bungalows on the site were constructed to provide accommodation to the workers and security guards. The developer also declared that the agreement with Vijaynagar Enterprises had been terminated long ago. "Development of the land, change of use has been permitted by the government on certain conditions. Since the land is within the coastal regulation zone, there was no question of construction of any building, and as such the company has not violated the lease conditions," it submitted. 
    In his four-page order, Deshmukh observed that in view of a crucial report submitted by the tehsildar, there appeared to be a link between Jolly Brothers and Ajmera Developers since the latter's office was located on the site. "Jolly Brothers has not given any statement on its link with Ajmera Developers. It has failed to utilize the land for the purpose for which it was allotted. Under such circumstances, since there is a breach of lease conditions, I am cancelling the land allotment order, and the land will be restored to the government," Deshmukh said in his order. 
    The senior bureaucrat said the revenue department had asked all collectors across the state to examine if there were violations of lease conditions on land allotted to people. "An intensive survey on revenue lands in the suburbs is complete," said the bureaucrat. "Revenue officials have submitted specific reports on several breaches of lease conditions. Accordingly, action will be taken against the lease holders after following the due process of law."

The Kanjur Marg plot allotted to Jolly Brothers

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CAG pulls up army for giving prime city plot to pvt builder

New Delhi: The CAG has criticized the army and defence estates authoritiesfor letting a private builder usurp their land in Mumbai, with the office of the then minister of state for defence production Rao Inderjit Singh also playing a role,by issuing "an irregular NOC''. 

    The case of the 5,166 sq-m land at Kandivli, which was in the possession of Central Ordnance Depot (COD) of Mumbai since1942,isbeing probedby the CBI, as reported by TOI earlier. Faced with land scams like Adarsh, Malad and Kandivli, MoD has been forced to now specify that station military authorities are no longer allowed todirectly issueNOCsto private builders. The latest CAG report said that even after "certain fraudulent activities regarding theland(Kandivli)cametotheir notice, COD did not get the land demarcated in its favour, which facilitated the usurpation of the landfrom the army''. 
    After M/s Neo Pharma Pvt Ltd (Kalpataru Bldrs), began development work on the land in 2007, the COD placed sentries there for protection. "(But) the company lodged a complaint with minister Rao Inderjit Singh,whereby his personalsecretary wrote to the then Army chief's secretariat for 'appropriate action','' theCAGsaid. TNN

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Pali Hill bldg put on block for 800cr

But Local Residents Raise Objections As Sandhu Palace Is Under Litigation

Nauzer K Bharucha TNN 

Mumbai: The controversial Sandhu Palace on Pali Hill, Bandra, touted as the most expensive residential building in the suburbs, is up for sale. 
    Last month, its developer, Sandhu Builders, put the entire building on the block for $147 million, or around Rs 800 crore. But when vigilant residents of the adjoining Chetak Cooperative Housing Society (Manju Mahal) saw the advertisement on an international real estate website, they quickly moved a contempt of court petition against the builder. 
    The society had dragged the builder to court for various violations some months ago. The Bombay high court subsequently ordered a status quo. Sandhu Palace, comprising two 19-storey towers, is the tallest structure on Pali Hill and was among the first buildings to benefit from height regulation relaxations during the tenure of Praful Patel as civil aviation minister. 
    The developer has been quoting more than Rs 60,000 a sq ft, making it the most expensive property in the suburbs. Several large flats were sold to NRIs at more than Rs 35 crore each. 
    The builder said he had spent in excess of Rs 148 crore on the project and sold 19 apartments out of a total of 48. Last week, the Chetak society filed an additional affidavit in the high court after Sandhu's advertisement came to light. It said the builder published the ad on the internet around October 27 and made efforts to dispose of the property, which had been "constructed by violating rules, regulations and applicable laws by making misrepresentationsbefore the concerned authorities". 
    The society said the builder was trying to create third-party rights by selling off the property despite the ongoing court case. The builder, Kanvarjeet Singh Sandhu, hit back, stating that he paid the society Rs 8.10 crore as part of the agreement, but it was sill trying to "coerce and compel" the developer to arrive at a further financial settlement. 
    "The petition has been filed with ulterior dishonest and malafide intent to extort Rs 100 crore from the respondents. Thus, the petition is a gross abuse of process in this court," said Sandhu. 
    Chetak's petition said Sandhu and the BMC colluded to illegally increase the building's floor space index (FSI). The society had allowed the developer to acquire development rights for three of its four plots. However, the builder allegedly usurped the rights of the fourth plot, which was not part of the agreement. This plot measured 1,775 sq m and also included another 725 sq m reserved for a road setback (future expansion). 
    The municipality's commissioner, deputy commissioner, executive engineer and deputy engineer (building proposal department, Bandra) have been made respondents, along with the developer, in the petition. 
    In 2007, Sandhu paid each of the more than 100 members of Chetak Rs 5-15 lakh for giving power-of-attorney to the builder to utilize about three acres of its land. The agreement mentioned three plots, but the society alleged that the builder "illegally" included the fourth plot as well and got them sanctioned by the BMC.

