For the 13 key functions applicable to the real estate & hospitality industry In India, 82 statutory Acts are applicable, as summarised below.
· 48 Statutory Acts are directly applicable (included in Annex 8 of the handbook)
· 34 Acts are indirectly applicable through supporting functions like corporate finance, Corporate Services, HR, etc. (included in Annex 9 of the handbook)
Further local regulations, as below, are also applicable & Architects can add more.
· Urban planning and development related
· Town and country planning laws.
Further, for all 13 functions, eight types of statutory processes having 113 key statutory activities have been identified as applicable in the Indian context.
These 113 activities are listed vis a vis the following statutory Acts in annex 21B in the handbook
· The RERA-Real Estate (Regulation & Development) Act 2016
· The building & other construction workers (regulation of employment &conditions of service) Act 1996
· The income tax Act,1961
· The SEZ Act 2005 &SEZ rules 2006
· The foreign exchange management act,1999(FEMA)
· The Goods and service tax Act,2017
· The Companies Act,2013
· The SEBI Act 1992 (clause 49)’ SEBI listing regulations 2015
· The payment of wages Act,1936
· The minimum wages Act, 1948
· The PF miscellaneous provisions Act 1952
· The employee state insurance (ESI) Act,1948 & (amendment) 1989
· The Contract labor (regulation)and abolition Act,1970
· The Payment of Bonus Act,1965
· The Maternity Benefit Act,1961
· The apprenticeship Act 1961
· The employment exchange Act 1959
For Design of Architect functions, five types of statutory activities (out of 8) are relevant, having 37 key activities (out of 113) to be performed, as summarised below.
· Meeting RERA Compliances =4
· Meeting statutory regulations and taxation obligations =2
· Obtaining Licenses, approvals, and maintaining statutory records w.r.t Statutory Acts =24
· Complying with IGST matters =4
· Deducting Income tax on services-TDS =3
The list of 37 activities mentioned above is given in chapter 1 of the book along with codes and narrated in annex 21B
It is pertinent to note that the Central Government /statutory authorities, at their discretion, may amend the applicability of statutory laws or various sections as mentioned in this blog. Therefore, the applicable sections are to be read as amended from time to time.
Given below is the list of 18 activities that can adversely impact business is as below (if these are performed without proper diligence or are unethical)
Statutory Process 1: Meeting RERA Compliances related = four key activities that can adversely impact organisation
· Commence construction without obtaining sanction plan approvals from competent authorities
· Obtain “certificate for adherence to statutory/approved sanctioned plans and project specifications and National Building code” through unfair means in case actual construction does not comply with sanctioned plans
· Submit inaccurate deed of declaration tabulating unit-wise areas constructed and bribing statutory agencies
· Bribe statutory agencies for obtaining a “completion certificate” even before construction is complete by duping customers and realizing payments through construction areas not yet ready for possession.
Statutory Process 2: Meeting statutory regulations and tax obligations and filing various key returns on the scheduled time = 4 key activities that can adversely impact organisation
· Publish inaccurately on the website project details vis-à-vis units booked, units under construction, list of approvals taken and pending, and the status of the project as prescribed in the RERA-Real Estate (Regulation and Development) Act 2016
· Inaccurate capture of details vis-à-vis summary return of outward and inward supplies and services along with payment of tax compliance in respect of The Central Goods and Service Tax Act,2017.
· File returns inaccurately
· File returns non-timely
Statutory Process 3: Obtaining Licenses, approvals, and maintaining statutory records w.r.t Acts = four key activities that can adversely impact organisation
· Commence and Continue construction without obtaining approvals/renewals as one or more
· Not complying with prescribed statutory procedures and bribing Statutory officials to obtain such licenses /approvals.
· Bribe the statutory inspectors during their visits to the construction site to validate those constructions conforms to statutory approvals
· Not maintain or maintain and submit inaccurate statutory records and bribe visiting Statutory officials.
Statutory Process 4: Complying with IGST matters = five key activities that can adversely impact organisation
· Maintain record vis-à-vis inward or outward supply of local architectural services or inward supply of BOQ sample materials procured which are either incomplete or incorrect vis-à-vis amounts chargeable to GST or rate of GST or both
· Maintain incomplete or incorrect records vis-à-vis inward supply of overseas consultant services or inward imported supply of BOQ sample materials procured from vendors
· Not comply with requirements w. r. t. GST payable, collected, paid, and ITC availed under GST rules for local consultants.
In case of overseas consultancy services received, incorrect computation of chargeable gross invoice amount on which GST is applicable (based on the availability or non-availability of PAN with overseas consultant entity and overseas consultant’s annual billing amount to us as a client).
· Not-Comply with requirements w. r. t maintaining details of suppliers and customers with their GSTN registration number
· File required returns non-timely vis-à-vis applicable sections of the Act
Statutory Process 5: Deducting TDS-services=1 key activity that can adversely impact organisation
· Deduction of TDS (Tax deduction at source as per Income Tax Act,1961) at a rate different than prescribed.
Handbook of the author
You can read more about the 18 key activities that can adversely impact business in Chapter 1 of my handbook, “ETHICS in the real estate and hospitality industry, Volume 1- Architectural, Interior design, and MEP services.”