Builders defy realty Act, want details to be hidden
The balance sheets and income-tax returns of builders will not be made public under the Real Estate (Regulation Development) Act, 2016.
The state government may exempt this provision from the RERA, when it notifies the rules in the next two weeks.
Builders said they would submit these details to the government but they don’t want them uploaded on the RERA website and made public.
The RERA mandates that builders must disclose all financial details. Because it is a Central Act, and land is a state subject, states can modify the Act. Several states have done so. For example, in Gujarat, developers do not have to divulge their income-tax returns.
The RERA says 70 per cent of the money taken from home buyers must be maintained in a separate escrow account and must be used only for the purpose of the ongoing project of building the homes. This money can be withdrawn in proportion to the percentage of completion of the project.
This is a key clause in RERA and was put in to stop builders from raising money for a project and then using it for other things like completing an earlier project or paying off a debt that was due.
In the case of Gujarat, the guidelines do not mention the norms for withdrawal of money from the escrow account, while in Kerala and Madhya Pradesh, there is no clarity on how much money can be withdrawn from the escrow account.
Andhra Pradesh, Kerala, Uttar Pradesh and Haryana have altered the definition of “ongoing project” in their notified rules. In Gujarat, the operational rules do not mention any definition of an ongoing project, according to sources.
The balance sheets and income-tax returns of builders will not be made public under the Real Estate (Regulation Development) Act, 2016.
“We have no objection to making the details public pertaining to flats, houses and amenities provided. But where is the need to put all our financial details before the public,” said Mr C. Shekar Reddy, builder and past national president of the Confederation of Real Estate Developers Associations of India
Disclosing financial details could will lead to unhealthy competition among builders, and to litigations. “Competitors may try to create problems by using this data. When no regulator is asking to make financial details public, why should developers do this,” he said.
He said builders are already submitting all financial details to the Registrar of Companies and if anyone wants, they can access the details from the RoC. The financial details can be accessed by those who have booked houses/flats, but not by all.
Municipal administration minister K T Rama Rao said, “We are still in the process of devising draft rules. We are receiving representations from various quarters. Nothing has been finalised. A committee has been formed to draft the Rera rules, which will be notified by the middle of this month.”
A committee has been formed to draft the Rera rules, which will be notified soon