Guntur: Fear of I-T raids for big transaction hits realty

GUNTUR: The realty sector continues to experience a slump. Information exchange between the Registration and the Income Tax departments, mandatory online payment for amounts above Rs 10 lakh, and cash constraints are deterring people from purchasing houses or land.

People are worried about the I-T department having access to information regarding the transactions. Realtors are trying to revive business by offering attractive discounts, still there are not many takers.

As high as 1,000 new flats are ready for occupation in and around Guntur city, but realtors and builders are concerned over the poor response.

Apart from this, 6,000 structures of various types are under construction in Amaravati.

Officials from the Registration department say that the revenue target for Guntur was Rs 525 crore, of which it has managed to achieve only Rs 386 crore. The target for Krishna district is Rs 532 crore, of which it has managed to achieve only Rs 375 crore.

The shifting of AP government departments to Guntur and Vijayawada, the shifting of the Secr-etariat to the Interim Government Complex at Velagapudi, and the est-ablishment of the AP Le-gislative Assembly and Council had created so-me hope for the real est-ate business, but demonetisation was a dampener on those plans.

The troubles of the realty sector remain unresolved to date. S. Sarath, a developer, says that half of the cash used in land purchases used to be unaccounted for. The trend was prevalent in the realty sector for decades. He says that the value indicated at the time of registration would be only half or a quarter of the market price. After demonetisation, every purchase or sale activity involving an amount equal to or higher than Rs 10 lakh is required to be carried out either online or via cheque or demand draft.

The I-T department wi-ll be able to scan through all the transactions and conduct inquiries about people’s earnings.

Mr Sarath says people are not interested in purchasing assets. They are waiting for the transaction laws to change, which is why the realty sector is experiencing a slump. It is not uncommon to see boards advertising, “Flats available, ready to occupy” and "Discount and loan facilities available for flats/plots”; but people are still not interested in making purchases.

S. Sivannarayana, an employee of the state government, says that ruling parties usually relax restrictions before an election, and so people are waiting for rules that allow cash transactions for property purchases.

High cement price puts extra burden
Abnormal increases in cement and iron prices are adding to the woes of the already-troubled realty sector. Realtors and developers are faced a huge additional financial burden, which is forcing them to halt construction. They have urged the government to bring cement prices down, and fear that activities in the realty sector may completely be shut down.

Cement prices have gone up from Rs 220 and Rs 270 per bag to Rs 350 and Rs 400; and steel prices have risen from Rs 40,000 per tonne to Rs 49,000 per tonne.

Allegations are that a syndicate of cement co-mpanies is responsible for this abnormal hike. The AP Real Estate De-velopers Association (APREDA), the Confede-ration of Real Estate Developers' Associations of India (CREDAI) and other associations have asked the government to take action against cement companies, and they have warned that they may be forced to stop construction.

G. Thirupathi Rao, the secretary of the APREDA, has alleged that cement companies have formed a syndicate and hiked prices, thus imposing an additional burden of Rs 100 per square foot for construction. He says that the realty sector is already experiencing a slump, and construction in Amaravati may also come to a halt soon.

In response, the AP government has directed cement companies to fix the price of cement at Rs 310 per bag. The realty sector is not satisfied with the government’s decision.  It seeks further reduction in prices to save the sector.