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Have a vacant plot & intend to sell it some time in future ,the taxman may soon demand share


By Riti, Section Gurgaon Real Estate Property
Posted on Mon Sep 01, 2008 at 12:56:43 AM EST

Have land, pay tax. If you have a vacant plot and intend to sell it some time in the future for huge profit , the taxman may soon demand a share. The Centre is considering a tax on unused urban land to finance a ``national fund for urban poor'' to ensure that basic services -- shelter, water, sanitation and health facilities -- reach the poorest.

Government sources said the tax would be paid by individuals, institutions and builders who are allotted land by a government agency but keep it vacant instead of using it for the originally stated purpose. The proposed tax will be calculated at the prevailing market rate. To bring in more money, the government also plans to give tax exemptions to contributors.

The tax is not just meant to improve the lives of slumdwellers but also deter speculation by builders and developers who exploit the scarcity of land in cities and towns.

Sources pointed out that the corpus, called Basic Services to Urban Poor Fund, will have an initial Rs 5,000 crore and will also get a grant from the Centre.

According to the proposal, moved by the housing and urban poverty alleviation ministry, the non-lapsable fund will be set up at national, state and city levels.

The purpose of the revolving fund, which is being vigorously pushed by minister of state for housing and urban poverty alleviation, Kumari Selja, is to finance the integrated development of slums.

This, by means of projects to provide shelter, basic services and other amenities.

The government proposal also suggests that civic agencies spend 25% of their budget in areas dominated by the urban poor if they want to avail of cash from the fund.

A similar rider will apply to civic agencies funded by the Jawaharlal Nehru Urban Renewal Mission.

Click on Full Story for More.

PRICE OF PROFIT

-Tax to be paid by those who are allotted land by a govt agency and choose to keep it vacant
-It will be calculated at the prevailing market rate
-Move is intended to deter greedy builders and developers from exploiting scarce city land
-Civic agencies must spend 25% of their budget in areas dominated by the urban poor if they want to avail of the cash `BUDGET FOR THE POOR'
-Civic bodies must spend more on poor to avail grant.

A government proposal has suggested that civic agencies spend 25% of their budget in areas dominated by the urban poor if they want to avail of Central assistance from Basic Services to Urban Poor Fund.

The limit has been fixed considering that at least a quarter of the population in cities and towns lives in slums.

Poor constitute a major chunk of the urban population. According to the government's estimates, in Mumbai, slum-dwellers constitute 54.1% of the city's population. The figure for Delhi is 18.7%. The proportion increases in smaller towns.

In Faridabad near New Delhi, 46.5% of the total population lives in slums while in Meerut the figure is 44.1%. In Kolkata, 32.5% of the total population lives in slums, while they account for 18.9% of Chennai's population. The figure for Hyderabad is 17.2%.

Selja had some time ago written to Prime Minister Manmohan Singh for setting up the dedicated fund. Subsequently, finance minister P Chidambaram asked the ministry to come out with the concept note on the proposal. The move is part of the housing and urban poverty alleviation ministry's proposal to provide 100% access to basic services for urban poor within the Mission Period 2005-12.

The ministry has also introduced an innovative concept of P-Budget (Budget for the Poor). Under this, municipalities will have to allocate funds for schemes especially focused on weaker sections of society according to the proportion of their population in a city, said a senior official.

Source:The Times Of India August31st,2008.

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