CBDT Notification Offers Income-Tax Exemption to State RERA Authorities of Goa and Telangana

Introduction

The Central Board of Direct Taxes also notified a grant of income-tax exemption to the Real Estate Regulatory Authorities (RERAs) of Goa and Telangana under the provisions of the Real Estate (Regulation and Development) Act, 2016 (RERA). This exemption relates to specific income streams on account of such authorities under the said act.

Key features of the Notification

The notification issued under Section 10(46) of the Income Tax Act, 1961 exempted the following income of the RERA authorities of Goa and Telangana: Grants-in-aid or loans/advances from the Government : Any amount received by way of grants, loans, advances etc from the government. Fees and penalty collected from builder, developer, agent or any other party as provided under the RERA Act.

Conditions for Exemption

To avail the permission for the exemption of authority from taxation, the RERA authorities should be able to meet the following conditions:

•No Commercial Operation: The authority should not be indulging in any commercial operation.

•Nature of Income Remains the Same: the nature and source of income do not change during the year.

• Filing of Income Tax Return: The authority shall file an income tax return in accordance with the provisions of the Income Tax Act.

• Audit Report: The authority shall accompany its income tax return with an audit report certified by a chartered accountant.

Impact of the Notification

This notice is an important step forward in making the regulatory regime of Indian Real Estate stronger. This income tax exemption to RERA authorities would enable the government to ensure that authorities have funds in hand to function efficiently.

This exemption under shall make the RERA authorities capable of achieving :

• Regulatory capacity: The right technology and human resources to make them more efficient and effective.

• Consumer Protection: Treat proactive measures for consumer protection.

• Transparency and Accountability: Strict regulations with pragmatic monitoring of compliance.

The CBDT’s notification of income tax exemption to the RERA authorities has significant implications for the real estate sector and homebuyers in India. The regulatory role of RERA gets strengthened with CBDT’s recent notification whereby it has granted income tax exemption to the authorities of RERA.

• Effective Enforcement: With the substantial finances, RERA authorities would have stronger mechanisms of effective enforcement for regulation of the rules.

• Better Protection to Consumers: RERA can afford spends on grievance redressal on a higher scale with fast track delivery of grievances.

• Capacity Building: The waiver will allow RERA authorities to increase its capacity by training and technology upgradation.

Benefits to Homebuyers

•More Transparency: RERA authorities can use more staff for better transparency and accountability of real estate.

•Projects to be completed in Schedule: Scrutiny effectively should help the developers complete such projects within the schedule.

•Quality Compliance – Better Quality at Construction and Development Levels: RERA can improve the quality compliance at the construction and development levels.

Probable Problems and Factors

This is a welcome step of tax exemption. But there are some possible problems and factors to be dealt with.

•Adequacy of Resources: The RERA authorities should ensure the money is spent prudently and responsibly towards the intended tasks.

• Transparency and Accountability: RERA authorities should be transparent in their functioning and provide adequate accountability in their practices so that they gain confidence among the stakeholders.

Coordination with Other Regulating Bodies: The RERA authorities need to converse with other regulatory bodies like the Competition Commission of India (CCI) as well as the Consumer Protection Act to bring a holistic approach towards regulation in the real estate sector.

Conclusion

The CBDT’s notification brings the much-needed strength to the regulatory framework in support of the Indian real estate sector. It will then enable the authorities of RERA to protect the interest of the homebuyers by means of upholding transparency and accountability in the business, thereby addressing the emerging challenges in the long-term sustainability of the real estate sector.