REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016: BENEFIT TO HOME BUYERS

RERA

Real Estate (Regulation and Development) Act (RERA), 2016 came into effect on 1st May 2017. RERA marks the beginning of new era with bringing in more clarity in deals between developers and buyers leaving out ambiguities. This Act will help the buyers in many ways and will increase the confidence of homebuyers and ensure if there is any wrongdoing by the developer, there will be a redressal mechanism through RERA court or consumer forum.

RERA is a Central Act and under the Central Law, each State has to notify rules and set up a Regulatory Authority to manage the real estate Sector which shall improve the governance and hold on the Sector reducing disputes to a great extent.

IMPORTANCE OF RERA

According to the Ministry of Housing and Urban Poverty Alleviation (HUPA), there were 76,044 companies operating in the real estate sector at the time of passing of the Bill in Rajya Sabha in March 2016. RERA is of extreme importance as it will be applicable to more than76,000 companies across the country.

More transparency: builders will have to deposit 70% of the funds collected from buyers in a separate bank account in case of new projects and 70% of unused funds in case of ongoing projects to ensure sufficient funds for the project to get completed on time. This will be a big relief to the buyers as timely delivery of the project is the biggest factor or cause of concern for the buyers.

As RERA aims to make transactions clearer and more transparent it will benefit the homebuyers. It will further attract more Foreign Direct Investments (FDI’s).

Developers will now have to get all the ongoing projects that have not received completion certificate and the new projects registered with Regulatory Authorities by July end, 2017. However, Cost of developers will rise as project can continue or start only after the project has been registered with the concerned Regulatory Authority.

Both developers and buyers will now have to pay the same penal interest of SBI’s marginal cost of lending rate plus 2% in case of delays.

Developers will be liable for structural defects for five years.

RERA will impact the real estate or real estate brokers in many ways- Now even brokers are to be registered with state level real estate Regulatory Authority. Brokers in unorganized sector need to get a license to operate.

Under RERA there shall be a code of conduct for the agents and all transactions have to be official this will ensure there is a no unfair trade practices.

 

Taruna Verma

The Indian Lawyer

 

 

GOODS & SERVICES TAX TRANSITIONAL PROVISIONS

GST Transitional Provisions

 

The much awaited tax reform is set to roll on 1st July 2017. The Government which has made the GST the main stay of its economic reforms is set to ride the rough road of implementation that will start in a few days time. One of the keys to the success of Goods & Services Tax (GST) is smooth migration to new regime with minimum disturbance to existing businesses. It further looks at the enrollment of existing or new taxpayers to GST as the first step towards Transitional Provisions in the new regime.

The GST Council has approved rate structure on various items and also approved rules relating to GST Returns and Transition Provisions.

CARRY FORWARD OF INPUT TAX CREDIT

A registered person shall be entitled to claim Input Tax Credit (ITC) of the Central Value Added Tax (CENVAT) credit carried forward in the return relating to the period immediately preceeding the appointed day subject to the following prescribed conditions:

  • The amount of credit is admissible as ITC under GST
  • All Returns for preceding 6 months filed under existing laws and admissible credit is reflected in last returns filed
  • ITC / CENVAT credit does not relate to exempted goods

 

CREDIT OF INPUTS HELD IN INVENTORY ON THE APPOINTED DATE

Taxes and duties on Inputs which are held in raw material / semi-finished / finished goods which were for manufacture of exempted goods under the earlier law will be eligible as credit by the following person:

  • Those who were not liable to be registered under the earlier law, or
  • Those who were engaged in the manufacture of exempted goods or provision of exempted services,
  • Those who were providing works contract service and was availing the benefit of notification
  • A first stage dealer or a second stage dealer or a registered importer or a depot of a manufacturer.

 

CREDIT OF ELIGIBLE DUTIES AND TAXES IN RESPECT OF INPUTS OR INPUT SERVICES

A registered person shall be entitled to claim credit of eligible duties and taxes in respect of inputs or input services received on or after the appointed day but the duty or tax in respect of which has been paid by the supplier under the existing law subject to the condition:

The invoice or any other duty or taxpaying document of the same was recorded in the books of account of such person within a period of thirty days from the appointed day (may be extended by a further period of thirty days by the Commissioner);

The registered person shall furnish a statement, in such manner as may be prescribed, in respect of credit that has been taken under this sub-section.

