KARNATAKA RERA – RERA Bank Account Directions 2019

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KARNATAKA RERA – RERA Bank Account Directions 2019

KARNATAKA RERA – RERA Bank Account Directions 2019 RERA Advisory By - CA Pradeep Bohra

Circular No 8 – RERA/ADM/CR-116/2019-20 Dated 07.01.2020

Circular No. 8 – RERA/ADM/CR-116/2019-20 issue Date 07.01.2020, named as RERA Bank Account Directions 2019 is mainly for the benefit of Promoters of the Project, Financial Institution involved with the Project, Professionals supporting the Promoters and all the Allottees of the Project.

The Circular Deals with Following Points:

A) RERA Bank Account Opening

  • Each Project shall have a Separate RERA Bank account.
  • Bank Account Should be opened in a Scheduled Bank at the Local Branch (which should be the Home Branch) where the project is going on.
  • Details of the Bank account should be submitted with the Project registration application.
  • This separate RERA Bank account should be opened before making the Project Registration Application.
  • The account such opened should be a “NO LIEN” account.
  • Such account will have the suffix “RERA Bank Account for (Project Name) Real Estate Project” with the RERA Bank Account Holder.
  • Every Project should have only 1 RERA Bank account. In case of Multiple Promoters, the principal promoter is responsible for proper operations of RERA Bank account. The Principal Promoter should make all required contractual or Legal arrangements for account operation

B) Deposits in RERA Account

  • The Promoter shall deposit 70% of the amount collected from Allottees (Other than Passthrough and Indirect Taxes) in the RERA account.
  • In the case of a project, where the estimated value of sales revenue is less than the estimated cost required to complete the project, entire 100% of the amount collected from the Allottees (other than Pass through Charges and Indirect Taxes) shall be deposited in the RERA Account.
  • Any Surplus money lying in the Bank account can be converted to “NO LIEN FIXED DEPOSIT” with the same Bank Branch.

C) Withdrawals from RERA Account

  • Following process to be followed by Promoter till Project completion for Every withdrawal from RERA Bank Account:
    • Withdrawal from the RERA account by the Promoter is permissible only after
  • it is certified by an Architect (Form1, certifying % of Completion work of each of Task/ activity of the Building wing of the project)
  • it is certified by an Engineer (Form 2, certifying actual cost incurred on the construction work of each of the Building/wing of the project) and
  • it is certified by a Chartered Accountant in Practice who is not a Statutory Auditor (Form 3, certifying cost incurred and paid on construction cost and Land cost, proportion of cost incurred and paid on construction and Land cost to total estimated cost of the project cost on the construction work of each of the Building/wing of the project). Maximum amount which can be withdrawn and certified by Chartered accountant will be determined by multiplying such proportion as arrived by the total estimated cost of the project.
    • The Entire balance amount lying in the RERA Account canbe withdrawn by the Promoter on the basis of submission of necessary certificates on the completion of the project anddue project completion compliances including submission of Last quarter data till the completion of the project.

D) Reporting to Authority

  • The Promoter shall submit Forms 1, 2 & 3 to Authority for withdrawal of Funds and for quarterly return filing compliance.
  • Annual Audit for each project to be completed and certificate in Form 4 to be obtained from statutory auditor of the Promoter and the same shall be submitted within 6 months from the end of every financial year to the Authority.
  • “NO LIEN” Certificate for FD should be obtained from Chartered accountant if any FD has been made out of surplus fund lying in RERA Bank Account.
  • “NO LIEN” Certificate for FD should be submitted as a part of Quarterly compliance.
  • RERA Bank Account Passbook/Statement copy should be certified by a Chartered Accountant as part of Form 3 and should be uploaded as a part of project Quarterly return submission.
  • Form 3 should be certified by a Chartered Accountant entity which is different from the Chartered Accountant entity certifying Form 4 which should be certified by the Statutory Auditor
  • Any wrong certificate by professionals would attract penal provisions under the Act and RERA authority may recommend respective Institutes to initiate penal action /suspension or cancellation of membership of respective professionals certifying Form 1, 2 & 3.

E) Changing RERA Bank Account

  • RERA Bank Account from one Bank to Another can only be changed with prior permission from the RERA Authority.
  • Following documents to be submitted by Promoter on RERA Portal for change in RERA Bank Account:
  • Form No 5 – Application for Change in RERA Bank Account
  • Applicable Affidavits
  • Copy of Board Resolution wherever applicable (other than Individual applicant)
  • Account Statement / Passbook of New proposed RERA Bank Account
  • Form No 6 – Certificate of Account Balance from Existing Bank
  • Form No 7 – Confirmation letter for change in RERA Bank Account
  • Form No 8 – Certificate for fund transfer from old bank to new bank
  • Proof of previous RERA Bank Account closure.

F) Powers of the Authority on RERA Bank Account

  • Upon revocation of the registration, the RERA Authority may direct the bank holding RERA Bank Account to freeze or de‐freeze the said account, to facilitate the remaining development works.
  • The RERA Authority may in the interest of the allottees, enquire into the payment of amounts out of RERA Bank Account.

Source: https://rera.karnataka.gov.in/


For any assistance, guidance or any query related to Real Estate project registration with Karnataka Real Estate Regulatory Authority, please write us at info@sharmaandpagaria.com

CA Pradeep Bohra

Partner, Sharma & Pagaria, Chartered Accountants, Bangalore.

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