All you want to know about the Real Estate Regulatory and Authority (RERA) Act 2016.

Synopsis: 

The Real Estate Agency of India passed the Real Estate Regulatory and Authority (RERA) Act in March 2016. This act has been made in accordance to increasing complaints against the builders or promoters and the real estate agents. These complaints are mainly regarding the late possession of a house to the buyer, faults in the society, irresponsible behaviour of promoters after the signing of the agreement and many such issues. RERA is a government body whose sole purpose is to safeguard the interest of buyers as well as lay a path so that the promoters and the real estate agents get a chance to come up with good services. The present structure of real sector is quite messy as corruption in the government bodies and opaqueness of the information is there. The policies in RERA have been made keeping in mind that due to the lack of activeness in the government work such as approval of a project, many promoters have to seek an unfair way to continue their work so that their massive investment in a project does not get lost. Also, the Real Estate Agency is establishing Central Agency Council and Real Estate Appellate Tribunal with RERA so as to bring in a level of confidence in buyers for the builders and the agents and also to punish the defaulters.

The thing is, there are several government rules and regulations which, if made aware properly to the general public, then many things will get proper transparency and discipline. RERA Consultants is one such advisory body whose purpose is to guide the people related to real estate in an organised manner. Even though the guidelines laid by RERA for promoters and real estate agents are very basic and affective, the general public needs a platform where they can be made aware of their particular rights. RERA Consultants is that platform which has done thorough research on the official rule book of RERA released by the government. The promoters, buyers and the agents can come up here for a jovial coordination among themselves. We offer consulting services to the promoters and the agents to get registered under RERA. Apart from that, our public forums and interactions will also prove beneficial for everybody. Real estate is a very important sector for a country’s growth and the current status is really bad with every day hundreds of complaints being lodged against different bodies of real estate. It is of great importance that a buyer starts to trust an agent and a builder so that a proper passage of business can take place.

Salient Features

1) It establishes the State Real Estate Regulatory Authority for that particular state as the government body to be approached for redressal of grievances against any builder. This will happen once every state ratifies this Act and establishes a state authority on the lines set up in the law.

2) This law vests authority on the real estate regulator to govern both residential and commercial real estate transactions.

3) This Act obliges the developer to park 70% of the project funds in a dedicated bank account. This will ensure that developers are not able to invest in numerous new projects with the proceeds of the booking money for one project, thus delaying completion and handover to consumers.

4) This law makes it mandatory for developers to post all information on issues such as project plan, layout, government approvals, land title status, sub contractors to the project, schedule for completion with the State Real Estate Regulatory Authority (RERA) and then in effect pass this information on to the consumers.

5) The current practice of selling on the basis of ambiguous super built-up area for a real estate project will come to a stop as this law makes it illegal. Carpet area has been clearly defined in the law.

6) Currently, if a project is delayed, then the developer does not suffer in any way. Now, the law ensures that any delay in project completion will make the developer liable to pay the same interest as the EMI being paid by the consumer to the bank back to the consumer.

7) The maximum jail term for a developer who violates the order of the appellate tribunal of the RERA is three years with or without a fine.

8) The buyer can contact the developer in writing within one year of taking possession to demand after sales service if any deficiency in the project is noticed.

9) The developer cannot make any changes to the plan that had been sold without the written consent of the buyer. This puts paid to a common and unpopular practice by developers to increase the cost of projects.

10) Lastly, every project measuring more than 500 square metres or more than eight apartments will have to be registered with the RERA.

Regards,

Kunal R. Sarpal

kunalsarpal@gmail.com ; kunal@whitecollarlegal.in

All about the Real Estate (Regulation and Development) Bill, 2013 .

The core aim of the Real Estate (Regulation and Development) Bill, 2013 was to protect the interest of the buyers and to promote fair play in Real Estate markets. This Bill had been introduced mainly to reach the objective of Government of India to provide “Housing for All by 2022.” The measures in the Bill were propounded with the aim to boost the domestic as well as foreign investment in the sector.