MATERIAL REMOVED FOR JOB WORK OR OTHER PROCESSES LIKE TESTING REPAIRING OR FURTHER PROCESSING

Where raw material, semi-finished or finished are sent for job work under earlier law and are lying with the job worker on the appointed day, job worker need not pay GST on its return to principal provided the goods are returned within 6 months or extended period of 2 months, from the appointed day.

Principal is required to file an application in FORM GST TRAN-1, specifying the stock or capital goods held by him as a principal at the place/places of business of his agents/branch, separately agent-wise and branch-wise.

If goods are not returned within the specified period, the input tax credit shall be liable to be recovered as an arrear of tax under GST and the amount so recovered shall not be admissible as input tax credit.

DUTY PAID GOODS RETURNED TO THE PLACE OF BUSINESS AFTER THE APPOINTMENT DATE

Condition I: Such goods are returned within 6 months or such extended period from the appointed day

In this case, the supplier of the duty paid goods is entitled to get refund of excise duty paid by him under the earlier law on removal of goods provided:

  • Duty paid goods were removed in earlier law 6 months prior to the appointed date
  • Goods are returned by person other than registered taxable person
  • Such goods are identifiable to the satisfaction of the GST authorities

 

If such goods are returned by registered taxable person, then the return of goods shall be deemed to be a supply.

Condition II: Such goods are returned after 6 months or such extended period from the appointed day

If goods are returned by registered taxable person, he will be liable to GST on such supply.

If goods are returned by person other than registered person, then GST will be paid by recipient of goods under reverse charge mechanism.

ISSUE OF SUPPLEMENTARY INVOICE, DEBIT NOTE OR CREDIT NOTE WHEN PRICE UNDER EXISTING CONTRACT IS REVISED

For upward revision, taxable person is required to issue supplementary invoice or debit note within 30 days from the date of revision in prices of contract entered into before appointed day.

For downward revision, the taxable person shall issue a credit note within 30 days from the date of such revision.

REFUND CLAIMS UNDER EXISTING LAW

Claim for refund of CENVAT credit any duty, tax, interest or any amount paid under the existing law shall be disposed of in accordance with the provision of existing law.

TREATMENT OF LONG TERM CONTRACT

In respect of a contract entered into prior to GST regime, the goods or services or both which are supplied on or after the introduction of GST would be liable to tax under the GST to the extent the supply takes place after introduction of GST.

TAXABILITY ON SUPPLY OF GOODS SENT ON APPROVAL BASIS

No GST shall be payable for goods sent on approval basis, returned to the supplier due to rejection or non approval by the buyer within a period of 6 months or the extended period of 2 months.

 

Sanchayeeta Das

The Indian Lawyer

BEEF BAN!!

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The Central Governmenton 26th May 2017 announced strict rules to prohibit sale of animals for slaughter and sale. The ban on slaughter is alsoapplicable to religious sacrifice at livestock markets and animal fairs that are a common occurrence in rural areas. The animals under purview are cows, bulls, bullocks, buffaloes, steers, heifers, calves and camels.

The reasonbehind the order is intended to end uncontrolled and unregulated animal trade. The rules won’t apply to goats and sheep, often sacrificed during Id.

Meat export organizationsprotested the move saying it was sudden and arbitrary and that it will affect their business.

With the onus being on cattle owners to certify that cattle will not be sold for slaughter or sacrifice, the trade in animals will be more regulated.

The rules will bring in new norms for the functioning of well-known livestock markets or annual cattle fairs like the ones at Sonepur (Bihar) and Pushkar (Rajasthan) or in other states including Uttar Pradesh, Maharashtra, Tamil Nadu and Andhra Pradesh.

Animals for slaughter can now be bought directly from farms — a move expected to ensure traceability and food safety standards and weed out middlemen between farmers and slaughterhouses, and increase the income of farmers who rear such animals for trade. New rules have, however, not banned sale of such animals for agriculture purposes or milk. But it can be done only through regulated livestock markets which will have to adhere to safety standards and certain do’s and don’ts to avoid cruelty against the animals.

