Month: June 2017

The Real Estate (Regulation and Development) Act, 2016 (RERA) had come into action in May 1. As most of the states failed to meet the timeline, center gave a stretch period of another 3 months for the completion purpose of project registrations under the Regulatory Authority (RA). Now, the given buffer time is also about to subside and states are making tracks for finalizing their respective RERA rules. Now, Rajasthan government is made it compulsory for every builder, agent and respective projects to be registered on the official website of RERA within the due time.

The state RERA website was launched by Vasundhara Raje, the CM of the state on yesterday June 1. The website- www.rera-rajasthan.in will secure buyers’ rights and will display all the registered project details and past 5 years’ development records of the builders as well in order to deliver them a secured property investment. Without registering on this portal no new project development work can be commenced, confirmed Raje. Again, for the ready-to-move properties state will give 3 months’ additional time period to complete the legal formalities.

Rajasthan was the first state in the country in providing affordable housing approval for the unfamiliar investors of the society and bracing up the PM’s ambitious project’ Home for All by 2022’. The state government of Rajasthan also advised big market players of real estate to invest in this affordable housing sector in order to provide standard lifestyle to the economically weaker section (ECS) of the society.
“The dilution of RERA and delay in proceedings is not acceptable when it’s subject to the buyers’ right protection and overall development in national real estate market. Real estate market in India have never been extraordinary, just because the malpractice of set of developers and realtors, RERA aims to reform the realty sector by bringing back the much-needed transparency in realty practice,-said West Bengal RERA expert Mr. Mahesh Somani.

Asking about the present status of Kolkata property market trends Mr. Somani also stated, “West Bengal is yet to notify the state RERA regime. Meanwhile, developers are in haste to complete their on-hand projects that are at advanced completion stage. These days, people perform their real estate deals mostly with the leading property portals in Kolkata. They have been delivering free property investment counsel from the very portal. It’s called ‘Post your property requirement in Kolkata which they are using to have a free, interactive session with the property experts related their investment and other RERA related queries. Naturally, people those are seeking for professional real estate help have become limited in number. Hence only fair practice will survive under stringent rules of RERA.”

Already 18 states and UTs notified their respective RERA rules; as many as 19 states are at advanced completion stage, as per the updated report card. States have been found diluted principle RERA rules and most of them even finalized their respective drafts without developing a Regulatory Authority (RA) and an official website. Only 6 states have set up an interim tribunals.
–LNN (Liyans News Network)

It seems like the Maharashtra government is now keen on reforming the real estate sector. In order to make the realty transaction law-bound the state of government of Maharashtra has issued a notification to levy value added tax (VAT) based on faltered payments received from homebuyers.
Homebuyers are again brought under new taxability before the GST roll out. According to this rule homebuyers who want into invest in under-construction properties before end of June, have to pay 1% of VAT along with the advance payments. Payments made after this marked time will attract 6% state GST under the new tax regime.
Under the existing tax rule of the state, homebuyers are paying 1% VAT of the transaction value at the time of registration of the agreement. Now with the new VAT amendment act, buyers will have to pay the tax at the time of staggered payments to the promoters. VAT payment will now be adjusted with the service tax, which also charged based on the certain percentage of the fee paid by the consumer during the course of the development (milestone payment). In a nutshell, after this alternation, a homebuyer will have to pay tax of 5.5%, including 1% VAT and 4.5% service tax up to June 30. After June 30, post GST implementation, the same consumer will have to pay 12% GST, counting 6% Central GST and 6% state GST starting from July 1.

The administration thinks that this amended VAT rule will be beneficial to the homebuyers. People who don’t pay upfront during the agreement and mostly render milestone payment; it will be an up to code regimen for them. This is sort of an interim tax rule before the GST implementation- that’s what recent market conjecture reveals. Because, after GST implementation all payments will attract SGST against 1% VAT. These the ideal time for the potential homebuyers to obtain leverage this latest amendment. Thus, homebuyers are advised make their payments before July 1 for their own use of the ongoing projects that nearing to completion within upcoming 3-6 months time period. The current 7.5% tax levy is total of 4.5% service tax, 1% VAT and 2-2.5% of tax credit loss.

Homebuyers should clear up their remaining payments for their ongoing projects before June end. Else tax burden will be inflated from July 1 onwards. This new tax regime will be emphasized on luxury projects in the tier I cities such as Mumbai and Pune. While the 12% GST through works-contract comes with appropriate input credits on all possession, such differential credit under the GST regime would not be in surfeit of 2-2.5% of the agreement value for various places in Mumbai.
According to the notification of Maharashtra government, “The claimant dealer (builder) opting to pay composition amount (1% VAT in the current regime) under this scheme shall not be eligible to claim to set-off of taxes paid in respect of the purchases (input procurement).”
GST roll out will increase property tax burden by 4.5% (approx) which is the difference between 12% GST and current tax cost of around 7.5%. VAT charge will be continued to be paid upon registration charges.

Speaking about West Bengal tax rules, The West Bengal state assembly on the 15th of December passed a new property tax act deemed Kolkata Municipal Corporation (Amendment) Act, 2016. This new act enables buyers to assess property tax by themselves, which came into effect on April, 2017. “Residential property sale in Kolkata is likely to surge this FY as the luxury property price is dropped after RERA implementation. It’s the right time for homebuyers to plunge in the realty market of Kolkata,”-said Mr. Mahesh Somani, RERA expert of West Bengal.

_ LNN (Liyans News Network)