Sandhu Palace, comprising two 19-storey towers, is the tallest structure on Pali Hill

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City to get 32 four-storeyed parking lots State Revises Builder-Driven FSI Policy

Mumbai: The state government has approved 32 public parking lots under the revised parking floor space index (FSI) policy, creating space for over 30,000 vehicles in the city. 
    Of the 32 approved parking spaces, 20 are located in the island city, nine in the western suburbs and three in the 
eastern suburbs. 
    In all, the BMC received 70 proposals, of which 32 have so far been approved by the state government. Another 11 proposals cleared by the BMC are awaiting the government's approval. 
    To encourage private developers to build public parking lots, the state government in 2008 had announced a policy under the Development Control Regulation (DCR) 33 (24) which would grant the developer up to four FSI in exchange for construction of parking lots. But the original policy had to be revised after experts termed it as builderdriven. 
WHAT IT MEANS 

• According to the revised policy, any developer who builds a public parking lot and hands it over to the BMC for free, will get up to FSI of 4 on a new construction on a plot of over 1,000 sqm in the island city and over 2,000 sqm in the suburbs 

• Developer has to pay 40% premium for additional FSI 

• Developer can build only ground-plus-four levels of parking floors 

• The civic corporation has so far collected over Rs 250 crore as premium

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Interest on Hsg Loans to Stay Out of Tax Net

In an order that will provide relief to those who invest in houses, the Income-Tax Appellate Tribunal (ITAT), Chennai, held that interest on loans taken for buying housing properties will continue to remain out of the tax net, even if the house is sold later.  The ITAT clarified that the interest paid for borrowed loans is certainly an expenditure that should be taken into account while computing the income from house property as well as in computing capital gains arising from sale of the same property. The ruling was made on October 31 by a two-member bench comprising OK Narayanan and SS Godara.  In this case, the taxpayer C Ramabrahmam borrowed money for buying property and claimed deduction for interest paid for the borrowed funds, while computing income from house property.  However, when the house was sold, the taxpayer treated the interest paid on loan as "cost of acquisition" for the purpose of computing capital gains and claimed deduction there too. The assessing officer, however, refused to accept the claim on the ground that interest has been allowed as deduction under section 24 (b) of the Income-Tax Act that deals with income from house property and the deduction cannot be allowed again while computing capital gains arising from the sale of the house.  The first appellate authority, Commissioner (Appeal), allowed the claim of the tax payer but the Income-Tax department moved the Incometax Appellate Tribunal (ITAT), the second appellate authority for deciding tax disputes.  The ITAT dismissed the appeal, holding that deduction under section 24 (b) of the Income-tax Act and computation of capital gains under section 48 of the Income-tax Act are covered under different heads of income. The first section deals with house property and the other section deals with capital gains. The first deduction was claimed when the taxpayer computed income from house property, while the second claim was made when the house was sold and capital gains were computed.  The ITAT held that both these provisions of the Income-tax Act are altogether different, the taxpayer is entitled to claim deduction of interest paid on borrowed loans while computing capital gains too.  Vispi T Patel of Vispi T Patel & Associates told ET: " This is a correct interpretation of the concerned law. This order will be a relief to the taxpayers who are in similar situations".

