Levies and the wish list
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Only time will say if the government will have a new chapter written in the infrastructural history of Bengaluru. A look at some of the factors by K. SUKUMARAN
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Inevitable: Developmental activities rise in tune with population increase
A new government always brings with it plenty of hope and expectations. The election manifesto of the present government contained a separate plan to develop Bangalore’s woefully inadequate infrastructure, such as:
* Setting up a Metropolitan Planning Council, with jurisdiction over 8,000 sq. km., comprising elected representatives and experts to plan and coordinate various activities in the region.
* Separate power generation unit for Bangalore.
* New blueprint for traffic regulation, and improved road infrastructure.
* Water supply schemes by tapping Hemavathy river.
* Development plans with Private-Public Participation.
* E-governance for efficient service.
* Administrative changes such as direct election of the city mayor every three years, assisted by a commissioner.
Special cell
While a separate ministry was not set up, two Ministers now share the responsibility of monitoring Bruhat Bengaluru as per the allocation of portfolios. Apart from this, a special cell for the development of Bangalore has been formed. Some of the election promises too found place in the Governor’s address to the joint session of the State legislature.
Meanwhile, various sections of the public have come forward with their opinions for filling the inadequacies in Bangalore’s infrastructure.
Many organisations too have submitted to the Chief Minister their ‘wish lists’ for a better Bangalore. One such organisation — CREDAI, Karnataka (formerly KOAPA) — has prepared an elaborate list of priority action from the State Government in the area of real estate.
It has stressed the need for a review of the levies charged by various Governmental organs and their reduction to a reasonable level, so that the prices of real estate products can come down to affordable levels. This, CREDAI feels, will give further fillip to the real estate sector.
Major levies
The levies start from the stage of purchase of land and continue till one occupies the constructed building. First, the stamp duty and registration charges on the land which will be around 10 per cent. Then, the betterment levy and conversion charges followed by khatha charges. Land revenue has to be paid till the completion of construction, which normally takes 2-3 years. Plan approval requires a hefty fees at Rs. 30 per sq.ft.
Issuance of NOCs from Fire Force, BWSSB and BESCOM comes to Rs.10 per sq.ft. of built-up area. Another requirement is the commencement certificate, at Rs. 5 per sq.ft. Labour welfare cess is also payable at one per cent of construction cost.
Once the construction is over, occupancy certificate has to be obtained which is around Rs. 15 per sq.ft. of built-up area. In addition to the above, construction materials such as cement, steel and bricks attract excise and customs duty.
The other levies include deposits with Electricity Board and BWSSB for service connections. VAT at four per cent is payable when the apartment is sold. Service Tax is yet another levy.
All put together, the levies amount to around 35 per cent of the cost, according to CREDAI-Karnataka. Interest on loans, property tax to the local body etc are additional costs.
CREDAI-Karnataka is seeking a downward revision in the levies which, it contends, will reduce property prices, increase the demand and ultimately supply higher income to the exchequer.
A pro-development real estate policy is what is required, according to Balakrishna Hegde, CREDAI-Karnataka President.
His contention is that a vital segment like housing will contribute to the economy substantially and serve as a catalyst for growth.
Meanwhile, the various city stakeholders such as BBMP, BDA, BWSSB, BMTC, BESCOM, KSIIDC, BMRDA, KHB, B-TRAC and BMLTA (Bangalore Metropolitan Land Transport Authority) presented their blueprints for Bangalore’s development at a workshop on Agenda For Bengaluru Infrastructure Development 2008, held on June 28.
The Chief Minister, in his vision address to the workshop, unfolded the plans for the development of major cities, embracing Bangalore, Mysore, Mangalore, Hubli-Dharwad, Gulbarga and the like.
The CM also recommended the PPP model for many of the projects. The workshop was attended by many industry heads, opinion leaders and experts. The Kasturirangan report on administrative changes too came up for consideration.
Wish list and reality
As is usually the case, wish lists are often overambitious expectations, without taking into account the ground realities such as technical and financial aspects, overall ability of the agencies involved in executing the wish list, political scenario, coordination among various stakeholders, legal impediments in implementing the plans which may be in conflict with the rights of citizens, etc. Finance can be another difficult area, though the CM is reported to have told ABIDE that funds are not a problem.
Viability and profitability of the plans and projects from various angles will need in-depth examination.
In general, the wish list for Bengaluru relating to real estate for a futuristic period of 5-10 years can be:
Transport and traffic plans, both road and rail.
Reduction in levies to around 25 per cent from the present 35.
Reduction in stamp duty and registration charges for healthy dealings.
Reduction in guidance value.
Reduction in the number of agencies/departments dealing with the subject; if possible, a single window.
Power and water supply.
Liberal approach to plan sanction and service connections.
Real estate is like the ‘Kamadhenu.’ Let it be nourished for reaping the maximum benefit to the national economy. One can only hope that the new government’s initiatives will bear fruit.
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