CA Umesh Sharma
Arjuna (Fictional Character): Krishna, In India there are more than 76 thousand registered Real Estate Companies. Also, there are lakhs of small builders. To regulate this Real Estate sector, Central Government has passed the Real Estate bill on the 10th of March. Let’s predict how this Real Estate bill may affect Builders and its probable effect on Tax Compliance.
Krishna (Fictional Character): Listen Arjuna, In India, Real Estate is the second largest sector after agriculture. The Young Generation is also moving towards this sector and therefore we see many people in this business. In India, every 10 lakh people invest in buying their own houses. In this business, many a times one has to face difficulties. To protect Home buyers’ interest, bring Transparency, Efficiency and Responsibility, the Government has passed this Real Estate Bill. The Government has proposed the Income Tax and Service Tax exemption or deductions in the Budget 2016 on one side and on other side Real Estate Bill has brought regulations on developers, therefore it seems that an efoort has been made to strike a balance.Arjuna: Krishna, Which are main features of this Real Estate Bill?
Krishna: Arjuna, The main features of Real Estate Bill are as Follows:
Arjuna: Krishna, Which are the provisions in this Bill that Promoters should ponder over within the frame of Income Tax?
Krishna: Arjuna, according to the provisions of this bill, Promoters should ponder over the following points relating to Income Tax:
As this is on an infant stage many issues may crop up in the future.
Arjuna: Krishna, Which are the provisions of VAT on developer and its probable effect?
Krishna: Arjuna, If developer has booked or sold before receiving completion certificate, then in composition scheme VAT is payable at the rate 1% on advance amount or Agreement to Sale in Maharashtra State. According to provisions of this law, developers will have to receive Completion Certificate. In VAT rules, Real Estate related sales, etc. receipt, Agreement to sales, etc. will be required to be verified. Now Tax Officers, can get more information from Real Estate Bill website. As information of bookings will have to be regularly updated on this website.
Arjuna: Krishna, What are the probable effects of this bill and Service Tax?
Krishna: Arjuna, In service Tax also, if booking/sales are made before receiving Completion Certificate, then from now 4.5% service tax is payable. Also CENVAT is available on Input services. Input Services are received from Contractor, Architect, Agent, etc. Their list may also be updated on the website, according to Real Estate Bill provisions.
Arjuna: Krishna, What should one learn from this Real Estate Bill?
Krishna: Arjuna, This law is beneficial from the customer. Hence, builders cannot do anything as per their wishes from now on. Also, due to regulations, this sector may also have to face difficulties if rules are not followed. The Central and State Government have made major changes in this Sector, through this Real Estate Bill. In the above discussion, explanation for many issues are yet to be known. It can be known after the complete implementation and application of the Real Estate Bills. In every House its Door i.e, “Chowkat” is auspicious and of prime importance. It is said that every member of house should live life happily and shall not cross the moral and ethical Door i.e “Chowkat” of house. Thus in hindi, Builders ko Real Estate Bill ki “Chowkat” nahi to taklif “Chowpat”. It means Builders will have to work within the four corners/frame of the laws or else they may have to bear four times the trouble.
Dear Chartered Accountants,
Under Real Estate Bill, The applicant or appellant may either appear in person or authorize one or more chartered accountants to present his or its case before the Appellate Tribunal. New opportunity is there for Chartered Accountants in this new Real Estate Bill. Thus your comments, views, suggestion are always well come on this topic.