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FM Asks Banks to Bail Out Builders

Tells bankers to fund residential projects stuck for want of funds

Finance Minister P Chidambaram has asked banks to lend a helping hand to builders, particularly those involved in construction of residential properties, in order to revive faltering economic growth. The minister discussed the problems of the real estate sector with the chiefs of state-run commercial banks at a meeting last week in New Delhi. Bankers who attended the meeting described the broad thrust of Chidambaram's comments, but declined to speak on record. 
"The minister asked banks to fund those residential projects that are stuck for want of funds. This, according to him, will help kickstart the economy," said a bank chief who attended the meeting. In August, after returning to the ministry, the finance minister asked banks to put pressure on builders to lower prices in order to reduce a growing inventory of unsold apartments. 
During the meeting, Chidambaram reviewed a report prepared by Ajai Kumar, CMD of Corporation Bank, on unsold stock in the real estate market and the way ahead. 
The report highlighted the need for builders to arrange their own resource for equity. It also stressed the need for builders to open an escrow account with banks. 
As of now, many builders show advances collected from purchasers of property as their equity contribution. The report, according to people at the meeting who described its contents, said this should end. Credit to Real Estate Sector Slows Down 
This is because the builder does not have any stake in completing the project. In its edition dated November 17, this paper had reported that half of the 3,23,000 apartments due for delivery in 2013 were likely to be delayed on account of problems faced by builders, including lack of financing and delayed clearances. Further, onefourth of apartments due for delivery in 2014 were likely to be delayed, according to the report from real estate research firm Liases Foras. 
Credit from commercial banks to the real estate sector rose only 4% for the year ended September 30, 2012, compared with a double-digit rise in 2010-11, a possible indication of the diminishing attraction of the sector. 
In August, the finance minister had told banks to put pressure on builders to cut prices. "Builders are sitting on huge inventories (unsold apartments) they are neither able to sell at the prevailing prices nor are they allowing others to buy by lowering prices." He further questioned banks as to why they were not putting pressure on builders to lower prices since they had funded both the builder and the retail home loan borrower. 
It's unclear what impact the minister's exhortation will have. 
At least half-a-dozen bankers that ET spoke to after the meeting in August said they did not discuss the subject of reducing prices with builders. "Even as we agree that real estate prices are at elevated levels, builders won't really care for our views," said a bank chief when asked if the bank has sent out any communiqué to builders to lower prices. 
"Back then (in August) the idea was to kickstart the economy and he is attempting it again. This time he has changed the approach," said a bank chief attending both meetings.

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Bharti Eyes Stake in DB Realty Arm’s Delhi Airport SPV

Co in talks to acquire 49% in SPV for . 350 cr The realty arm of telecom major Bharti Group is in talks with DB Realty's hospitality arm to buy a 49% stake in the SPV that is developing a plot at the Delhi International Airport's new hospitality district, for . 350 crore.  DB Hospitality had got the land on a 30-year sublease for . 400 crore through competitive bidding in 2009. It was planning to build three hotels and a convention centre on the 7.7-acre plot, but construction is yet to start because of the overall economic slowdown, and also difficulty in raising funds after an arm of the company got embroiled in the 2G spectrum scam and its promoters Vinod Goenka and Shahid Balwa were attested for their alleged role in the scam. Now, to speed up construction, the company has been looking to sell a significant minority stake to raise funds and has been in talks with a number of funds as well as hospitality and realty firms, said a person close to the development, who did not wish to be named. Vipul Bansal, CEO of DB Realty, confirmed that the company was in the process of selling a 49% stake in the SPV, but did not comment on its talks with Bharti Realty. "At the moment, the stake is open to all interested parties," he said in an email. David Rebello, the CEO of Bharti Realty, declined to comment on the deal. GMR Infrastructurecontrolled DIAL had invited bids for developing hotels in the new hospitality district spread over 43 acres near the Delhi airport. It auctioned 14 hotel plots, with the 7.7-acre plot given to DB Hospitality being the biggest of the lot.  DB Realty has been trying to sell some of its other assets as well, including its 170-room Hilton hotel property near Mumbai airport and a new 314-room Grand Hyatt property in Goa.

