The Real Estate Regulatory Authority (RERA), which came into force from May 1, is set to make real estate more transparent and provide protection to the end customers. Currently, 13 states including UTs have notified rules. The states that have notified rules are Gujarat, Odisha, Uttar Pradesh, Andhra Pradesh, Bihar, Maharashtra and Madhya Pradesh. However, the real estate regulatory authority, which is going to be formed in Uttar Pradesh, will not benefit homebuyers who have invested in realty projects which are currently stuck. RERA will also not be able to help homebuyers where they have paid the total cost of the flat and the developer is still unable to execute the delivery due to cash crises.
Some of the main objectives of RERA are:
#Protecting interest of consumer in real estate sector
#Establishing a process for speedy dispute redressal
#Ensuring sale of plot, building/apartment, or real estate project in an efficient and transparent manner
#Establishing a tribunal for hearing appeals from decisions, directions or orders of Real Estate Regulatory Authority and the adjudicating officer.
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In the Budget 2017, the finance minister had also notified certain measures for promoting affordable housing and the real estate sector.
Incentives for promoting investment in immovable property: The existing provisions of the Act provide for a concessional rate of tax and also indexation benefit for taxation of capital gains arising from the transfer of the long-term capital asset. To qualify for the long-term asset, an assessee is required to hold the asset for more than 36 months subject to certain exceptions. For example, the holding period of 24 months has been specified for unlisted shares. With a view to promote the real estate sector and to make it more attractive for investment, it is proposed to amend section 2 (42A) of the Act so as to reduce the period of holding from the existing 36 months to 24 months in case of immovable property, being land or building or both, to qualify as long-term capital asset. This amendment will take effect from 1st April 2018 and, accordingly, apply in relation to the assessment year 2018-19 and subsequent years.
Rationalisation of provisions of section 80-IBA to promote affordable housing: The existing provisions of section 80-IBA provide for 100% deduction in respect of the profits and gains derived from developing and building certain housing projects, subject to specified conditions. The conditions specified, inter alia, include the limit of 30 square meters for the built-up area of a residential unit in respect of project located in Chennai, Delhi, Kolkata and Mumbai or within 25 km from the municipal limits of these four cities. Further, it is also provided that in order to be eligible to claim deductions, the project shall be completed within a period of three years.
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In order to promote the development of affordable housing sector, it is proposed to amend section 80-IBA so as to provide the following relaxations:—
(i) The size of residential unit shall be measured by taking into account the “carpet area” as defined in Real Estate (Regulation and Development) Act, 2016 and not the “built-up area”.
(ii) The restriction of 30 square meters on the size of residential units shall not apply to the place located within a distance of 25 km from the municipal limits of the Chennai, Delhi, Kolkata or Mumbai.
(iii) The condition of the period of completion of the project for claiming deduction under this section shall be increased from existing three years to five years. These amendments will take effect from 1st April 2018 and, accordingly, apply in relation to the assessment year 2018-19 and subsequent years.