All About Registration --> the process and the cost to customer

Not many people are sure about the registration process and how much it would cost to the customer. Hence, I thought of writing this post. In this post, I would try to cover all the expenses related to the registration process and explain each of them with some numbers. The below process holds good if you are planning to buy an indepdendent house/villa.

Registration (Stamp Duty): Goverment assigns a value to the land involved in the project. Let us assume that the value of land as per govt. standards is 6000 INR per sq. yard. Now, stamp duty is 9.5 % of the value.

If you chose a 200 yard sq. yard plot, you have to pay 9.5% of 200*6000.

VAT: VAT varies as per constructed area which will typically be in sq. feet. This also depends on the agreement of concession. VAT is 1% of the agreement of concession.

If the value per SFT is 2000 as per the agreement, a 2500 sq. ft of constructed area would attract a VAT of 2500*2000*1%

Service tax: Service tax 4.08% of the agreement of concession.

The above three components cover the complete registration cost (in the case of independent house).

On Growth Path... again

With the global economy showing signs of recovery and with stable government at the centre, India seems to have re-started its journey on the path of growth. The recent address by the nation’s president Dr. Pratibha Patil has references to give impetus to the Commercial Vehicle segment, pension reforms, skill development and not to forget, the most relevant of all, the housing sector.

At the outset, it looks like, the government is planning to make credit available to builders (increase liquidity in the credit markets) and housing loans available to customers who were earlier deprived of housing loans. These consumers are not necessarily sub-prime.

A recent show in CNBC (Hindi channel) showed that around 3500 houses were sold in Mumbai in the last two months. That is a clear indication of the positive trend in the market. Developers like the JP group, HDIL confirmed the positive movement in the market. All this coupled with burgeoning urban population has the potential to spur the economy. Many developers conform that they may not see the mad rush for homes as during the 2005-2008, however most in the industry see an increase in the traction in the market.

What this means for the costumer: With easy availability of credit to developers, they can see more apartments being built, more choice, more competition and more value add to the customer.

From the developers’ side, one should not forget that the market is not friendly to everybody and always. If one company takes a wrong call (could be investing heavily at sky high prices during very high valuations), one such wrong call has the potential to shut its operations. As they say, the fittest will survive post any tough time.