Cap­i­tal gains tax ex­emp­tion pro­posed for Amar­a­vati must be given to Delhi too

HT Estates - - HTESTATES - Ramesh Menon

Amar­a­vati, the new cap­i­tal of Andhra Pradesh, is be­ing con­structed by in­no­va­tive land­pool­ing mech­a­nism with­out the use of the Land Ac­qui­si­tion Act. Cap­i­tal gains tax will be ex­empted for per­sons hold­ing land from which some part was pooled for cre­ation of the state cap­i­tal of Andhra Pradesh. The tax ben­e­fit de­pends on the value of the land given up by the farmer, ac­cord­ing to the bud­get pro­pos­als.

Those who held land on June 2, 2014 and sold it to the gov­ern- ment to carve out the new cap­i­tal will ben­e­fit from the tax waiver. Over 20,000 farm­ers have given up land un­der the Land Pool­ing Scheme (LPS) for the devel­op­ment of the new cap­i­tal city. The ex­emp­tions are ret­ro­spec­tive and are ap­pli­ca­ble for trans­fer of cap­i­tal as­sets, both land and build­ings.

So shouldn’t Delhi be given the same pri­or­ity? Af­ter no­ti­fi­ca­tion, the land-pool­ing pol­icy of Delhi is cur­rently lan­guish­ing due to lack of po­lit­i­cal will, thereby lead­ing to an in­crease in slums and unau­tho­rised de­vel­op­ments. It has been al­most three years now.

Farm­ers, whether in Am­ra­vati or Delhi, de­serve the same ex­emp­tion. This is be­cause Delhi is In­dia’s only city state, which is 100% ur­banised ac­cord­ing to the Mas­ter Plan of Delhi 2021 or MPD 2021. The stated vi­sion is to “de­velop Delhi into a world-class megapo­lis. Land is ei­ther an in­her­ited or longterm in­vest­ment as­set, and so val­u­a­tion is largely sub­jec­tive. There is also a pro­jected need for al­most 1.6 mil­lion af­ford­able res­i­den­tial units and 130 mil­lion sq ft of workspace.

Gov­ern­ments, both at the Cen­tre and the state level, need to un­der­stand that the av­er­age per capita land hold­ing in Delhi would be less than half a hectare, and the only way to ag­gre­gate 56,000 hectares will be through the in­cen­tives route. This would help chan­nelise bil­lions in in­sti­tu­tional in­vest­ments into land and fu­ture de­vel­op­ments.

If a ro­bust man­u­fac­tur­ing sec­tor is to be de­vel­oped, the gov­ern­ment needs to ex­tend f acil­i­ta­tion and in­cen­tives to­wards raw ma­te­ri­als for pro­grammes, in­clud­ing Make in In­dia and Start up In­dia. So why can’t land be treated as the most cru­cial raw ma­te­rial for planned ur­ban­i­sa­tion of Delhi? MPD 2021 is the last phase of devel­op­ment of Delhi and 100% land is likely to be con­sumed for devel­op­ment. All pos­si­ble in­cen­tives need be ex­tended so that gov­ern­ment agen­cies have ac­cess to iden­ti­fied land parcels to roll out the new in­fra­struc­ture.

The lieu­tenant gov­er­nor of Delhi, through an ex­ec­u­tive or­der, had or­dered that the in­ter- depart­ment trans­fer of land for devel­op­ment projects in the Cap­i­tal must at­tract only a no­tional fee. Even gov­ern­ment agen­cies need to be in­cen­tivised to roll out phys­i­cal and so­cial in­fra­struc­ture in a time-bound man­ner. Let’s not for­get that al­most 40% of the to­tal land in Delhi would be avail­able to DDA un­der the land-pool­ing pol­icy.

Treat land like raw ma­te­rial for af­ford­able hous­ing, con­sid­er­ing that the pro­jected pop­u­la­tion in the NCT of Delhi is around 2.3 crore. There is also an ur­gent need for more work­places.

Land pool­ing is the only way for­ward, and now is the best time to es­tab­lish Delhi as the politi- cal, eco­nomic and devel­op­ment cap­i­tal of In­dia.

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