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3 city areas will appreciate most in 5 yrs: Report

Mumbai: Ulwe in Navi Mumbai, Wadala and Chembur are expected to generate the highest returns for residential real estate investors over the next five years, a report by property firm Knight Frank has revealed. 
    In fact, seven of the top nine spots on the list of 13 areas across the country are occupied by localities in Mumbai and Pune. While rates in Ulwe are expected to rise 145% in five years, in Wadala and Chembur, the hike is likely to be 133% and 125%. 
    The report seeks to identify areas that will develop because of factors such as job creation, infrastructure development and lifestyle change. "We identified 100 cities using banking penetration, hotel room demand, and air passenger traffic as surrogates for business activities. For infrastructure development, the current and proposed investment in infrastructure were taken as proxies," said Samantak Das, director, Knight Frank. REALTY CHECK New projects to boost Ulwe, Chembur 
Mumbai: According to a report by realty firm Knight Frank, seven areas in Mumbai and Pune are likely to give among the best returns to residential realty investors. Taking a number of factors into consideration, the firm identified Mumbai, Delhi, Bangalore, Chennai and Pune as the top five cities to identify investment opportunities. 
    From the five cities, Knight Frank has listed 13 zones which are expected to appreciate by over 90% in the next five years. Of the 13, the top three areas are in Mumbai. They are followed by Noida Extension and Dwarka Expressway in the National Capital Region (NCR), Medavakkam in Chennai and Hinjewadi in Pune. The cheapest areas identified by the study are Noida Extension in NCR and K R Puram in Bangalore, where prices range around Rs 3,200 to Rs 3,245/square foot. At the other end are Wadala and Chembur, where market prices reign in the region of Rs 12,000 to Rs 15,000/sq ft. 
    In terms of infrastructure, Ulwe is expected to gain because of new projects, which include suburban rail connectivity, the trans-harbour creek bridge and the proposed Navi Mumbai airport. Although there has been a spate of titledisputes in Ulwe in the past, lenders say Cidco has become more discerning and there are now projects with clear title where big names such as HDFC are willing to lend. Wadala prices are expected to rise as the area gets re-rated following lifestyle changes that are taking place as very large projects come up. "Link road in Malad has already witnessed a lifestyle shift which has resulted in prices there rising faster. Wadala, too, is undergoing a lifestyle shift," Das said. Chembur is expected to benefit from the completion of the Santa Cruz-Chembur link road, the Eastern Express Freeway and the monorail. 
    According to Das, the Planning Commission's projection of a housing shortage of 26 million units does not reflect the demand for housing but the need. Employment generation will translate that need into demand by increasing affordability, he said, adding, "Our research is targeted at the end-user and not those who are looking at property for self occupation. We have projected the appreciation net of transaction costs but have not taken into account either the rental income or expenses for maintaining the property. In any case, the rental income will only be around 2%."

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Flat buyers’ forum seeks VAT refund

