Gurgaon and Noida Land Prices Likely to Fall

Thanks to the land pooling policy of Delhi Development Authority (DDA), New Delhi will have around 70,000 acres of land at its disposal. This new change will certainly bring down the land prices in Gurgaon and Noida.


Property Consultant, CBRE’s Managing Director Mr. Anshuman Magazine said that the land pooling policy will prove to be benefitable in the long run for National Capital Region (NCR) as the land prices in the peripherals markets of Gurgaon and Noida will reduce with more supply coming into Delhi Market.

As per the land pooling policy,DDA will develop the necessary support infrastructure and mass affordable housing projects on the land and the developer’s will receive a large portion of that land for further real estate development. For this purpose DDA has identified around 200 villages at the outskirts of Delhi and is planning to convert 90 villages into development area and another 90 villages into urban area. These areas include:

• North Delhi (Mazra and Akbarpur)
• North-West Delhi (Rohini and Narela)
• West Delhi (Najafgarh and Dwarka)
• South Delhi (Masoodpur, Chhatarpur and Kishnagarh)
• NH -1

Experts say that this is short-term trend and is likely to rationalize prices once supply of developable land comes in the real estate market of Delhi. They believe that schemes like land pooling will help solve issues relating to the availability of land for development of real estate and for infrastructure development to aid the ever-increasing urban population.

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Is it true that a builder has to pay Service Tax when he sells an under-construction property?

As per the new rules, Service Tax will be calculated at the rate of 12.36% of the gross value of the property. But, because there is a Government abatement of 75 % (increased from 67 %), tax will be levied only on 25% of the gross value of the property. The effective rate of service tax is therefore 2.575%.

The 2010-11 budget imposed service tax on all under-construction properties from July 1, 2010. Now, according to the Service Tax Act [Section 65(105)], the developer or builder of an under-construction property has to pay service tax when he sells a property to a buyer. There is only one situation in which the builder does not have to pay service tax when he sells an under-construction property: When he sells a building after a completion certificate is obtained from local authority and entire consideration is obtained from the buyer only after building completion certificate is obtained.

Therefore, although paying Service Tax is mandatory, it can be avoided if:

a.The builder has obtained a completion certificate from the issuing authority.

b. The buyer has paid the entire consideration only after the building completion certificate had been obtained by the builder.

You can even get the completion certificate from an architect or chartered engineer or licensed surveyor. It is not necessary to go to a Government authority to get the completion certificate. You may rely on the notification issued by the Government of India (D.O.F.No.334/03/2010-TRU) which reads as follows:

 “Before the issuance of completion certificate if agreement is entered into or any payment is made for sale of complex or apartment in residential complex, service tax will be levied on such transaction since the builder provides the construction service. Completion certificate issued by a Government authority was prescribed as demarcation by introducing an Explanation in the Finance Act. During the post budget discussions, it was pointed that practice regarding issuance of completion certificates varies from different states. Considering the practical difficulties, the scope of the phrase ‘authority competent’ to issue completion certificate has been widened by issuing an order for removal of difficulty (Refer M.F.(D.R) Order No.1/2010 dated 22nd June 2010). Completion certificate issued by an architect or chartered engineer or licensed surveyor can be now taken to determine the service tax liability.”

However, this exemption above is only from paying Service Tax. You will have to pay Stamp Duty on the sale value of the property if you purchase property after construction.

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