Real Estate Industry News, Updates and Trends in India
Proppick
Follow Us
Follow Us

Blog

  • By Anupama Meshram |
  • Jul 28,2017

What Is The Real Estate Regulation Act (RERA)?

A lot of hue and cry on RERA has been made in news and media. Now, let us understand what exactly it is, and its real implications on builders and home or property buyers.

What is RERA?

Real Estate Regulation and Development Authority Act which is popularly known as RERA came into execution on 1st of May 2017. Last year in March, both houses (Rajyasabha and Loksabha) passed the bill and after various amendments to the regulation, the draft was formulated and subsequently implemented on May 1, 2017.

RERA is basically, formulated to protect or safeguard the interest of residential property buyers and to infuse accountability and transparency into the real estate sector, which is usually unregulated.

After the enactment of this stricter regulatory rule, all real estate sector builders and developers (mainly residential) have to upgrade and recalibrate their business practises accordingly.

What are the provisions included for registration of real estate projects?

As notified by the Government of India, the important key provisions of the Act are,


• It is mandatory for all residential and commercial real estate projects of larger than 500sq m or 8 apartments, to get registered with their respective state's RERA authority, before it is launched.
• The real estate agents, who are in purchase or sale of the reality projects, have to register themselves with the authority.
• The running projects which are without CC (Completion Certificates) will have to file for registration within 3 months of the commencement of the Act. Within 30 days, the authority will either accept or reject the application. After acceptance of the registration request the developers have to furnish all the relevant details about the project to the RERA's official website.
• If the body fails to register a project within the stipulated time, then the project will be penalised with 10% of the total project cost or the developer will face an imprisonment of up to 3 years.

How RERA promotes transparency in real estate sector?

RERA requires all builders to submit original and approved plans for their running / ongoing projects to the regulatory authority, including details of any subsequent modifications. In addition, they will have to provide details of the revenue collected from the buyers / successful tenderers and the utilization of the funds, together with the construction, completion and delivery deadlines certified by an engineer, architect or a certified CA.

In order to have all residential buyers to make an informed decisions, real estate regulatory authorities will need to ensure the publication / release of information regarding each builder's profile, litigation details, track record, advertisements and projects prospectus, plots and apartment details, information of Registered agents, promoters and consultants, layout plans, approval status, etc.

In addition to this, a maintenance of a separate Escrow account by the developer for each project which allows the use of (70% of )funds collected from a particular project to be used only in that same project.

What is a RERA compliant Project?

Every homebuyer or any realty sector buyer should know this before proceeding to make a deal.


• Before advertising and selling any project / property, it should have received all requisite approvals
• Details regarding to completion timeline, sanctions and master plans should be disclosed
• Each unit should be sold as per the carpet area and not as per the built-up area.
• It is important for promoter to have a separate Escrow account for each project and should maintain 70% of funds as advance deposits

RERA regime is going to have a far reaching effect on residential developers. It actually gives more importance to the realty customers and empowers them with legal rights to have more value for their money and investment. It also helps in building trust in the realty sector which ultimately leads to more strong economy.

Read Full Story
  • By Anupama Meshram |
  • Jul 25,2017

GST Regime Beneficial For Real Estate Buyers

GST Regime - Beneficial for Real Estate Buyers

The launching of GST is one of the biggest tax reform in India after independence. It replaces the complex and multiple taxes levied by the state and the central governments on the end consumers. It is to subsume all the indirect taxes like central excise duty, VAT (Value Added Tax) – calculated on material cost, commercial tax, service tax (calculated on labor or service) and octroi charges/taxes. The predominant philosophy of GST is 'One Nation, One Tax'.

The overall benefits for the economy will be:
• Easy compliances
• Create a uniform tax rate and structures
• Elimination of previous cascading tax structure
• Helps in reducing additional tax burdens on consumers
• Widening of the tax base
• More tax collection

The two most crucial points of the GST are:

The introduction of Input Tax Credit, in which the credits of input tax paid at each stage of the production or service delivery, can be availed in the further stages of value addition. Due to this, the end consumer will bear only the GST charged by the last dealer in the supply chain, meanwhile, it will have all the benefits of the earlier stages.

To make sure that the developers, manufacturers and service providers pass on the benefits to the end consumers, an Anti Profiteering clause in the GST Bill under section 171 of GST law is made. This makes them mandatory to pass on the benefit of tax reduction due to input tax credits to the final customers.