Mumbai: Even as the sales tax department is computing the value-added tax (VAT) paid by 10,600-odd registered dealers or developers, a group of chartered accountants who have set up a forum of aggrieved flat buyers, is now asking them to demand VAT refund from developers.      The forum, which operates through a website called www.flatvat.com, have asked all the 450 buyers who have registered at the website to ask for a debit note or a tax invoice and receipt of the VAT amount collected by the developer. "The invoice and receipt confirms that the developer has paid tax to the government against your flat and will further help you get the refund in the future,'' said Sharad Patel, founder-partner of chartered accountants ASJ who set up the website.      The sales tax department is still computing the total VAT amount – it hopes to collect more than Rs 1,000 crore – paid by the registered developers. Official sources said that while majority of big developers have paid VAT, several small developers have shown nil returns. Dealers have to file sales tax returns every three months. The department is now in the process of verifying the reason as to why some developers have shown nil returns.      Incidentally, even before a buyer asks for a refund, Gundecha Builders, a suburban developer, has decided to refund the balance from the total 5% of the agreement value they have collected from their customers as VAT.      Paras Gundecha, chairman of Gundecha Builders, recently wrote to his 350-odd flat buyers asking them to collect cheques from his office or from the bank for the excess VAT amount. Gundecha, which has computed VAT between 1% and 3.5% of the agreement value, will refund roughly Rs 3 crore to the customers. "Barring very few buyers who have not paid, the majority of my customers paid the VAT amount in the form of escrow and bank guarantees. Now that I have paid that VAT to the government, Isee no reason to hold on to the excess money,'' said Gundecha.      Another leading developer, who has projects mostly in Andheri and Borivli, said he too plans to refund the balance amount to his customers who have paid in bank guarantees and escrow in a few days. "But I am going to tell this customers that though I am refunding the money, they will have to pay in case the sales tax department comes up with another computation. I do not want more headaches," said the developer who refused to be quoted as he is in midst of a legal dispute with 30-odd flat buyers who have refused to pay VAT.  HOMING IN  WHAT THE LAW SAYS  Builders must pay VAT on underconstructed flats sold between June 20, 2006, and March 31, 2010.  If flats had an occupation certificate at the time of sale, then no VAT has to be paid  HOW VAT IS COMPUTED  The sales tax department has given three different methods to compute VAT. In one method, also the preferred option of developers, 5% VAT is computed after the cost of construction and value of land is deducted from the amount mentioned in the agreement. This leads nearly 50% reduction in the amount on which VAT is applicable CONSUMER ACTIVISTS AND ORGANIZATIONS ADVISE      Demand the cost sheet from your developer to see how they have calculated the VAT for your flat Check if the developer has registered the company at the sales tax department, to ensure that the VAT amount is paid appropriately

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Unlike Your Pizzas, Home Deliveries to be Delayed

DREAMS CRASH A new survey shows nearly half of the 323,000 homes to be delivered in 2013 will be delayed     Here's a shocking piece of news for those waiting to take possession of their homes next year. A new survey has found that nearly half of the 323,000 homes to be delivered in 2013 are lagging behind construction schedule, with a third not ready for a housewarming before 2014. In addition, nearly three of every four homes promised for delivery in 2014 are also likely to be delayed, real estate research firm Liases Foras has found in a nationwide survey conducted recently. "There have always been delays, but it is a bigger concern today as the quantum of homes being built is much larger now," says Deepak Parekh, chairman of India's biggest mortgage lender HDFC Ltd. "Everyone's money is stuck. It is not only bad for homebuyers, but also for the economy," adds DK Mittal, secretary, department of financial services. The problem that began in 2010, when the economy started to weaken, has aggravated in the last one year due to paucity of funds as well as delays in securing approvals. Home sales have slowed down, private equity has dried up, the primary market is subdued, and banks have been reluctant to lend to builders. A combination of consumer activism, agitation by farmers, bureaucratic delays, labour shortage and legal wrangles has also contributed to the holding up of projects. The delays leave lakhs of homebuyers to grapple with another problem in the midst of rising prices and a slowing economy. "Individual homebuyers have the option of taking recourse to the law, but almost no one does so as it is a cumbersome process and may lead to further delays if the builder digs in his heels," says Vaibhav Gaggar, partner at law firm Gaggar & Associates, which helps clients in real estate disputes, among others. "If they choose, buyers could invoke a clause that is part of most standard contracts, to terminate the contract and get back their money with interest. If the person chooses to retain the property, he could file for compensation and damages by proving that he has been injured financially," added Gaggar. At present, contracts between buyers and builders provide for a per sq ft compensation in case of delays. "But the amount is minuscule," he said. Builders in the Delhi-National Capital Region have been the biggest culprit, with a 74% late delivery rate, followed by Mumbai and Chennai at 61%, Bangalore at 59% and Kolkata at 57%. "Data indicates that there would be more delays going forward because of the stress on cashflows of developers," says Pankaj Kapoor, managing director at Liases Foras, the firm that carried out the survey. Supply, Demand Both a Concern  This non-brokerage real estate research and rating firm services banks like HDFC, Axis Bank, Deutsche Bank and Standard Chartered as well as big real estate companies and private equity (PE) funds.  Experts say there are liquidity concerns both on the supply and demand side. Many developers are faced with a liquidity crunch and cashflow issues due to slowdown in home sales, and this is turn is impacting their ability to finance construction of new properties.  "Home sales are down nearly 40% because of the very high cost of homes. This is becoming a vicious cycle," says Anckur Srivasttava, who heads GenReal Property Advisers, a property consultancy. Adds Anshuman Magazine, managing director of CB Richard Ellis: "There is a liquidity concern on both the supply and demand side due to high interest rates and high prices. The impact of the slowing economy is reflecting on the ground now, in demand slowing down and execution of projects being hit." According to a recent report by real estate consulting firm PropEquity, the number of unsold properties in India's top seven cities at the end of December this year is expected to be around 32,000 units and valued at over . 21,000 crore. Developers argue that liquidity issues are just one of the reasons for the delays. More pressing is the issue of getting approvals on time to get on with construction. "After the first approval, subsequent no-objection certificates and approvals like water, electricity connections, completion certificate and others get delayed," says Lalit Kumar Jain, president of the Confederation of Real Estate Developers Associations of India (Credai), the national association of builders. The regulator will, however, have the right to give an extension to the builder on a case-to-case basis.  ravi.sharma@timesgroup.com

