Income Tax relief for Real-estate Developers and Home Buyers

By SRELJ Bureau

As part of the AatmaNirbhar Bharat Package 3.0 as announced by Hon’ble Finance Minister on 12th November, 2020, certain income tax relief measures were brought in for real-estate developers and home buyers.

Up to 2018, section 43CA of the Income-tax Act, 1961 (‘the Act’) provided for deeming of the stamp duty value (circle rate) as sale consideration for transfer of real-estate inventory in the case the circle rate exceeded the declared consideration. Consequentially, stamp duty value was deemed as purchase consideration in case of buyer under section 56(2)(x) of the Act.

In order to provide relief to real estate developers and buyers, the Finance Act, 2018, provided a safe harbour of 5%. Accordingly, these deeming provisions triggered only where the difference between the sale/purchase consideration and the circle rate was more than 5%. In order to provide further relief in this matter, Finance Act, 2020 increased this safe harbour from 5% to 10%. Therefore, currently, the circle rate is deemed to be the sale/purchase consideration for real estate developers and buyers only where the variation between the agreement value and the circle rate is more than 10%.

In order to boost demand in the real-estate sector and to enable the real-estate developers to liquidate their unsold inventory at a rate substantially lower than the circle rate and giving benefit to the home buyers, it has been decided to further increase the safe harbour from 10% to 20% under section 43CA of the Act for the period from 12th November, 2020 to 30th June, 2021 in respect of only primary sale of residential units of value up to Rs. 2 crore. Consequential relief by increasing the safe harbour from 10% to 20% shall also be allowed to buyers of these residential units under section 56(2)(x) of the Act for the said period. Therefore, for these transactions, circle rate shall be deemed as sale/purchase consideration only if the variation between the agreement value and the circle rate is more than 20%.

Legislative amendments in this regard shall be proposed in due course.

Representation to register Retailers and Building and Construction Professionals as MSMEs will be examined: Shri Gadkari

By SRELJ Bureau

Union Minister for MSME and Road Transport and Highways, Shri Nitin Gadkari today assured the Retailers Association of India and Practicing Engineers, Architects and Town Planners Association (India) that their request for registering as MSMEs will be examined expeditiously. He felt that this need to be explored from the point of these bodies being employment creators and whether various benefits such as insurance, medical, pension, etc can be provided to workers.

He also called upon the retailers to start exploring option of home delivery and maintaining social distancing, availability of sanitizers for customers/employees and use of masks at all retail outlets.

The Minister was addressing meetings today via video conferencing with the representatives of Retailers Association of India and representatives of Practicing Engineers, Architects and Town Planners Association (India) on impact of COVID-19 on their respective sectors. During this interaction, the representatives expressed concerns regarding various challenges being faced by them amid COVID-19 pandemic along with few suggestions and requested support from the government to keep the sector afloat.

He also called upon the Engineers, Architects and Town planners to explore decongesting over crowded cities and   participate in the development of rural, tribal and backward regions especially along the Green Expressways like the new Delhi -Mumbai Exoressway which is passing through such areas. He said various clusters and logistics parks will come up up on this ambitious project offering huge opportunities.

Some of the major issues highlighted and the suggestions given included: registering retailers/restaurants/architectural firms as MSMEs, starting Malls with conditions of safety measures related to COVID-19, starting operations of e- Commerce companies for non-essential items, relief in rentals for retailers, extension of moratorium to 9 months, reduction in bank interest rate from 10% to 4-5%, adherence to RBI guidelines by private banks, applying GST on receivables only, registration of builders as MSME who are already registered under RERA Act, etc.

Shri Gadkari called upon the industry that it is needed to be ensured by industries that necessary preventive measures are taken to prevent the spread of COVID-19. He emphasized on usage of PPE (masks, sanitizer etc.) and advised to maintain social distancing norms during business operations.

He mentioned that all the stakeholders must adopt an integrated approach to come over the crisis while ensuring the lives and livelihood of the people. Shri Gadkari also urged the industry to have a positive attitude during this time to tide over this crisis.

The Union Minister emphasized that special focus towards export enhancement is the need of the hour and necessary practices shall be adopted to reduce power cost, logistics cost and production cost to become competitive in the global market. Further, he mentioned that there is also need to focus on import substitution to replace foreign imports with domestic production.

He further mentioned that work on Green Express Highway has already started, and this is an opportunity for industry to make future investments in industrial clusters, logistics parks equipped with state-of-art technology. He opined that there is a need to expand the horizon of industrial cluster in areas other than metro cities and urged industries for participation.

The Minister recalled that Government of Japan has offered special package to its industries for taking out Japanese investments from China and move elsewhere. He opined that it is an opportunity for India which should be grabbed.

Shri Gadkari responded to the questions from representatives and assured all possible help from the government. He informed that he would take up the issues with related departments. He emphasized that industry should take a positive approach and tap the opportunities that will be created when the COVID-19 crisis gets over.

