GST gives builders advantage

Hyderabad: Homebuyers hoping to file cases against builders under RERA Act, for demanding additional money for ready-to-move-in-flats citing GST burden, would not be able to do so anymore. While the state government is in the process of notifying RERA Act in the next two-three weeks, it is learnt that the draft rules prepared by TS government have exempted ongoing projects from RERA Act, which gives no scope for buyers of ready-to-move-in flats to file cases against the builders.

After the rollout of GST on July 1, the builders started passing on additional financial burden to the buyers of ready-to-move-in flats saying that the GST tax rate had increased to 12 per cent against 6 per cent collected by state government in VAT regime. Buyers are being asked to shell out up to Rs 1.80 lakh more for a flat worth Rs 30 lakh, triggering protests from them. The Real Estate (Regulation and Development) Bill, 2016 was passed by Parliament in March 2016 and all the 92 sections of the Act come into effect from May 1, 2017. However, the TS government is yet to notify even the draft rules despite the two months that have passed since the Act came into force.

The deadline to notify draft rules is July 31 which means less than 25 days time remain to seek objections from stakeholders concerned, seek cabinet's approval and issue final rules that would set up state regulatory authority and appellate tribunal. But the process in this regard is moving at snail's pace. No new realty project can be taken up from August 1 in the absence of RERA.  

Meanwhile, the state government also faces the possibility of legal problems if anyone approaches the courts and files a case against the delay in notifying RERA. The government had constituted a committee with senior officials of MAUD, HMDA, GHMC, revenue etc to draft rules for RERA two months ago. The committee submitted draft rules to MAUD minister K.T. Rama Rao in mid-June.

However, the builders objected to the draft rules that brought in ongoing projects under RERA. They met Mr Rama Rao and officials and brought to their notice that even BJP-ruled states like Gujarat, Rajasthan had exempted ongoing projects from RERA. Karnataka was the latest state to exempt ongoing projects from RERA two days ago. Builders appealed to the authorities about ongoing projects in TS also being exempted from RERA.

Official sources said the government was convinced with the argument made by builders and decided to change draft rules exempting ongoing projects from RERA. The changed rules have now been submitted to CM for approval. After approval, it will be referred to the Cabinet for final approval.