The Real Estate Bill 2013, first and foremost ensured the formation of Real Estate Regulatory Authority (RERA). This body was created for the registration of Real Estate agents and their subsequent projects. This Bill outlines the duties of developers, buyers and agents in the Residential Real Estate sector.  It also stipulates:

• Uniform regulatory environment in this sector,
• Genuine contract between buyers and promoters of Residential Real Estate projects
• Developers are barred from booking or offering the projects of Residential Real Estate for sale without registering them in RERA,
• The information of promoter should be uploaded with the details of above mentioned point in the website of RERA,
• 50% or less of the money paid by the buyer should be maintained in a separate bank for the construction of the project,
• The framework must have written agreement with completion certificate and payments.
• A Tribunal of Real Estate was to be devised so that the decisions of RERA could be appealed.
• Setting up of the Central Advisory Council.
• The regulatory authority had the power to set rules and regulations

The main purpose of the Bill is to restore the confidence of the people in the Real Estate zone by introducing transparency and accountability in the housing markets. It will help in accessing the financial and capital markets in the long term goals. “The Bill will promote orderly growth through consequent efficient project execution, professionalism and standardization.” Along with guaranteeing speedy trials of disputes and growth to the sector, “it also ensured to curb corruption and use of black money in the real estate market, the Bill will include some provisions which will help in tracking down innumerable sources of black money which currently costs the government Billions of rupees in lost taxable income.

Drawbacks of the Real Estate (Regulatory And Development) Bill, 2013

Following are the setbacks of the said Bill:

1. It does not enumerate any difference between the Residential Real Estate and Commercial Real Estate.
2. Some projects in the Real Estate with certain investors or stakeholders do not come under the category of this Bill. They are:

• “Government agencies/authorities at Centre, State and Municipal level;
• Financing agencies like Bank/Financial Institutions
• Brokers, Underwriters and Bulk Purchasers”

3. It also does not provide any tool for transferring the booking during the construction time
4. It fails to provide any additional securities for the retail purchasers

Amendments to the bill of Real Estate, 2013

1. Establishment of Real Estate Regulatory Authority: Formation of the body called Real Estate Regulatory Authority in States as well as Union Territories to regulate Real Estate projects
2. Discrimination: There will be no discrimination based on caste, religion, creed, sex, or gender. The government may bring a non-discriminatory clause to allow anyone to buy a property in complex even a transgender.
3. Applicability of the Bill: The Bill introduced in 2013 was applicable only to the Residential Real Estate. Now, it is proposed to cover both Residential as well as Commercial Real Estate.“Getamber Anand, National President of the Confederation of Real Estate Developers’ Associations of India (CREDAI), said while builders welcome the changes, the Bill should not be retrospective in nature as it would lead to a lot of confusion and delays.” He also said that Commercial Real Estate should be kept out of the ambit of the regulator.
4. Registration: Previously, the developers had to register the Residential projects if the project was greater than 1000 sq. m. and had more than 10 apartments. But according to the recommendation, “projects on at least 500 sq. m. of the area or with 8 flats also have to be registered to the regulatory authority.” It includes registration of Real Estate projects and agents along with the disclosure of all registered projects as well as the details of the project, layout plan, etc., the authority.
5. Refund of Money in Case of Misleading Advertisements: Incorrect information, the false statement contained in the notice, the advertisement may lead to reimbursement of the money to the buyer.
6. Compulsory Deposit of at least 70% of the Total Cost of the Estate: The amended Bill makes it compulsory for the buyers to deposit 70% or more of the total cost of the estate which includes land and construction cost. Earlier, only 50% or less was the required to be deposited.This 70% of the money should be deposited in another bank account and should be only for the above-mentioned
7. Builders are Restricted from Taking More than 10% Advance Without a Written Agreement: “A builder will not be able to take more than 10% advance money from buyers without a written agreement. Right now, a lot of dealings happen by paying huge advances and the agreement part is delayed by many.”
8. Structural Defects: It is suggested that builders will be liable for structural defects with imprisonment of five years which is more than the earlier prescribed punishment of two years.  “In such cases, the jail term is that of one year or five per cent of the apartment cost or both. Other pro-developer measures include single window clearance and digitisation of land records.”
9. Sale of Property as per Prices Linked with Carpet Area: Carpet area is the area which includes usable spaces like kitchen and toilets, and it should be clearly defined to impart clarity which earlier was not the case.
10. Resident association: “Formation of resident association has been made compulsory within 3 months of the allotment of the majority of the units in the project so that buyers get to utilize facilities such as common hall, club house, reading room,”
11. Payment of Interest: Builders have to pay interest if there is any delay or default in the home at the same rate as they charge the home buyers.
12. Consumer Courts: the aggrieved customers can now approach to any consumer court at the district level also instead of the regulatory body given in the Real Estate Bill of 2013. This Bill also established a fast track dispute resolution mechanism which would solve the disputes within sixty days through appellant tribunal against ninety days earlier proposed.
13. Notification for the Act: now the “State has to make rules within six months of notification of the proposed Act instead of one year, and the allottees shall take the possession of house within two months of issuance of occupancy certificate.”
14. Additional Benches of the appellate tribunal: For the speedy adjudication of grievances, an additional bench of the appellate tribunal can be made in a state.
15. Punishment: For promoters, three years of punishment and for agents one year of punishment has been prescribed for the violation of the orders of the appellate tribunal.
16. Punitive Provisions: “Punitive provisions including de-registration of the project and penalties in case of contravention of provisions of the Bill or the orders of the Authority or Tribunal.”
17. The Bill looks to set up administrative bodies at the Central and state level for responsible and transparent business practices.

