MAHARERA Amendment Rules, 2019 effect on Land Cost and Cost of Construction
- Thursday 4th July 2019
- Author: Shreya Uppal
A Chartered Accountant has to verify the cost incurred towards construction cost and land cost. He is also required to certify the proportion of cost incurred to total estimated cost.
This major amendment in terms of calculation has come due to various developers using the separate account amount for other than the specified land cost and cost of construction meaning.
The certificate in Form 3 is required to be obtained along with Architectâ€™s certificate and Engineerâ€™s certificate as and when promoter wishes to withdraw fund from the separate account.
As per the MAHARERA Amendment Rules, 2019 issued on 6th June, 2019 to bring some major and important amendments to previous rules, meaning of Land Cost and Cost of Construction has been amended. As per Section 4(2)(I)(D) of the RERA Act, 2016 to withdraw the amount from separate account. A Chartered Accountant has to verify the cost incurred towards construction cost and land cost. He is also required to certify the proportion of cost incurred to total estimated cost. The certificate in Form 3 is required to be obtained along with Architect’s certificate and Engineer’s certificate as and when promoter wishes to withdraw fund from the separate account.
Amended meaning of both the terms have been explained below:
1. Land Cost
(a) In ascertaining the cost of completion of a percentage of the project, the land cost shall be calculated basis of the value of the land as ascertained from the Annual Statement of Rates (ASR) prepared under the provisions of the Maharashtra Stamp Act, relevant on the date of registration of the real estate project.
(b) Earlier the land cost used to include many items like marketing costs, brokerage costs, legal cost, supervision costs, Amount paid for TDR etc. These terms shall not be included while calculating the land cost w.e.f these Amendment Rules, 2019.
(c) This major amendment in terms of calculation has come due to various developers using the separate account amount for other than the specified land cost and cost of construction meaning. Many developers were violating the rule by using that money to pay off their outstanding debts of banks.
2. Cost of Construction
(a) The cost of construction for the purpose of sub-clause (D) of clause (I) of sub-section (2) of section 4, shall include all such costs, incurred by the Promoter, towards the on-site and off-site expenditure for the development of the Real Estate project such as mobilization advances to contractors, procurement advances to vendors, construction equipment, site preparations and so on and onsite and offsite construction activities, payments/ installments to local authority, and all other items of expenditure for the construction, marketing and sale of the project.
(b) Fees, Charges, Interest etc. and taxes and penalties to any competent authority or statutory or local authority of the Central or State Government under any laws or rules or regulations for the time being in force.
(c) The development cost or cost of construction of the project shall not include marketing and brokerage expenses towards the sale of apartments. Such expenses though part of the project cost, should not be borne from the amount that is required to be deposited in the designated separate account.
To infuse transparency and better control over the money taken from the homebuyers these amendments have been done.
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