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Drains, Mithi to be widened in another 3 yrs: Civic body

Mumbai: The civic body has said that Mumbai's storm water drains will be widened and deepened by 2015, as will be the city's most abused river, Mithi. The cost of the venture, in the end, will come to about Rs 3,900 crore. 

    Municipal commissioner Sitaram Kunte said that, through the BRIMSTOWAD project, the BMC is quadrupling the holding capacity of storm water drains and supporting that with pumping stations to prevent a repeat of the 2005 floods. "We have planned for a rainfall of 50mm/hour and runoff coefficient of 1, as recommended by the Madhav Chitale factfinding committee. But there may be days when it rains more; no system can be calibrated to take care of all eventualities," Kunte added. 
    The civic chief said pumping stations are being constructed in two phases. "The Irla and Haji Ali pumping stations are complete, while work on Love Grove and Cleveland stations at Worli is underway. Tenders have been invited for the Britannia outfall pumping station. In case of three other stations (Gazder, Mahul and Mogra), there are land and environment issues that need to be resolved." 
    But, according to hydraulics expert Madhav Chitale, the implementation of BRIMSTOWAD is the least required to protect Mumbai, which is now a risk-prone zone from "hydrological point of view". "Mumbai needs a three-way approach. It has to be probabilistic and not deterministic. BRIMSTOWAD is a deterministic approach," he said. 
    Chitale pointed out that his report had recommended categorisation of floodprone areas on the basis of the possibility of their flooding "once in 10 years, 25 years, 100 years and above 100 years"—also known as the river valley approach. In the first category, he said, residents must be asked to take compulsory insurance. Another desperately-needed measure is the preparation of a climatic model to determine rising sea levels. "Orissa has done such a study. Mumbai must also study the impact of sea rise. There are 40 points where water from the city flows into the sea. Protection bunds need to be redesigned at these points." 
    According to storm water drain department officials, of the 55 floodingprone spots, inundation has been stopped in nine and reduced in six others, thanks to pumping stations. The Love Grove and Cleveland pumping stations will ensure there is no flooding in another nine spots, while Britannia, Gazder, Mahul and Mogra will stop flooding in yet another 24 places. 
    Activists argue that it is not enough to merely widen and deepen nullahs and rivers. The city's open spaces must be saved as well since these act as holding ponds in case of floods. 
    Rising concretisation of open spaces in housing and commercial complexes has increased the runoff, preventing water from percolating into the ground. Similarly, saltpan lands and mangroves along the coast must be protected, activists say.

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Bldgs can have only 2 cellphone towers: BMC

Mumbai: The BMC will not allow more than two cellphone towers to be installed on rooftops. 