Right of Multiple entry Life-long Visa facility to visit India for OCI Cardholders, to remain in abeyance till Prohibition on International Air Travel of passengers from/to India is lifted

By SRELJ Bureau

The Union Ministry of Home Affairs (MHA) has issued an order specifying that the right of multiple entry life-long visa facility for visiting India for any purpose granted to persons registered as Overseas Citizen of India (OCI) cardholders would continue to be kept in abeyance till the prohibition on international air travel of passengers from/to India is lifted by the Government of India.

Any foreign national holding an OCI card who intends to travel to India for compelling reasons during this period would have to contact the nearest Indian Mission. Further, in case of persons holding OCI card who are already in India, the OCI card shall remain valid for their stay in India for any length of time.

 

Click here to see Official Order

Physical Registration of Leave and License agreements discontinued till July 2020 in Maharashtra

By SRELJ Bureau

Government of Maharashtra have decided to discontinue physical registration of leave and license Agreement in Maharashtra. Now till July 2020 all leave and license agreements shall be registered online only. There will be no physical presence of parties to the leave and rent agreements in Maharashtra.

Government of Maharashtra have decided to avoid any rush at registration centres. To keep social distancing, Govt had announced that till July 2020 there will be no physical registration of the leave and license agreements.

The module is developed and made available by the Department of Stamps and Registration.
It provides facility of online registration of Leave and License Agreement to citizen.
Citizen can,
      1) Prepare the agreement       5) Submit it for registration
      2) View the draft                    6) Get it registered
      3) Modify if required               7) Get the status of registration through SMS
      4) Execute (sign) it
All these activities can be performed from anywhere anytime, without going physically to Sub Registrar Office.

Land Use Change for Central vista Development/ Redevelopment Project Approved; includes New Parliament building

By SRELJ Bureau

The Govt has approved the land use change as required for the Central Vista Development/Redevelopment project on the recommendations of Delhi Development Authority (DDA). This paves the way for the construction of new Parliament building and other projects in the prestigious Central Vista project.  This decision will ensure that the green areas and Public-Semi-Public spaces are adequately compensated or enhanced.

The Central Vista of New Delhi houses Rashtrapati Bhawan, Parliament House, North and South Block, India Gate, National Archives etc. All these iconic buildings were constructed before 1931, the year in which the new capital was inaugurated. The other office buildings were built on various plots subsequently to address the office requirements of Central Ministries and Departments in an unplanned manner.Parliament House building came up in 1927 and is declared Heritage building. Its facilities and infrastructure are inadequate to meet the current demand. Therefore, there is an imperative need to construct a new state-of–art Parliament building in close vicinity. This proposal may address not only the space requirement but may result into an iconic structure as a symbol of democracy.

The offices of the Central Government are spread over different locations which affects inter-departmental coordination, and unnecessary travel leading to congestion and pollution. Further, most of the existing buildings have outlived their structural lives. The Hutments, which occupy huge area in the Central Vista, came up as temporary structures during the Second World War. Development of Common Central Secretariat will create modern workspaces with latest technology for better productivity and efficient utilization of human resources.Rajpath and avenue in Central Vista which includes greens and water bodies adjoining it, symbolizes the magnificence of the Capital City and is a tourist place of national importance. Upgrading its facilities and rejuvenating the green spaces is necessary. In view of the above, we have taken up the Central Vista Development/ Redevelopment Project.

The objectives of the Project include upgrading Parliament’s space and facilities; consolidating, rationalizing and synergizing government functioning; refurbishing and better equipping the Central Vista Avenue; strengthening cultural institutions in the Central Vista.  This change in land use will pave the way for development/re-development of these projects.

IBBI amends the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016

By SRELJ Bureau

The Insolvency and Bankruptcy Board of India (IBBI) notified the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2020 on 6th January 2020.

The amendment clarifies that a person, who is not eligible under the Code to submit a resolution plan for insolvency resolution of the corporate debtor, shall not be a party in any manner to a compromise or arrangement of the corporate debtor under section 230 of the Companies Act, 2013. It also clarifies that a secured creditor cannot sell or transfer an asset, which is subject to security interest, to any person, who is not eligible under the Code to submit a resolution plan for insolvency resolution of the corporate debtor.

The amendment provides that a secured creditor, who proceeds to realise its security interest, shall contribute its share of the insolvency resolution process cost, liquidation process cost and workmen’s dues, within 90 days of the liquidation commencement date. It shall also pay excess of realised value of the asset, which is subject to security interest, over the amount of its claims admitted, within 180 days of the liquidation commencement date. Where the secured creditor fails to pay such amounts to the Liquidator within 90 days or 180 days, as the case may be, the asset shall become part of Liquidation Estate.

The amendment provides that a Liquidator shall deposit the amount of unclaimed dividends, if any, and undistributed proceeds, if any, in a liquidation process along with any income earned thereon into the Corporate Liquidation Account before he submits an application for dissolution of the corporate debtor. It also provides a process for a stakeholder to seek withdrawal from the Corporate Liquidation Account.