The news of the Bill changing to an Act will be a sign of relief to the home buyers who have suffered from huge losses, delays in delivery of their projects by developers, and discrepancy in the fulfilment of promises made to them at the time of booking. The changes that have been inserted in the Bill have been widely accepted by the industrial players.

Specialists say that the improvement is sure and subsequently is a step closer towards setting up of a land regulation in India. Om Ahuja, the CEO, Residential Services of JLL India stated that “If the Real Estate Regulatory Bill comes in 2015, it will be the biggest thing for the sector as it will provide protection to home buyers and it will also result in some non-credible players exiting the sector because of the checks and balances that will come in place”

Benefit to the builders

Builders have also been provided with advantages in this Bill 2015. The prime advantage given to the builders by legislation is that they can also impose a penalty on the allottees for not paying the dues on time. In the case of any conflicts with buyers, builders also have the opportunity to approach to the regulator.

Although the Bill has some benefits for builders, it is the builders only who have to pay high amount imposition of the Bill on them. “The Bill provides for a penalty, up to 10 percent of the total project cost or even imprisonment, if builders do not honour their commitment or fail to register themselves with the regulator.”

Conclusion

The Real Estate (Regulatory and Development) Bill, 2013 was introduced in Rajya Sabha and was referred to Standing Committee on Urban Development for examination by the Speaker of Lok Sabha. The Bill has been amended by the government numerous times. The amendments revolving around both Residential Real Estate and Commercial Real Estate must necessarily be taken into consideration and punishment to the developers, etc. should be deliberated upon. In 2015, the Union Cabinet gave the permission to amend the Real Estate (Regulation and Development) Bill. Finally, after the effect of umpteen minds, the Bill had been approved by the Prime Minister, Narendra Modi, was passed by the Rajya Sabha on 10^th March and subsequently by Lok Sabha on 15^th March, 2016.

Corporate Tax Rates Slashed from 30% to 25%, Learn how!

Government Calls for Comments on Proposed Plan of Phasing-Out Exemptions and Deductions under the Income-Tax Act in Order to Bring Down Rate of Corporate Tax from 30% to 25% 

   

The Union Finance Minister Shri Arun Jaitley in his Budget Speech 2015 had indicated that the rate of Corporate Tax will be reduced from 30% to 25% over the next four years along with corresponding phasing-out of exemptions and deductions. This is a step towards simplification of tax laws, which is expected to bring about transparency and clarity.

The Government proposes to implement this decision in the following manner:

·        Profit linked, investment linked and area based deductions will be phased out for both corporate and non-corporate tax payers.

·     The provisions having a sunset date will not be modified to advance the sunset date. Similarly the sunset dates provided in the Act will not be extended.

·        In case of tax incentives with no terminal date, a sunset date of 31.3.2017 will be provided either for commencement of the activity or for claim of benefit depending upon the structure of the relevant provisions of the Act.

·        There will be no weighted deduction with effect from 01. 04.2017.

The details of proposed phasing-out of deductions are available on the website of the Income Tax Department at www.incometaxindia.gov.in.

12 easy steps to start your business/Company!

Starting your own business is very exciting & has its own benefits!

Please bear in my mind that these are standard procedures and are applicable in most cities in India, however, some in some cities there are some additional (or lack of) processes that you will have to find out.

