Developers to be penalised for delaying projects

Q: Property buyers in India have had a raw deal. Many have not got possession of the apartments on the due date promised by the builder. I am told that some safeguards have now been introduced by the government. —SR Kumar, Dubai

A: Buyers of immovable properties in India will draw comfort from the fact that the Real Estate (Regulation & Development) Act has come into force from May 1, 2017. Rules under this Act have already been notified by 14 state governments. Under this legislation, all ongoing projects which have so far not received completion certificate and all new projects will have to be registered by the developers by July 31, this year. Penalty will be levied on developers where there is a delay in completion of the project. Developers will be required to refund payments to buyers of properties within 45 days of the refund becoming due.

In the case of a new project, 70 per cent of the money collected by the developers from buyers will have to be deposited in a separate bank account and such funds can only be utilised for the stipulated project. This will ensure that the funds collected from buyers will be used exclusively for the project and that such funds will not be diverted for any other purpose by the developers.

Q: On my return to India, I would like to set up a consultancy practice. I have not yet decided in which state of India I would like to set up the establishment, but I am more inclined towards Maharashtra as the Mumbai Pune region offers large opportunities. However, I am worried about the regulatory paperwork I will have to do. —C RA p te, Bahrain

A: Many states are vying with each other to ensure that there is ease of doing business in their state. According to press reports, the Maharashtra government is planning to do away with the need for obtaining a licence under the Shops & Establishments Act where the number of employees or workers is ten or less. This proposal is to be implemented by amending the law. This government has already cut down on the number of permissions required to set up a business. Earlier, 76 approvals were necessary. This has been brought down to 32 and the government hopes to reduce this further.

However, even if you are not required to be registered under the Shops & Establishments Act, you will have to obtain a permanent account number from the income-tax department and file your tax returns every year. This would be necessary even if you make a loss in the initial years, because to carry forward the loss for eight years, it has to be assessed by the tax department. You should also be registered under the GST law which is coming into force from July 1, 2017.

Q: I want to set up a consultancy practice. What regulatory paperwork I will have to do?

A: planning The governmentto Maharashtrado away is with the need for obtaining a licence under the Shops & Establishments Act where the number of employees or workers is ten or less. Government has already cut down on the number of permissions required to set up a business.

Q: I am surprised to find that international food retail chains do not operate in India. This would create many employment opportunities for the young. What is the reason for this? —R LB hat ta char ya, Doha

A: In the past, foreign direct investment of more than 50 per cent was not allowed in the retail business, though it was permitted in the cash and carry business. Last year, the government relaxed the regulations for foreign direct investment by permitting foreign retailers to sell food products which are produced or manufactured in India. However, since the retail margins on food products are very low, foreign retailers want a change in policy to allow them to sell personal care items along with the food products.

The Department of Industrial Policy & Promotion is likely to liberalise the policy and seek approval of the government. The Food Processing Ministry is confident of such reform which will prove to be attractive for global retail chains.