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By Pratap John
NON-RESIDENT Indians (NRIs) can make use of India�s relaxed real estate development policy under which investors are given a tax holiday and allowed to fully repatriate their profits, a prominent Indian tax and forex expert has said.
H P Ranina, who is also an attorney with India�s Supreme Court, said recent relaxation announced by the Government of India means that NRIs can inve st in the real estate sector and fully repatriate the investment and profits that are not taxable either.
The main requirement set by the government is that the project concerned must get approval before March 31, 2007.
Once approved the project needs to be completed within 48 months from the last day of the financial year concerned.
Ranina, who is in Doha at the invitation of the Institute of Chartered Accountants of India (Qatar chapter) and the Indian Business and Professional Network (IBPN) for an analysis of the recent Indian
federal budget, yesterday said the real estate sector provides a great opportunity for NRIs.
The International Bank of Qatar (IBQ) was the lead sponsor of the event held at the Qatar Chamber of Commerce and Industry (QCCI) building.
Earlier, speaking to Gulf Times, he said the minimum land requirement for real estate development had recently been brought down to 25 acres from 100 acres earlier. And for real estate development including housing, utility and recreational facilities the land requirement is further low - only 12.5 acres are needed in such cases.
Each dwelling unit in such a real estate complex must not exceed a built up area of 1,000sq ft in Mumbai and Delhi and 1,500sq ft in other cities and towns.
However, one is allowed to own two or more units and combine them if one requires greater space.
But the tax holiday will only be given to units whose carpet area is less than 1,000sq ft in Mumbai and Delhi and 1,500sq ft in other cities and towns.
He
said the Indian banks are now liberal in approving and financing real estate projects.
The interest rate on housing loans is also very competitive now and it hovers around 7%.
NRIs, Ranina said, can invest in the Indian real estate sector either as individuals or groups on a partnership basis. They can also set up limited liability companies in which case the minimum capital must be $25mn.
The real estate sector may grow between 15% and 20% this year and in the coming years. It is likely to be fastest growing sector of the Indian economy in the next few years.
Analysing the federal budget presented by Finance Minister P Chidambaram last month he said NRIs can heave a sigh of relief that the tax proposal on NRE/FCNR deposits is being withdrawn.
�I don�t think the proposal will be implemented in the next four to five years. The present government seems to acknowledge the fact that NRIs contributed significantly though the India Development Bond, when the country
faced one of its worst forex reserve crises in the early 90s,� he said.
He said the budget would give a further push to the Indian economic growth, which is already among the highest in the world. The Indian economy may grow at 10% in the next three years.
While continuing with the earlier measures for promoting rural development, increasing farm output by bringing in more acres under irrigation and giving additional allocations for infrastructure development, the finance minister has also continued to show the humane side by making large allocations for education, health and employment generation schemes.
The budget proposals have also attempted to tackle vexing issues such as inflation and the low rate of growth of the manufacturing sector for which the minister has brought down the customs duty rates.
The budget also attempts to rationalise the excise duty structure, especially to help the textile industry that is employment-oriented.
Taxpayers in India will
greatly benefit by the reduction in tax rates across the board which will give a benefit of Rs24,000 every year in taxes on income of Rs250,000.
The proposed Income Tax bill, according to Chidambaram, would further simplify the IT procedures besides widening the taxpayers net.
The budget, he said, was undoubtedly growth-oriented and would make an impact on the lives of the people for some time to come.
Indian Ambassador Ranjan Mathai was the chief guest at Ranina�s budget analysis at the QCCI. ICAI chairman Girish Jain welcomed the gathering and IBPN president Hasan Chougule proposed a vote of thanks. | 