The rules, notified by the Ministry of Environment, will have to be implemented within three months across the country, including Kerala, which allows cow slaughter. Though the issues relating to cow slaughter come under the ‘State’ subject in terms of making law and framing the rules, the new central rules are notified under the Prevention of Cruelty to Animals (PCA) Act of 1960 that gives the Centre power over animal welfare.

The rules also provide for setting up a district-level authority to enforce animal protection laws on the ground, including those against illegal slaughter. As part of the Prevention of Cruelty to Animals (Regulation of Livestock Markets) Rules, 2017, it makes a provision of constitution of Animal Market Committee for management of animal markets in the district. The Committee will have to ensure that no person will bring a cattle to an animal market unless upon arrival he has furnished a written declaration signed by the owner of the cattle that “the cattle has not been brought to market for sale for slaughter”.

The purchaser will have to give an undertaking that he/she will not sell the animal for purpose of slaughter, follow the state cattle protection or preservation laws, not sacrifice the animal for any religious purpose and not sell the cattle to a person outside the State without the permission as per the State cattle protection laws.

Under the rules, no animal market will be allowed in a place that is within 25 km from any State border or that is within 50 km from any international border. Besides, unfit animals, pregnant animals, animals who have not been vaccinated and animals under six months of age cannot be displayed or sold at any of the cattle market anywhere in the country.

The market committee will have to keep a record of name and address of the purchaser and procure his identity proof. The committee will also have to ensure that the purchaser of the animal gives a declaration that he shall not sell the animal up to six months from the date of purchase and shall abide by the rules relating to transport of animals made under the Act or any other law for the time being in force.

Since the rules include buffaloes in their definition of cattle, big traders and exporters will initially feel the heat in procuring the animals for meat. But the regulation of slaughter houses and closure of illegal ones will ultimately bring consistency of supply in the market and ensure food safety standard. India is currently a major buffalo meat exporting country which grew from Rs 3,533 crore in 2007-08 to Rs 26,685 crore in 2015-16.

 

Sanchayeeta Das

The Indian Lawyer

SEBI proposes to levy USD 1,000 fee on each P-Note issuance

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Participatory Notes commonly known as P-Notes or PNs are instruments issued by registered Foreign Institutional Investors (FII) to overseas investors, who wish to invest in the Indian stock markets without registering themselves with the market regulator, the Securities and Exchange Board of India (SEBI)

Markets Regulator, SEBI on Monday, 29th May 2017, proposed to levy a regulatory fee of USD 1,000 for each Participatory Note (P-Note) issued by foreign investors and bar issuance of such derivative-based instruments for speculative purposes to check any misuse of these products for channelizing black money as the concerns remain that P-Notes are misused by some to channelize black money from abroad into the country through the stock markets.

In a consultation paper issued on Monday, SEBI said it has been continuously making regulatory changes in order to ensure that the Offshore Derivative Instrument (ODI) route is not misused.

In the context of the Indian market, ODIs are investment vehicles used by overseas investors for an exposure in Indian equities or equity derivatives. These investors are not registered with SEBI, either because they do not want to or due to regulatory restrictions.

SEBI incurs a significant expenditure in terms of capital and manpower when it comes to monitoring of investments coming through the ODI route.

It is proposed that beginning 1st April 2017, for a period of every three years, regulatory fees of USD 1,000 be levied on each ODI issuing Foreign Portfolio Investment (FPI) for each and every ODI subscriber coming through such FPI.

SEBI said quite a few ODI subscribers invest through multiple issuers and the proposed fee will discourage the ODI subscribers from taking ODI route and encourage them to directly take registration as an FPI.

Besides, SEBI has proposed to prohibit ODIs from being issued against derivatives for speculative purpose. Further, the ODI issuers would be given time till December 31, 2020, to wind up the ODIs issued against derivatives which are not for hedging purpose.

Presently, ODIs are being issued against derivatives along with equity and debt. As of April 2017, the ODIs issued against derivatives had a notional value of Rs 40,165 crore, which is 24 per cent of the total notional value of outstanding ODIs.

P-notes are issued by registered FPIs to overseas investors who wish to be a part of the Indian stock markets without registering themselves directly. They, however, need to go through a proper due diligence process.

SEBI has sought suggestions from public on the proposals till 12th June 2017 and a final regulation will be put in place after taking into the considering views of all the stakeholders.

Taruna Verma

Senior Associate

The Indian Lawyer