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RERA effect – Pay the full amount in advance …………….

by | Jun 24, 2017 | Finance, Real Estate, Scams

Most of my friends are getting letters from builders asking them to pay up the full amount.

The logic being that if they pay up now, they have to pay service tax at 4.5% and VAT at 1% – a total of 5.5%. However, if they wait upto the 1st of July, then GST comes into force and they will have to pay 12% as per the new GST rules.

Actually this is not the case. The builder cannot charge 12% as he gets a set off for the things that he pays for and the government is hell bent on making sure that builders do not profit because of a change in the tax law.

However, how things will finally work out will depend on how hard the buyers fight for their rights.

So, a niggling thought comes to mind – why are the builders really going out of their way to save money for their clients? Not their nature to do so.

If you realize, they are asking for money only for those projects that have not registered under RERA. Once they register under RERA, they have to put 70% of the amount that they get in an escrow account that has to be used for the construction of the project. This condition is not applicable for the amount collected before the RERA registration. So, if you are thinking of paying up (considering the fact that most builders are even giving a discount), then what you are doing is taking a chance that the builder will not divert your money elsewhere!

Insist on RERA registration before paying up.

Niranjan Bangera

36 Properties Pvt Ltd



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Written By: niranjan

Financially Stupid Niranjan


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