Kerala: Proof must for villas, flats; plot registration escapes taxes dept scanner

The order issued by the tax department would result in huge revenue loss to the government as the business volume in the plot development sector is much higher than that of flats and villas.
Image used for representation
Image used for representation

THIRUVANANTHAPURAM: The state government has asked sellers of flats and villas to produce copies of project registration certificates from the Kerala Real Estate Regulatory Authority (KRERA), and also the sale agreement with customers, at the time of formal property sale registration. This will be applicable to the original builder or developer and not for resale of properties.

Curiously, the order issued by the taxes department has spared plot registrations from its ambit. This would result in huge revenue loss to the government as the business volume in the plot development sector is much higher than that of flats and villas.

The order also makes a false claim that the new direction was based on a request from KRERA. But it is learnt that the KRERA’s letter to the chief secretary was about plugging tax evasion in the plot development sector. The letter sought a direction to the registration department not to allow sales deed registration of plots that lack KRERA registration. It cited a similar direction issued by the Tamil Nadu chief secretary that increased the compliance level in that state.

KRERA’s request to the CS followed a series of efforts by the authority and the local self-government department to increase compliance level in the plot development sector.

Flats and villas

The taxes department’s order is applicable only for flats and villas that fall in KRERA’s threshold of projects requiring registration. The reform will increase compliance level in KRERA registration thereby benefiting customers. Also, parties will be forced to reveal the actual value in the sales deed because it cannot be different from the previous agreement between the seller and buyer. Manipulation in the project area will also end as KRERA’s registration documents will have exact details of the project which would be verified by the sub-registrar.

In May 2023, KRERA had issued a clarification on the threshold of projects requiring registration. As per law, projects that exceed 500 sq m of land or projects with more than eight apartments, villas or units require mandatory registration. But many realtors skipped the rule raising the argument that registration was not required for projects that do not meet both criteria. KRERA clarified that each criterion was stand-alone and warned of penal action against offenders.

Why produce copy of sales agreement?

Some stakeholders criticised the condition in the tax department’s order to produce a copy of the sales agreement. “The sales agreement is a document registered with the same sub-registrar office. Its digital version is available at the officer’s fingertips. Why should they ask us to produce a copy?” asked a builder.

False claim

The order also makes a false claim that the new direction was based on a request from KRERA. But it is learnt that the KRERA’s letter to the chief secretary was about plugging tax evasion in the plot development sector

Related Stories

No stories found.

X
The New Indian Express
www.newindianexpress.com