The implementation of GST will bring significant transformations in the real estate sector of India, in coming times.

RERA:

Along with the GST, another unprecedented move in the history of Indian Real Estate property sector is the enactment of latest Real Estate and Regulation Act (RERA). It has already started addressing the issue of non-transparency and enforces a level of accountability on the real estate builders and brokers. For Residential property sector buyers, this will definitely act as a positive sentiment booster. This will subsequently benefit all the Residential real estate sector stakeholders.

Benefits to Buyers:

Simple & transparent taxes are applied to the property purchase price. The under construction properties will be charged at 12%, which is lower than the ready-to-move-in houses or projects.
• The buyers (consumers or builders) have to pay only a single tax on the materials and labors.
• There is no GST for Affordable housing projects which come under affordable housing schemes.
• The multiple taxations occurring, in tax cascadation during the transportation and in the logistics are reduced in the present GST regime.

Conclusion:

There might be a marginal impact on the real sector in the short term due to a lot of confusions and implementation hurdles. But in the long term, future prospects are definitely bright for Real Estate sectors as the trust quotient of consumers/property buyers, on the builders and construction sector will improve.

The combined effect of simplified tax structure and the accountability affixed on the real estate developers, fixed at every stage will surely bring, cheers to both buyers and builders in the long run.

Read Full Story
  • By Poojitha |
  • Jul 24,2017

GST Impact On Real Estate Industry

Introduction:

The Goods and Services Tax or GST was rolled out on the 1st of this month by our honorable President and Prime Minister of India. The aim of this new tax, GST is to transform India with its - "One Nation, One Market, One Tax" principle. This simple tax is replacing a large number of indirect taxes, which were levied on a variety of goods and services.

Its implementation has created a lot of confusion in the entire nation with respect to the price of various commodities (goods) and services. The reason for this is, before the 1st July 2017, a host of taxes were levied on various items such as sales tax, service tax, value added tax (VAT), customs duty, octroi, excise duty etc. Some of these taxes had different values in different states since they come under the jurisdiction of the state or were shared by both state government and central government. For example, manufacturing tax (excise duty) is levied by the central government which is almost uniform in the country, but sales taxes, which are levied by a state government is different in different states.

Subsequently, GST is touching every sector of the economy and its implementation is producing ripples in various segments - Real Estate, Agriculture, Manufacturing, IT, etc.

Impact on Real Estate:

The Real Estate Sector in India is one of the most important sectors of its economy. It ranks second in employment generation after agriculture in India. It contributes an average of 5-6% of GDP and also stimulates demand in a large number of ancillary industries.

With time, the implementation of GST is expected to generate a positive effect on realty sector. Currently, the sale of land and building, have been kept out of GST ambit. It is seen that it will revive the buyer and investor interests, by bringing more transparency in taxation and will minimize unscrupulous transactions. This will assist in improving the market of real sector and is said to act as a sentiment booster.

The GST also helps in revamping its supply chain mechanism. Before GST, a Contractor had to pay service tax, excise duty, octroi, entry tax at the time of procurement of the materials. These all are replaced by GST and will help in increase of the margins of the Developers and Contractors. The main benefit comes from the construction of land and building as the cement, iron, and bricks are charged with reduced taxes. The logistics cost of transportation of cement, bricks, and iron is reduced through the subsuming and streamlining of the taxes. The contractor may transfer this benefit to the property buyers or the end consumers to increase the sale.

The cloud storing of invoicing during procurement of materials in various stages of construction will also help in recording all real estate projects running in India. After the launch of GST, the number of property searches in Hyderabad's residential category has seen a jump of a third in the past one year, because of availability of properties at desired price ranges and expected improvement in regulatory policies. The properties which are priced below Rs.80 lakhs has seen the highest number of searches in the past 1 year. While the searches for luxury properties, which were priced at Rs. 1.5 crores, had seen a marginal growth as against a flat growth in the number of searches of properties in other metro cities of the country.

Conclusion:

The GST impact on real estate is expected to be positive in the long run, as it will bring a lot of transparency and accountability in the projects run by different contractors and developers in India. The sub summation of many taxes with the GST will increase the profits of Contractors and it can surely be transferred to the consumers or property buyers, to increase the sale.

Read Full Story

Your Favorite Projects

No favorites