New Labour uniform codes

Labour uniform codes
Labour uniform codes

As per the information gathered by me from news/media/notifications, etc on new 4 labour uniform codes- few provisions are being implemented w.e.f. 1-7-22 by Central Govt and rest shall be notified by States as per their “State – Reforms of Labour Code” and dates for implementation shall be as per their state’s gazette notification, the central rules are as under: (Attaching latest booklet on the matter)

*W.e.f 1.7.2022*

1. Working hours can be varied from 10 to 12 hours but an aggregate 48 hours exists so can do 4 day week and three days layoff/weekly off – as per requirement. The Government is also working on the work from home concept.

2. Basic is mandatory 50% of CTC. So pf in any case 12% on Basic that is 50% of CTC.

*Important Note:* Basic can not be less than 50% of CTC but in Minimum wages – that consists of Basic + DA as part of basic therefore for those employees who are getting minimum wages can not be further bifurcated.

NEW LABOUR LAW REFORM CODES: (total 29 existing labour laws merged in 4 new Reform Codes)

The central government has notified four labour codes, namely,

1. the Code on Wages, 2019, on August 8, 2019; (amalgamated 4 laws)
2. the Industrial Relations Code, 2020, (amalgamated 3 laws)
3. the Code on Social Security, 2020, (amalgamated 9 laws) and
4. the Occupational Safety, Health and Working Conditions Code, 2020 on September 29, 2020. (amalgamated 13 laws)


The statutory minimum wage is based on the gross wage payable for a normal working week, i.e. before overtime payments.


1. the basic wage agreed in your contract;
2. performance-related payments and allowances for shift work, irregular hours, etc.;
3. weekly or monthly fixed payments for the turnover you generate;
4. work-related payments by third parties, e.g. tips or payments agreed between you and your employer;
(The total of these amounts may not be lower than the minimum wage.)


Some income components are not included in the calculation of the minimum wage:

1. overtime pay;
2. leave allowance;
3. profit shares;
4. special payments, e.g. incidental payments received for reaching sales targets;
5. future payments you receive subject to certain conditions (e.g. pension and saving schemes to which the employer contributes);
6. expense allowances;
7. end-of-year allowances.


Your gross minimum wage depends on how many hours you work. If you work part time the gross minimum wage is proportionately lower.

Therefore, you are requested to be in touch with experts on the subject for implementing dates of Labour Codes state wise because our company works pan-India.

Read our other blog – Latest Taxation, GST and Other Updates

Chartered Accountant in Pimpri Chinchwad

TDS on Sale of Property by NRI in India – Latest 2022

TDS on Sale of Property

Properties sold in India by NRIs are liable for taxation and TDS is required to be deducted under the Indian income tax laws. An NRI who wants to sell a property situated in India has to pay tax on capital gains.

In this article, we will discuss the applicability of TDS on Sale of Property by NRI in India.

Tax implications for NRIs selling property in India

Your tax liability on the sale of your property in India will depend on the period of time for which you have held it. If you sell a property that you have owned for more than 2 years, then you will be liable to pay a long-term capital gains tax. In case a property is held for 2 years or fewer, the short-term capital gains tax will be applicable. 

The date of the purchase of the property by the original owner will be considered for calculating capital gains on an inherited property.  

TDS on sale of property by NRI in India 

TDS (Tax Deducted at Source) shall be deducted whenever any property is sold/ purchased. The buyer needs to deduct some amount (called TDS) and pay the balance to the seller.

The amount to be deducted depends on the residential status of the seller. In case the seller is a resident Indian, 1% of the sale price of the property will be deducted as TDS.

In the case of an NRI seller, the amount of TDS to be deducted will depend on the quantum of money received by the seller. 

TDS rates applicable on the sale of property owned by NRIs are as under:  

  • 1. Long-term capital gains tax on the sale of property held for more than 2 years: 20%.
  • 2. Short-term capital gains tax on the sale of property held for less than 2 years: As per the income tax slab of the NRI seller.

Surcharges and cess would also be charged on the capital gains. Here are the effective rates of TDS on the sale of property by NRI for long-term capital gains. 

Long-term capital gains tax
Surcharge on LTCG tax
(C =A + B)
Total tax (incl surcharge)
Health & education cess
Applicable TDS rate (incl surcharge + cess) 
Sale price < Rs. 50 lakh20%Nil20%4% of total tax20.8%
Sale price Rs. 50 lakh to Rs. 1 crore20%10% of LTCG tax22%4% of total tax22.8%
Above Rs. 1 crore20%15% of LTCG tax23%4% of total tax23.92%
TDS on sale of property by NRI in India

The maximum surcharge rate on tax payable on dividend income and capital gain mentioned in Section 112 of the Income Tax Act has been capped at 15% as announced in Union Budget 2022.

