Online Living India News: It is Evident that Prime Minister Narendra Modi wants the transparency in the Indian real sector. The sector is said to be a magnet for black money, not exactly consumer-friendly especially for the middle-class group but with tightening the grip of the central government with Real Estate Regulation Act (RERA) which came into force in the month of May of this year.
One more regulation the government is planning is to ask the real estate developer to pay tax on their unsold inventory or stock of ready houses. The proposal by the revenue department if implemented will bring down the unrealistically high home prices. The motive is to discipline the profit-mongers who keep the prices high in this real estate sector.
The common practice done by the real estate company is to show the finished homes or apartments as the stock-in-trade and the income incurred by it is shown as the business income. Now when the market shows the upward trend the companies hold the apartments so that they could benefit from the price appreciation that they accrue after the compilation of the project in few years.
With the new regulation, to avoid getting into expensive litigation the builders will now have to sell these apartments soon, perhaps by offering discounts.