The steps given below are for incorporating a Business 

Steps involved in starting business in India

Registration Requirements:

No:	Procedure	Time to complete:	Cost to complete:
1	Obtain director identification number (DIN) online from the Ministry of Corporate Affairs portal (National)	1 day	INR 100
2	Obtain digital signature certificate online from private agency authorized by the Ministry of Corporate Affairs (National)	3 days	INR 1,500
3	Reserve the company name online with the Registrar of Companies (ROC) (National)	2 days	INR 500
4	Stamp the company documents at the State Treasury (State) or authorized bank (Private)	1 day	INR 1,300 (INR 200 for MOA + INR 1,000 for AOA for every INR 500,000 of share capital or part thereof + INR 100 for stamp paper for declaration Form 1)
5	Get the Certificate of Incorporation from the Registrar of Companies, Ministry of Corporate Affairs (National)	5 days	INR 14,133 (see comments)
6	Make a seal (Private)	1 day	INR 350 (cost depends on the number of seals required and the time period for delivery)
7*	Obtain a Permanent Account Number (PAN) from an authorized franchise or agent appointed by the National Securities Depository Ltd. (NSDL) or the Unit Trust of India (UTI) Investors Services Ltd., as outsourced by the Income Tax Department (National)	7 days	INR 67 (INR 60 application fee + 12.36% service tax + INR 5 for application form, if not downloaded)
8*	Obtain a Tax Account Number (TAN) for income taxes deducted at source from the Assessing Office in the Mumbai Income Tax Department	7 days	INR 57 (INR 50 application fee + 12.36% service tax)
9*	Register with the Office of Inspector, Shops, and Establishment Act (State/Municipal)	2 days	INR 6,500 (INR 2000 + 3 times registration fee for trade refuse charges)
10*	Register for Value-Added Tax (VAT) at the Commercial Tax Office (State)	12 days	INR 5,100 (registration fee INR 5000 + stamp duty INR 100)
11*	Register for Profession Tax at the Profession Tax Office (State)	2 days	No cost
12*	Register with Employees’ Provident Fund Organization (National)	12 days	No cost
13*	Register for medical insurance at the regional office of the Employees’ State Insurance Corporation (National)	9 days	No cost

* Takes place simultaneously with another procedure.

Detailed Steps and Explanation of procedure to start Business in India

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Procedure 1.

Obtain director identification number (DIN) online from the Ministry of Corporate Affairs portal (National)

Time to complete: 1 day

Cost to complete: INR 100

Procedure:The process to obtain the Director Identification Number (DIN) is as follows:

1. Obtain the provisional DIN by filing application Form DIN-1 online. This form is on the Ministry of Corporate Affairs 21st Century (MCA 21) portal. The provisional DIN is immediately issued.
The application form must then be printed and signed and sent for approval to the ministry by courier along with proof of identity and (address):
a. Identity proof (any of the following): Permanent Account Number card, driver’s license, passport, or voter card;
b. Residence proof (any of the following): driver’s license, passport, voter card, telephone bill, ration card, electricity bill, bank statement;
2. The concerned authority verifies all the documents and, upon approval, issues a permanent DIN. The process takes about 4 weeks.

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Procedure 2.

Obtain digital signature certificate online from private agency authorized by the Ministry of Corporate Affairs (National)

Time to complete: 3 days

Cost to complete: INR 1,500

Procedure: To use the new electronic filing system under MCA 21, the applicant must obtain a Class-II Digital Signature Certificate. The digital signature certificate can be obtained from one of six private agencies authorized by MCA 21 such as Tata Consultancy Services. Company directors submit the prescribed application form along with proof of identity and address. Each agency has its own fee structure, ranging from INR 400 to INR 2650.

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Procedure 3.

Reserve the company name online with the Registrar of Companies (ROC) (National)

Time to complete: 2 days

Cost to complete: INR 500

Procedure: Company name approval must be done electronically. Under e-filing for name approval, the applicant can check the availability of the desired company name on the MCA 21 web site.

The ROC in Mumbai has staff members working full time on name reservations (approximately 3 but more if the demand increases). A maximum of 6 suggested names may be submitted. They are then checked by ROC staff for any similarities with all other names in India.

The MCA receives approximately 50-60 applications a day. After being cleared by the junior officer, the name requests are sent to the senior officer for approval.

Once approved, the selected name appears on the website. Applicants need to keep consulting the website to confirm that one of their submitted names was approved.

In practice, it takes 2 days for obtaining a clearance of the name if the proposed name is available and conforms to the naming standards established by the Company Act (1 day for submission of the name and 1 day for it to appear on the MCA website).

