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Statutes are drafted to pin down the regulation of the most important areas of any sector and to ensure that the rights and liabilities of players of the sector are defined. The Real estate sector which was suffering from unfixed norms and laws, tasted the nectar of proper regulations and sector-specific regulator in 2016 when the central government enacted the “Real Estate (Regulation and Development) act”. The act defines the roles and responsibilities of the promoters to protect the interests of the consumers. The act has brought transparency in monetary terms and prohibits the developers to diverge the funds deposited by the consumers. Most of the consumers are satisfied with the regulations but the promoters are found struggling with the rules and regulations of the act.
The present paper focuses upon the problems of the promoters in the real estate sector in different aspects be it dealing with the RERA authority, taking clearance from the boards, competition issues, and most recently being hard hit by Covid-19. Starting from the definition of promoter and the approach of the states as to inclusion and exclusion of persons in the definition shows the persisting ambiguity even when the statute provides the exclusive definition. The act positively prescribes all the obligations whose breach might attract penalty but it lacks addressing the practical issue builders face in the real estate business. Healthy competition among the service providers is considered one of the pillars of success for any sector but multiple obligations under the act might dishearten the emerging developers in the real estate market. The power of RERA authority of revocation of registration might lead to an increase in the stalled projects which is already in high numbers due to economic slowdown. The cases of state RERA authorities and the Competition Commission of India would help the reader to assess the approach of the authorities.
With the introduction of GST, builders are feeling blessed as they can claim Input Tax Credit but at the same time issues like taxability of stock transfer and taxability of Transferable developmental rights (TDR) still disturb the developers. Two covid-19 waves have further crippled the real estate sector by making the promoters highly indebted and generating huge financial crises for the emerging developers.
