cajdshah.com-What RERA Rules Must Developers Know

1. What RERA Rules Must Developers Know? cajdshah.com/blog/what-rera-rules-must-developers-know jdshah Welcome to a special edition guide from JD Shah Associates! Imagine building a giant skyscraper—it’s an exciting job, but you need a solid rulebook. In India, that rulebook for property developers is called RERA (Real Estate (Regulation and Development) Act, 2016). RERA is like a very strict, but fair, school principal for all builders. It exists to make sure buyers are protected and that construction projects are finished on time and as promised. For developers, understanding these rules isn’t just about following the law; it’s about building trust and ensuring strong Corporate Governance. If you get the RERA basics right, your business runs smoother and your reputation shines. JD Shah Associates helps you master this tricky balance of rules and growth. This article is your guide to the most important rules you must follow. Table of Contents Why developers need to take RERA seriously Before jumping into the specific rules, let’s understand why RERA matters: It builds trust. Home-buyers feel safer when they know a developer is following RERA. 1/8

2. It avoids penalties. If you don’t follow RERA, there can be big fines or your project may stop. It links to other important tasks like tax audit and income tax declaration—if your books aren’t right, you could bleed into problems with both RERA compliance and auditing and taxation. Key RERA Rules Developers Must Know Each rule below also shows how it connects with audit or tax tasks (our speciality at JD Shah Associates) so you can see the full picture. 1. Registration of Projects What it means: Under RERA, before you sell units in a new residential or commercial project, you must register the project with the state RERA authority. You need to provide details like how many units, how big the land is, what kind of building, estimated costs, possession date, etc. Why it matters for tax & audit: When you register a project, you must show actual costs, funds, and sunk investments. That’s where auditing and taxation become important. 2/8

3. If you’re audited (for example, a tax audit under the Indian Income Tax Act), your project registration details help prove you’re aligned. When you do your income tax declaration, make sure project registration fee or cost structure is captured correctly. Useful information for you: Always keep clear records of the land purchase, approvals, construction costs. Submit the registration well before sales begin. If you make changes to the plan, update the registration. At JD Shah Associates, we help you prepare these records and link them to tax audit readiness—making sure you’re audit-proof. 2. Disclosure to Home-buyers What it means: The developer must disclose specific information: project layout, approvals obtained, ongoing construction status, external links, number of units sold, timeline for completion, and more. This disclosure must be visible on your website and the RERA portal. Why it matters for tax & audit: Good disclosure means your books match what’s promised. If your sales contracts say one thing but your income tax declaration shows something else, that mismatch triggers red flags during auditing. Strong disclosures feed into audit and assurance services—third-party assurance of your statements may be required by lenders or buyers. Useful information for you: Maintain a dedicated page on your website with all disclosures and updates. Use simple language because buyers appreciate clarity. Keep backups of all approvals, status updates, amended plans. At JD Shah Associates, we review your disclosure process to ensure compliance and smooth integration with auditing and taxation workflows. 3. Fund-Segregation (Escrow Account) What it means: RERA requires that money collected from buyers (for a specific project) must go into a separate escrow account. The funds cannot be used for other projects. A set portion must be used only for construction and land cost of that specific project. Why it matters for tax & audit: These funds need to appear clearly in your financial statements. Auditors pay special attention to whether you’re using money for the correct project. That is a part of audit assurance. Incorrect use affects your income tax declaration because your cost of construction or project expenses might be mis-represented. 3/8

4. During a tax audit, the auditor will check that your escrow account usage aligns with RERA obligations and your bookkeeping. Useful information for you: Open a project-specific escrow account. Monitor withdrawals: only permissible for that project. Document every transaction tied to the project: land cost, construction cost, approvals. JD Shah Associates can help set up the ledger, guide you through audit trails, and ensure your bookkeeping meshes with auditing and taxation standards. 4. Timely Completion & Possession What it means: You must deliver possession of flats/apartments on (or before) the date promised in the registration and disclosure documents. Delays must be disclosed; in many cases, compensation may be owed to buyers for delays. Why it matters for tax & audit: Delay can mean extra costs: interest, compensation, legal & administrative expenses. Your financial statements must reflect that accurately—this is part of auditing and taxation. Your income tax declaration must include all costs, and if you accrue compensation/penalties, that impacts profit/loss. 4/8