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Procedure 4.

Stamp the company documents at the State Treasury (State) or authorized bank (Private)

Time to complete: 1 day

Cost to complete: INR 1,300 (INR 200 for MOA + INR 1,000 for AOA for every INR 500,000 of share capital or part thereof + INR 100 for stamp paper for declaration Form 1)

Procedure: The request for stamping the incorporation documents should be accompanied by unsigned copies of the Memorandum and Articles of Association, and the payment receipt.

The company must ensure that the copies submitted to the Superintendent of Stamps or to the authorized bank for stamping are unsigned and that no promoter or subscriber has written anything on it by hand. The Superintendent returns the copies, one of which is duly stamped, signed, and embossed, showing payment of the requisite stamp duty. The rate of stamp duty varies from state to state.

According to Article 10 and Article 39 of the Indian Stamp Act (1899), the stamp duty payable on the Memorandum and Articles of Association for company incorporation in Mumbai, Maharashtra, is as follows:

a. Articles of Association: INR 1000/- for every INR 500,000/- of share capital (or part thereof), subject to a maximum of INR 50,000,000;

b. Memorandum of Association: INR 200;

c. Form-1 (declaration of compliance): INR 100.

Once the memorandum and articles of association have been stamped, they must be signed and dated by the company promoters, including the company name and the description of its activities and purpose, father-“s name, address, occupation, and the number of shares subscribed. This information must be in the applicant’s handwriting and duly witnessed.

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Procedure 5.

Get the Certificate of Incorporation from the Registrar of Companies, Ministry of Corporate Affairs (National)

Time to complete: 5 days

Cost to complete: INR 14,133 (see comments)

Procedure: The following forms are required to be electronically filed on the website of the Ministry of Company Affairs:

e-form 1; e-form 18; and e-form 32. 

Along with these documents, scanned copies of the consent of the initial directors, and also of the signed and stamped form of the Memorandum and Articles of Association, must be attached to Form 1.

The fees for registering a company can be paid online by credit card or in cash at certain authorized banks. One copy of the Memorandum of Association, Articles of Association, Form 1, Form 32, Form 18 and the original name approval letter, consent of directors and stamped power of attorney must be physically submitted to the Registrar of Companies.

 The certificate of incorporation is sent automatically to the registered office of the company by registered or rush mail.

The registration fees paid to the Registrar are scaled according to the company’s authorized capital (as stated in its memorandum):

a. INR 100,000 or less: INR 4,000. If the nominal share capital is over INR 100,000, additional fees based the amount of nominal capital apply to the base registration fee of INR 4,000:

b. For every INR 10,000 of nominal share capital or part of INR 10,000 after the first INR 1,00,000, up to INR 500,000: INR 300;

c. For every INR 10,000 of nominal share capital or part of INR 10,000 after the first INR 500,000, up to INR 5,000,000: INR 200;

d. For every INR 10,000 of nominal share capital or part of INR 10,000 after the first INR 5,000,000, up to INR 1 10,000,000: INR 100;

e. For every INR 10,000 of nominal share capital or part of INR 10,000 after the first INR 10,000,000: INR 50.

The payment of fees can be made:

1. offline: one can upload all incorporation documents and generate the payment challan. Against this challan, the applicant must obtain a demand draft for filing fees amount in favour of -” the Pay and Accounts Office, Ministry of Corporate Affairs, New Delhi” and this demand draft is payable in Mumbai. The applicant must make the payment at specified branches of certain banks. It takes around one week for clearance of payment. Only after the clearance of payment does the ROC accept the documents for verification and approvals;

2. online: the applicant makes the payment by credit card and the system accepts the documents immediately. Please note that in Mumbai, the ROC requests for pre-scrutiny of documents for any corrections, before they are uploaded. Once the documents have been uploaded, they can then be approved without any further correction. The online filing mechanism requires only one copy of scanned documents to be filed (including stamped MOA, AOA, and POA).

Schedule of Registrar filing fees for the articles and for the other forms (l, 18, and 32):
a. INR 200 for a company with authorized share capital of more than INR 100,000 but less than INR 500,000;
b. INR 300 for a company with nominal share capital of INR 500,000 or more but less than INR 2,500,000;
c.INR 500 for a company with nominal share capital of INR 2,500,000 or more

Source: trak.in website

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