Bengaluru: Real estate sector hit by demonetisation blues

Bengaluru: The construction industry has evinced a mixed response to the demonetization exercise. Members of the Confederation of Real Estate Developers’ Association of India (CREDAI), Karnataka, say that they welcome the demonetisation move as it would bring in transparency apart from bringing down the rate of interest.

However, small players or realtors have a different opinion and feel their business interests are being affected as they have to pay tax for every transaction. So the customer too is forced to shell out more, resulting in a slump in the market for small realtors.

Secretary of CREDAI, Bengaluru, Suresh Hari, said that the demonetisation does not affect the real estate sector. In fact, it is a boon for both the industry and the customers, where the rate of interest for housing loans are likely to come down after December. This has been hinted at already.

People from IT-BT are the major customers and they transact only through cheques and online transfers. There is no scope for black money transactions. Since the Real Estate Regulation Act (RERA) is being set in place, the entire industry is being streamlined and the CREDAI wants all the builders, small and big, to be brought under the purview of the Act, making it a level playing field, he said.

The money circulation has increased by over '7 lakh crore in the country. The EMI payable by the customer will go down, giving more scope for purchasers. Once the system falls in place, each transaction will be linked to Aadhar or PAN, bringing more transparency, Hari added.

A small-time builder, on condition of anonymity, said that it affects the poor section of society and the small-time builders who cater to the poor and middle- class. Meanwhile, enquiries for the houses and sites has come down to zero from a considerable number.

Genuine house buyers are thinking twice for fear of being questioned by the Income Tax sleuths. Many would have saved up money without going to the bank to evade registration and stamp duty. Since the stamp duty is very high in the state, several customers try to avoid it. In this way, the small industry has been hit, said the contractor.

A windfall for temples

• Insiders in the state revenue department say the Muzarai department is opening the Hundis of all the major temples of the city following information that they have been filled soon after demonetisation. “Revenue of all the temples were almost doubled this month compared with the corresponding month last year,”  informed an officer.
• Union transport minister Nitin Gadkari announced that toll suspension on all the national highways of the country has been extended till December 2.
• Even though the state government has not made any official announcement, according to sources, all government hospitals will be allowed to collect their payments in old notes till the weekend. “The same is applicable even in the Jan Aushadi centers,” explained an officer.
• Most of the city banks have started offering other services including loan disbursement etc. Auto, housing loan applications which were kept on the backburner for the past 15 days are being processed now.
• According to the Income Tax department officials, there is a huge demand for new PAN cards reported from Karnataka ever since a PAN card has been made compulsory to open new bank accounts.
• Insurance advisors say, for the first time in the past decade they received a huge demand for new unit-linked schemes as they are exempted from tax payments.

One-time exchange opportunity!
Even though the central government had announced that people can get their notes exchanged in the post offices, in the city GPO, only one person is allowed to exchange old notes just once between November 9 and November 24.

Separate web page for withdrawn currencies
Karnataka Post has created a separate page on its website for data entry of withdrawn currencies. Through this the activity of all the post offices in the state can be monitored easily.