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Who decides the period of registration of a project with RERA?

Saturday, January 20, 2018
By Ramesh S. Prabhu

Q. Requesting you to please guide us on GST chargeable to buyers, what % is to be charged and can we take input credit from the same?
A.
You have to charge 12% to the customer or buyer on the entire cost of flat including land cost as work contractor.
All input credit on GST paid on cement, steel, professionals etc., even if they are more than 12%, say 18% paid, will be available as input credit.

Q. Considering a scenario where a real estate project has 2 phases. Full Occupation Certificate is already obtained for building constructed in phase 1. Building Plans are yet to be approved for Phase 2. When should such a project be registered with the authorities?
Is it required to register or disclose such project under RERA immediately or only after approval of Phase 2 or only when developer intends to market/sell units in this phase 2?
A.
Since phase 1 is completed with OC prior to 1st May 2017 (before commencement of  Real Estate (Regulation and Development) Act, 2016 so the phase 1 is not required to be registered with RERA authority. Only the phase 2 where the building plan is under process for approval can be registered with RERA authorities, only after getting the sanction of the plan for phase 2. Phase 2 would be required to be registered only when the promoter wants to market or sell the flats. So long as you do not want to advertise or market or offer for sale any units in phase 2, you need to register with RERA. Thus, the minimum eligibility to register your phase 2 project is approved plan and it requires to be registered only when the promoter wants to market phase 2 flats.

Q. What happens if the real estate project is not registered as required under the Act?
A.
(1) Cannot Advertise, Market or sell the apartment/ Plot: As per section 3 of the Act, the promoter cannot in any manner book, advertise, offer for sale or market or sell or Invite in any manner persons to purchase any unit or plot till grant of registration.

(2) Levy of Penalty for non registration: As per section 59(1) of the Act, if any promoter contravenes the provisions of section 3, he shall be liable to a penalty which may extend up to ten per cent of the estimated cost of the real estate project as determined by the Authority.

(3) Imprisonment for not complying with orders and decision of the Authority: As per section 59(2) of the Act, if any promoter does not comply with the orders, decisions or directions issued under sub-section (1) or continues to violate the provisions of section 3, he shall be punishable with imprisonment for a term which may extend up to three years or with fine which may extend up to a further ten per cent. of the estimated cost of the real estate project, or with both.

(4) Compounding of Offence by paying additional penalty: As per the table under Rule5(1) of Maharashtra Real Estate (Regulation and Development) (Recovery of Interest, Penalty, Compensation, Fine payable, Forms of Complaints and Appeal, etc.) Rules, the court may, for the purposes of compounding of any offence committed under section 59(2) read with section 70 regarding the compounding of offence, accept a sum of money of 5 percent which may extend up to 10 percent of such estimated cost.

Q. What is the period of registration of project? Or who decides the period of registration of the project with RERA ?
A.
As per section 4(2)(l), every promoter at the time of application for registration of the project is required to submit a declaration in the prescribed form. Rule 3(6) of Maharashtra Real Estate(Regulation and Development) (registration of real estate projects, registration of real estate agents, rate of interest and disclosures on website) Rules, has prescribed form B.

As per section 5(3) of the Act, the registration granted by the Authority under this section, shall be valid for a period declared by the promoter under sub-clause (C) of clause (1) of sub-section (2) of section 4 for completion of the project or phase thereof, as the case may be. Thus, at the time of applying for registration, the promoter need to work out the complete project details as under in consolation with the professionals and the contractors to be involved in the project:

(a) Advocate having an experience of 10 years standing: in consultation with the Architect, the development control rules under which the project will be developed, the approval or permissions required to be obtained before applying for registration of the project, the approvals or permissions or sanctions to be obtained after the registration of the project along with the statutory time within which the sanctions will be received, documents required for getting such sanction, different milestones for the completion of the project, time and funds required to complete each milestones, quarterly fund flow statements.

(Ramesh S. Prabhu is Chairman, Maharashtra Societies Welfare Association)

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