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New Indian law to protect interests of property buyers

Real Estate (Regulation and Development) Bill seeks to frame regulations, which will protect the interest of persons who purchase properties, which are developed by builders.

I intend going to India to set up a housing project. I am told that the government is coming up with some legislation for protecting the interest of buyers of property. I need some information on this aspect. I also want to know about the tax incentives available for setting up housing projects.
S.K, Pandey, Dubai
A Real Estate (Regulation and Development) Bill is currently pending in parliament. This bill seeks to frame regulations, which will protect the interest of persons who purchase properties, which are developed by builders. One of the important aspects of the legislation is that the amount collected from the buyers of property by the builder should be deposited by him in an escrow account.
A part of the money so deposited has to be used only for the cost of constructing the building and developing the amenities. The percentage is now proposed to be brought down from 70 to 50 because the builder may have already invested substantial amount in the cost of the land. The builder can withdraw funds from this escrow account only for covering the cost of constructing the specific project.
The profits earned by the builder at any point of time are 100 per cent free of tax under the provisions of section 80-IB(10) of the Income-tax Act. This is subject to fulfilment of certain conditions. The benefit is available only where the built-up area of the residential unit does not exceed 1,500sqft, for Delhi and Mumbai it is 1,000sqft. The built-up area of shops cannot exceed three per cent of the total built-up area or 5,000sqft, whichever is higher.
There are many advantages of the Indo-Mauritian double tax avoidance agreement (DTAA). However, to get the benefit of the agreement, a tax residency certificate has to be obtained from the Mauritian government. I want to know the rules which are provided for this purpose.
S.C, Ranganathan, Doha
The Financial Services Commission (FSC) of Mauritius has introduced a new application form for obtaining the tax residency certificate (TRC). Unless the TRC is obtained, a Mauritius entity cannot obtain the benefits of the DTAA, one of which is exemption from capital gains tax in respect of shares and securities sold in India. Generally, a Global Business Company-1 licence is obtained from the FSC. Certain conditions have to be fulfilled, like having office premises in Mauritius, employing on full-time basis atleast one Mauritius resident individual, and assets of atleast $100,000. One other requirement is that reasonable annual expenditure has to be incurred by the entity in Mauritius.
There are many entities, which are setting up automatic teller machines specially in small cities and towns in India. Can NRIs or PIOs invest in these entities by remitting foreign exchange from here?
K. Rahim, Sharjah
Currently, specific permission has to be obtained for foreign direct investments in white label ATM operations.
However, the Indian government is now proposing to allow 100 per cent foreign direct investment through automatic route and the need for specific permission will be avoided. This is being done to encourage ATM operations to promote financial inclusion. Therefore, until the rules are amended, NRIs and PIOs will have to obtain specific approval from the government.
The writer is a practising lawyer, specialising in tax and exchange management laws of India.