Hence, regardless of whether the value of the property sold by an NRI is Rs. 1 crore or Rs. 5 crores, or even Rs. 10 crore–the rate of TDS will remain the same i.e. 23.92%.

In the case of short-term capital gains, surcharge and cess would be added to the applicable tax rate as per your income tax slab in the same manner as in the case of long-term capital gains.

The TDS shall be deducted when any payment is made to the NRI seller for the purchase of property, even if the advance is being paid. The TDS shall be deposited by the buyer with the Income Tax Dept.   

The TDS on the purchase of property from NRI shall be deducted regardless of the transaction value of the property. Even if the price of the property is less than Rs. 50 lakh, the TDS shall be deducted. 

Chartered Accountant in Pimpri Chinchwad

Refund of Swiss VAT to foreigners – Switzerland

Swiss VAT

Do you have expenses for entrepreneurial activities in Switzerland as a recipient of services with a registered office, domicile, or permanent establishment outside Switzerland, and would you like a VAT refund?

The legal basis for VAT refunds can be found in Art. 107, s. 1, b of the Swiss VAT Act and to art. 151 to 156 of the VAT Ordinance (OTVA).

The Federal Administrative Court has just confirmed the practice of the AFC concerning the content of the certificate required for the reimbursement of Swiss VAT paid by foreign companies.

What should the certificate issued by the foreign authority contain?

To be entitled to reimbursement, a foreign company must, among other things, prove to the Swiss tax authorities (AFC) that it has the status of the company in the country in which it is domiciled, or in which it has its headquarters or a permanent establishment (see art 151, paragraph 1, letter d, OTVA).

The certificate issued by the foreign tax authority must be valid for the reimbursement period (calendar year).

Insofar as reciprocity is granted, and the country has a VAT system (see list of these countries on the AFC website), it is essential that the certificate confirms that the applicant is registered with the register of persons liable for VAT during the period for which the VAT refund is requested, or indicates the date from which the applicant is entered in the register of persons subject to VAT.

Insofar as reciprocity is granted, and the country does not have a VAT system (see list of these countries on the AFC website), it is essential that the company certificate confirm the applicant’s status as an entrepreneur during the period for which the VAT refund is requested, or indicates the date from which the applicant has the status of the contractor.

Attention, if the above conditions are not met, the AFC will not be able to process the request, nor refund the Swiss VAT!

Read More

Chartered Accountant in Pimpri Chinchwad

Test of Control (TOC) vs Test of Details (TOD) –

Test of Control
Test of Details

In a process of Statutory Audit, the Test of Control and Test of Details are two important stages and it also makes an important question from the interview pov.

I have discussed a comparison of both gathered from my experience.

TOC is a type of audit procedure we perform to evaluate whether a client’s internal control works effectively. Thus, we perform the test to obtain evidence of effectiveness before we can rely on controls. In case controls are weak, we will need to increase our substantive tests.

So, we take out the samples from SCOT (Significant class of Transactions), test various assertions, capture the details of the given sample, and match them with supporting documents. The sample size depends on the population and frequency of control.

Based on the TOC, we determine the extent of TOD. Test of Details is a substantive procedure used to collect evidence to verify individual transactions or balances.

So, after a combined assessment of risk and control (CRA), we define the tolerable error (TE) for deviations and obtain the samples for transactions to do the testing. The goal here is to confirm that supporting docs match with each other and the source.

I have only explained the surface of it and there are a lot of other things done throughout this.

I hope it was worth a read! Do add your learnings in the comments.

Windfall tax: Will India impose it too?

Windfall tax: Will India impose it too?

This question has been a buzz in Indian media for the past few weeks. But what is this windfall tax that Indian media is going on about?

What is the windfall Tax?

When a company benefits from something that they are not responsible for and, as a result of that, enjoys the financial gain, that gain is referred to as windfall profits.

Governments, typically, levy a one-time tax over and above the normal rates of tax on such profits, and that is called windfall tax.

Why Now?

So what’s happening is global oil and gas prices are at a peak level due to the Russia-Ukraine conflict. If we take the example of any Indian upstream oil companies, say ONGC, or Oil India. They declared an all-time high net profit in the fiscal year 2021-22.

ONGC declared that its net profit grew by 258% to reach ₹40,306 crores. While the Oil India announced a net profit of ₹3,887.31 crore, which is 123% higher than in the preceding year.