    Currently, the civic body is finalizing a new policy after the Union department of telecommunication (DoT) issued guidelines on installation of the towers. While formulating the policy, the public concern over thehealth hazards will also be kept in mind. 
    Mumbai's cellphone usage is high and various service providers are vying to grab a major share in the market and want to instal towers on buildings to provide better connectivity. 
    The civic body also plans to have a special counsel to fight the case in the high court and to vacate the stay on taking any action on the illegal towers. 
    "Although we don't have our own machinery to check radiation levels, a new policy will soon be drafted to check the number of towers in Mumbai. We will not allow more than two towers on the top of a building." 
    The issue was raised by BJP corporator Vinod Shelar who said Mumbaikars were facing grave danger due to rising cellphone tower radiation astheBMChad not prepared any guidelines. 
    "At certain places, five to six towers have been set up on terraces," Shelar said. 
    "An increase in cellphone towers has seen rise in diseases like cancer, brain tumour, high blood pressure and heart ailments. The proportion of birds has also reduced considerably in Mumbai," he added. 
    Several mobile companies are violating the proposed transmission levels of 600 microwatt proposed by the International Commission of Non-Iodised Radiation, claimed Shelar. 
    According to BMC officials, the onus is on the DoT's term cell to scrutinize the radiation levels. "In some cases wherethe radiation levels are high, BMC officials can register cases on the DoT helpline," Gupta added 
HEADING FOR TROUBLE 
    According to the BMC, there are 3,489 cellphone towers in Mumbai. Of these 1,628 (47%) are illegal 
    Over 500 towers have been installed without the civic body's nod in Bandra, Santa Cruz , Vile Parle, Andheri and Jogeshwari. K-East ward (eastern side of Vile Parle, Andheri and Jogeshwari) has 261 illegal towers 
    D ward (Malabar Hill, Nana Chowk) has 138 unauthorized ones 
    Mumbai's cellphone usage is high and various service providers are vying to grab a major share in the market and want to instal towers on buildings to provide better connectivity 
    Mobile companies violated the proposed transmission levels of 600 microwatt proposed by the International Commission of Non-Iodised Radiation, claimed a corporator

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Pressure mounts on CM to lower VAT, decision soon

Mumbai: A day after a cabinet meeting discussed the contentious issue of value-added tax (VAT) for flats, pressure is mounting on chief minister Prithviraj Chavan to reduce it from 5% to 1%. 

    It has been brought to his notice that it is wrong to charge 5% VAT, particularly for flats sold after 2010 as the relevant charge is 1%. It is incorrect to recover the amount with retrospective effect, the CM has been told. 
    Industries minister Narayan Rane said even if VAT has to be paid by the developer, it will eventually be recovered from the buyer. "Even if the builder pays VAT, he will recover it from the buyer later. Under such circumstances, if the government is keen to protect the interests of the buyer, it should reduce the amount from 5% to 1%," he said. 
    A senior bureaucrat said while no decision has been taken on extending the deadline or reducing VAT yet, Chavan is in favour of lowering the amount to protect the interests of flat buyers. "We expect him to take a decision within a week after consulting senior cabinet members," the bureaucrat said. 
    On the issue of a sudden hike in the prices of Mhada's Malwaniflats, a minister said when the agency issued an advertisement, it said the apartment would cost Rs 34 lakh each. But now, it has asked for an additional Rs 15 lakh without assigning any reasons. "The matter was brought to the notice of the chief minister, who admitted that it was a mistake on the part ofMhada officials," the minister added. 
    Mhada MD Satish Gavai said it was an error and a high-level probe had been ordered. Mhada was in the process of fixing responsibility, he added. "When Mhada issued the advertisement, it quoted a price of Rs 34 lakh. Later, we observed that it was an incorrect price and the actual cost was Rs 49-50 lakh. We are considering giving the buyers more time," Gavai said.10,600 get registered 
    As many as 10,600 developers have registered themselves under the e-return scheme initiated to collect VAT. Sales tax officials said a majority of developers filed nil returns. TNN

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HC throws out builders’ plea against VAT levy Says Scheme Not Against Constitution

