residential – Page 6 – FindMyProperty

What is RERA?

RERA (Real Estate Regulation and Development) Act, The act was passed by parliament last year. RERA seeks to bring clarity and fair practices that would protect the interests of home buyers and also boost investments in the real estate sector.
RERA requires builders to submit the original approved plans for their ongoing projects and the alterations that they made later. They also have to furnish details of revenue collected from allottees, how the funds were utilised, and the timeline for construction, completion, and delivery that will need to be certified by an Engineer/Architect/practicing Chartered Accountant.

How will RERA impact Homebuyers?

Some of the important compliances are:

• Informing allottees about any minor addition or alteration.
• Consent of 2/3rd allottees about any other addition or alteration.
• No launch or advertisement before registration with RERA
• Consent of 2/3rd allottees for transferring majority rights to 3rd party.
• Sharing information project plan, layout, government approvals, land title status, sub-contractors.
• Increased assertion on the timely completion of projects and delivery to the consumer.
• An increase in the quality of construction due to a defect liability period of five years.
• Formation of RWA within specified time or 3 months after majority of units has been sold.

The most positive aspect of this Act is that it provides a unified legal regime for the purchase of flats; apartments, etc., and seeks to standardise the practice across the country.

Which projects come under RERA

• Commercial and residential projects including plotted development.
• Projects measuring more than 500 sq mts or 8 units.
• Projects without Completion Certificate, before commencement of the Act.
• The project is only for the purpose of renovation / repair / re-development which does not involve re-allotment and marketing, advertising, selling or new allotment of any apartments, plot or building in the real estate project, will not come under RERA.
• Each phase is to be treated as standalone real estate project requiring fresh registration.

GST may bring a lot of relief to the real estate sector. GST council has announced the statutory tax rates under the Goods and Services Tax (GST) and same will be become effective from 1 July, 2017. These new GST will replace all applicable indirect taxes. While some goods and services are going to get cheaper, some are set to get taxed more.

Under-construction properties will attract the Goods and Services Tax (GST) rate of 12 percent which is likely to keep the impact neutral or positive for homebuyers. Currently, a homebuyer has to pay several indirect taxes, including excise duty, value-added tax and service tax, which amounts to a tax outgo of about 11 per cent, excluding STAMP DUTY.

These, barring stamp duty, would be subsumed in GST under the new indirect tax regime that will also allow input tax credit for developers. The real estate sector, is awaiting clarity on the abatement rate for the land cost.
Completed and ready-to-move-in properties will also be exempted from the new GST taxes. However, stamp duty and property taxes will most likely be applicable to immovable properties as usual.

GST will impart more transparency to the sector, which faces a perception issue. GST would provide an audit trail for better control and monitoring of the sector.