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RERA

Bombay HC-refund by the builder to buyers under RERA order not liable to TDS

The Bombay High Court recently ordered a construction contractor to return the amounts to apartment buyers based on an order issued in March without making any deduction for tax at source (TDS). The HC bench of Justices SJ Kathawalla and Milind Jadhav passed the order.

Several people who booked apartments in a real estate project in Malad (West) between 2015 and 2016 have applied for HC orders to recover arrears under a 2018 refund order issued by the Maharashtra Real Estate Regulatory Authority (MahaRERA) against the builders.

In March 2021, through a consent order, the originator agreed to pay Rs 2.75 crore in installments to the petitioners. But in the July 2021 payment, 10 percent of the amount was deducted as VAT on the amount of interest according to the refund note, which according to the petitioners was not allowed by law.

RERA

The petitioners’ attorney, Subit Chakrabarti, said the reimbursement was in the form of compensation or a court debt, while BuildersĀ  Zal Andhyarujina senior advisor said the reimbursement was based on the provisions of Section 194A of the Income Tax, but later the analysis of the law indicated that the refund was as compensation and was outside the jurisdiction of the department in which it was invoked, so it has no objection to returning the discounted amount to the petitioners.

The HC too said the refund was akin to a judgment debt and cannot be liable to TDS.

Credit- Et realty

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