Mumbai: The Bombay high court on Tuesday dismissed a bunch of petitions challenging the state government's decision to charge builders a 5% Value Added Tax on buildings that were under construction from June 20, 2006 to March 31, 2010. The ruling came a day before the October 31 deadline to pay the tax.      "There is no merit in the challenges," said a division bench of Justice Dhananjay Chandrachud and Justice Rajesh Ketkar, while adding, "A wide degree of latitude was enjoyed by the legislature in tax matters." The court held that the composition scheme formulated by the state in two circulars of August and September 2012 were not against the Constitution.      Builders had challenged the state's decision on grounds that it discriminated between buildings built before and after 2010. As per the state's composition scheme, developers of buildings under construction from 2006 to 2010 should pay VAT at 5% of the Works Contract, which includes the cost of construction and excludes the land value, amount paid to subcontractor, service charges, etc. But for buildings under construction from April 2010, builders have to pay VAT of only 1% of the total agreement's value.  NO RESPITE FOR FLAT BUYERS  Flats sold in buildings under construction from June 20, 2006 to March 31, 2010 will attract VAT of 5% of the Works Contract  Flats sold in buildings under construction from April 1, 2010 will attract VAT of 1% of the agreement value  Builders must pay VAT on the 2006-10 flats by today or pay annual 15% penalty  Builders say they will pass on cost to buyers 'Assessing officer can decide on contract type'      Buyers who purchased flats that were under construction from 2006 to 2010 are seeing builders pass on the costs to them. There have been reports of builders demanding that flat buyers deposit the money with them or face a penalty. While the builders are supposed to pay VAT of 5% on just the Works Contract, experts say that flat buyers are being charged 5% on the total agreement of the flat.      The VAT applies only to under construction buildings and not those that were ready with Occupation Certificates when flats were sold.      The builders were led by the Maharashtra Chamber of Housing Industry-Confederation of Real Estate Developers Association of India (MCHI-Credai) and Pune-based Marathi Bandkam. The court said that it was "far-fetched" to assume that the government had applied the April 2010 date inadvertently. The court ruled that the state had the right to frame a scheme and determine the cutoff date for bringing it into effect.      However, the court held out a ray of hope by saying the order would not come in the way of the state taking any decision to hear the pleas of developers who wanted the post-April 2010 scheme made applicable to buildings under construction from 2006 to 2010.      The court also said that, if the builder raised the issue, the assessing officer (sales tax) could decide on whether a particular type of development contract was not a Works Contract. VAT would not be applicable if it was not a Works Contract.

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HC to give verdict on VAT today

Mumbai: The Bombay high court is scheduled to deliver its verdict on the Maharashtra government's decision to charge value-added tax (VAT) on under-construction buildings between 2006 and 2010 on Tuesday, a day before the deadline for developers to pay the levy ends. 

    "Ultimately, the burden will be on the middle-class tax payers or buyer of flats," said a division bench of Justice D Y Chandrachud and Justice Rajesh Ketkar. The bench will start hearing the case at 9.30am, one-and-a-half hours before the court opens at 11am. 
    The court is hearing a bunch of petitions filed by the Maharashtra Chamber of Housing Industry-Confederation of Real Estate Developers Association of India (MCHICredai), the representative body of builders in the state, along with the Pune-based Marathi Bandkam. An PIL has also been filed by Grahak Hitawardhini, a Pune-based consumer organization. 
    The petitioners have questioned if the sale of flats constitutes a work contract. They have also claimed that the VAT of 5% and 1% for flats purchased from 2006 to 2010 and post-2010 respectively was against the law, as it included the cost of land, which was an immovable property.Mhada flats do not attract VAT: Tax, legal experts 
Mumbai: Buyers who purchased under-construction Mhada flats in the past six years may not have to pay the value added tax (VAT). 
    Legal and tax consultants have told Mhada that its projects do not attract VAT. The reason: Unlike in private transactions, Mhada does not enter into any sale agreement with its buyers. Mhada issues allotment letter to buyers after it has received the entire flat cost in maximum three installments. 
    The law states that builders will have to pay a 5% VAT on sale of properties between 2006 and 2010. The VAT post 2010 will be 1% of the cost of the property. 
    "In private transactions, a developer enters into an agreement to sale with the buyer after receiving a certain amount of the total flat cost of the under-construction flat. A sale deed is registered after the full flat cost is paid," said a Mhada official. 
    Mhada, however, is still playing cautious. "Though we are firm in our view and believe our buyers, majority from the middle class, should not be taxed. The sales tax department has not sent any notice to us for VAT payment," the official added. 
    "We are focusing on private developers. We do, however, believeMhada and Cidco will have to pay VAT," said a tax official. Tanaji Satre, Cidco vice-chairman, said prima facie he believes VAT is not applicable on them, but he has to check.

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