5. For audit assurance, auditors will check your project schedules vs actual timelines, your provisioning for delays, and how this reflects on your financial health. Useful information for you: Build realistic timelines from day-one, with buffer for delays. Regularly update buyers with progress and notify of any hold‐up. In your accounting, create provisions for possible delay costs so you’re prepared. Our team at JD Shah Associates can assist you to structure timeline‐based cost monitoring and integrate that with your tax audit and auditing and taxation strategy. 5. Agreement & Sale Documents What it means: When you sell units, your agreement with the buyer must include certain details (floor plan, carpet area, super built-up area, possession date, etc.). Changes to these must also be communicated. Why it matters for tax & audit: The sale agreement value goes into your books: affects revenue recognition, which is a key part of auditing and taxation. Your income tax declaration must correctly show profit from sale of units, which depends on how you priced the units and costs incurred. The tax audit will look at whether you recognized revenue at correct times and whether your disclosures match the contract terms. Useful information for you: Standardise agreement templates, ensure they capture all RERA-required fields. Keep signed copies and store electronically. If you change plans (area, amenities), update buyers and record changes. JD Shah Associates can review your contracts to ensure they align with RERA, auditing & taxation frameworks, and reduce your risk. 6. Penal Provisions & Dispute Redressal What it means: If you fail to comply with RERA, you may face legal penalties, stop‐work orders, or be required to pay compensation. There are special tribunals and authorities for redressal of buyer complaints. Why it matters for tax & audit: Legal/penalty expenses must be reflected correctly in your financial statements—it’s part of auditing and assurance. These costs may impact your income tax declaration (deductibility, timing of expense recognition). The tax audit will look at contingencies, liability disclosures, and how you have provided for disputes. 5/8

6. Assurance services may be requested by investors or lenders who want to know you’re managing risk well. Useful information for you: Stay informed of all RERA updates and changes in regulation. Maintain a register of complaints, resolutions, and any monetary compensations paid. In your accounts, after consultation with auditors, set aside provisions for possible penalties. Our firm, JD Shah Associates, offers audit & assurance services and helps you manage compliance risk—linking regulatory compliance with your tax audit and full auditing and taxation needs. JD Shah Associates We at JD Shah Associates, believe that RERA compliance is not isolated—it must tie into your overall financial compliance and transparency. Here’s how our services inter-connect: Audit & Assurance Services: We examine your financial statements, verify that disclosures (including RERA-related matters) are accurate, and help you pass external audits. Tax Audit: Under the Indian Income Tax Act, certain developers must have a tax audit— our team ensures your books and disclosures meet this standard. Income Tax Declaration: Proper declarations of profit, costs, tax liabilities; we ensure your project accounting aligns with your declarations. Auditing and Taxation Advisory: From selecting cost recognition methods, provisioning for delays/penalties, to managing risk—all woven into your RERA obligations. 6/8

7. You can explore all these services in more detail on our website:. Real-Life Experience “After we registered our project and segregated funds as required, we worked with JD Shah Associates to align our internal audits. We found errors early and corrected them before submitting tax declarations.” “The disclosures and contract review helped us gain buyer trust and avoid any tribunal complaints. The audit team connected RERA tasks with our tax audit—things flowed much smoother.” These experiences highlight how RERA compliance and auditing/taxation go hand-in- hand. Quick Checklist for Developers Register your project with the state RERA authority before marketing. Disclose full information online and update regularly. Use a dedicated escrow account for each project. Track construction timelines and notify buyers of delays. Standardise sale agreements with all RERA disclosures. Keep a complaints register, anticipate penalties, and make provisions in accounts. 7/8

8. Coordinate with your audit & taxation advisers early so compliance and tax strategy are aligned. Conclusion Following the RERA rules isn’t just legal compliance—it’s good business. It builds reputation, reduces risk, and links directly with your financial health through audit & assurance, tax audit, income tax declaration, and auditing and taxation. At JD Shah Associates, we help developers integrate all these — making sure you’re compliant, transparent, and financially sound. Visit our website for full details and reach out to us when you’re ready to align your project with best practices. 8/8