The amended regulations are effective from 6th January 2020. These are available at www.mca.gov.in and www.ibbi.gov.in.

Draft New Delhi International Arbitration Centre (NDIAC) Rules issued for public consultation

By SRELJ Bureau

The New Delhi International Arbitration Centre (NDIAC), Act 2019 was enacted with a view to provide for the establishment and incorporation of the New Delhi International Arbitration Centre for the purpose of creating an independent and autonomous regime for institutionalised arbitration and to make it a hub for institutional arbitration and to declare the New Delhi International Arbitration Centre to be an institution of national importance. The Act replaced the ordinance on the subject which had come into force on 2nd March, 2019.

As per section 5 of the Act, NDIAC will be headed by a Chairperson, who has been a Judge of the Supreme Court or a Judge of a High Court or an eminent person, having special knowledge and experience in the conduct or administration of arbitration, law or management, to be appointed by the Central Government in consultation with the Chief Justice of India. Besides, it will also have two Full-time or Part-time Members from amongst eminent persons having substantial knowledge and experience in institutional arbitration, both domestic and international. In addition, one representative of a recognized body of commerce and industry shall be nominated on rotational basis as a Part-time Member. The Secretary, Department of Legal Affairs, Ministry of Law & Justice; Financial Adviser nominated by Department of Expenditure, Ministry of Finance and Chief Executive Officer, NDIAC will be ex-officio Members.

Section 23 of the Act provides for the Secretariat to the Centre inter-alia comprising Registrar, Counsel and other officers & employees etc.

In this regard, the Department of Legal Affairs has prepared the following draft Rules:

 

  1. The New Delhi International Arbitration Centre (the terms and conditions and the salary and allowances payable to the Chairperson and Full-time Members) Rules 2020.
  2. The New Delhi International Arbitration Centre (the travelling and other allowances payable to Part-time Members) Rules 2020.
  3. The New Delhi International Arbitration Centre (the number of officers and employees of the Secretariat of the Centre) Rules 2020.
  4. The New Delhi International Arbitration Centre (the qualifications, experience, method of selection and the functions of the Registrar, Counsel and other officers and employees of the Centre) Rules 2020.

 

The Government intends to consult all stakeholders in the process. A copy of the aforesaid draft Rules have been uploaded on the website of the department of Legal Affairs (http://legalaffairs.gov.in/). Accordingly, DoLA has commenced public consultation on the draft rules with the timeline of submission of comments by 14th March, 2020.

Model Tenancy Act(MTA) to Promote Growth of Rental Housing Segment by Regulating Renting of Premises

By SRELJ Research

The Ministry of Housing and Urban Affairs has drafted a ‘Model Tenancy Act’, 2019 which envisages to balance the interest and rights of both the owner and tenant and to create an accountable and transparent ecosystem for renting the premises in disciplined and efficient manner. It will enable creation of adequate rental housing stock for various income segments of society including migrants, formal and informal sector workers, professionals, students etc. and increase access to quality rented accommodation, enable gradual formalization of rental housing market.  It will help overhaul the legal framework vis-à-vis rental housing across the country. It is also expected to give a fillip to private participation in rental housing for addressing the huge housing shortage across the country.

The Draft MTA will also promote growth of rental housing and investment in the sector and promote entrepreneurial opportunities and innovative mechanism of sharing of space.This MTA will be applicable prospectively and will not affect the existing tenancies.

  •    MTA stipulates a robust grievance redressal mechanism comprising of Rent Authority, Rent Court and Rent Tribunal.
  •    It has been proposed to cap the security deposit equal to a maximum of two month’s rent in case of residential properties and, minimum of one month’s rent in case of non-residential property.
  •    After coming into force of this Act, no person shall let or take on rent any premises except by an agreement in writing.
  •    The Model Act provides for its applicability for the whole of the State i.e. urban as well as rural areas in the State.
  •    Within two months of executing rental agreement both landowner and tenant are required to intimate to the Rent Authority about the agreement and within seven days a unique identification number will be issued by the Rent Authority to the both the parties.
  •    A digital platform will be set up in the local vernacular language of the State for submitting tenancy agreement and other documents.
  •    The copy of the draft Model Tenancy Act, 2019 has been uploaded on the website of this Ministry (http://mohua.gov.in/) for seeking comments from the public and other stakeholderslatest by 01/08/2019.
  •    A copy of the draft Act has also been shared with the States/UTs for seeking their views/comments.
  •    Once finalized the Model Act will be shared with the States/Union Territory (UTs) for adoption.

As per Census 2011, nearly 1.1 crore houses were lying vacant in the country and making these houses available on rent will complement the vision of ‘Housing for All’ by 2022. The existing rent control laws are restricting the growth of rental housing and discourage the owners from renting out their vacant houses due to fear of repossession. One of the potential measures to unlock the vacant house is to bringing transparency and accountability in the existing system of renting of premises and to balance the interests of both the property owner and tenant in a judicious manner.