As the Indian government has recently gone for the cut in Central Excise Duty and considering that it is spending more on food and fertilizer there is the requirement of any alternate levy to full fill this gap and one of the solutions could be levying a windfall tax on oil companies.

Countries like Italy and the UK have already imposed a windfall tax over the past couple of weeks.

Will such tax increase the Price of the Fuel?

Very unlikely, as this tax is not part of the input or output cost, but levied only on profit.

Is India really considering such a levy of tax?

While there is no formal denial by the government, upstream oil companies have said they have heard nothing about this.

Let me know your thoughts on whether you believe that such a tax should be levied or not?


Chartered Accountant in Pimpri Chinchwad

Rotation of Auditor under Companies Act, 2013 – Important Step to Maintain Independence of Auditor

It is mandatory for every company registered under the Companies Act, to get its accounts audited by the statutory auditor and present it before the stakeholders every year. An audit is an important activity for every business and the auditor must present his views in an unbiased way.  

The principle of Audit Rotation implies periodic breaks to audit engagements and is imposed to avoid long-term relationships between an auditor and the client. Audit breaks/rotation is a major provision to enhance the Audit quality and maintain the trust of various stakeholders in the company.

Section 139(2) of the Companies Act, 2013 deals with the mandatory auditor/audit firm rotation principle and provides for the rules and regulations in this regard. 

Auditor Rotation Applicability

Section 139(2) of the Companies Act, 2013 provides for mandatory rotation of auditor or audit firm by listed and certain class or classes of companies. The Section specifies that no listed company or a company belonging to such class or classes of companies as specified shall appoint or reappoint

  1. An individual as auditor for a more than one term of five consecutive years and 
  2. An audit firm as auditor for more than two terms of five consecutive years. 

Therefore rotation of auditor is applicable to all listed companies and such other classes of companies as may be prescribed. The list of “such other class of Companies” is provided in Rule 5 of Companies (Audit and Auditors) Rules, 2014. Except for small companies and one-person companies, rotation of auditors is applicable to the following companies:

Sr. No.Category of companyThreshold limit 
1.Unlisted public companiesHaving paid-up capital of Rs. 10 crores or more
2.Private limited companiesHaving paid-up capital of Rs. 50 crores or more
3Any company having paid-up capital below threshold limits as specified under points (1) and (2) above but having public borrowings from a financial institution, banks, or public depositsRs. 50 crore or more

Therefore from the above explanation, it is clear than Auditor Rotation is not applicable to the following companies:

  1. One Person Company 
  2. Small Company
  3. Unlisted public companies having paid-up capital less than Rs. 10 crore or borrowings less than Rs 50 crore
  4. Private Limited companies having paid-up capital less than Rs. 50 crore or borrowings less than Rs 50 crore

Can the Outgoing Auditor be Reappointed in the same company after the completion of his term of the audit?

First Proviso to Section 139(2) provides that after the completion of the audit term (5 consecutive years or 10 consecutive years as the case may be), the outgoing auditor shall not be eligible for re-appointment in the same company:

In the case of individual AuditorFor a period of 5 years from the completion his term
In the case of an Audit FirmFor a period of 5 years from the completion of his term

Therefore post completion of the term of audit, a cooling period of 5 years is provided to be eligible for reappointment as an auditor in the same company.

Provision related to Common Partner in Audit Firm

Second Proviso to Section 139(2) of the Companies Act, 2013 provides that if Audit Firms i.e. incoming audit firm and outgoing audit firm whose tenure has expired in a company immediately preceding the financial year, are having common partner or partners, then such incoming audit firm is not eligible to get appointed as auditor of the same company for a period of 5 years. 

Manner of Rotation of Auditors by the companies on expiry of their term

  1. Recommendation for an appointment:

The Audit Committee, where there is one of the Board shall consider the matter of rotation of auditors and shall recommend his appointment at the annual general meeting of the company.

  1. Prior Period must be taken into consideration:

While calculating the consecutive 5 years or 10 years, the prior period before commencement of the Act, served as Auditor (whether individual or firm) shall be taken into account.

  1. Not eligible for appointment if belongs to the same Network

The incoming Auditor shall not be eligible for appointment if he or any partner of the firm is associated with the outgoing auditor or auditor firm under the “same network of audit firms.”

Rule 6(3) of the Companies (Audit and Auditors) Rules, 2014, provides that while calculating the period of five consecutive years or 10 consecutive years as the case may be the period for which an individual or firm has held office as auditor prior to the commencement of the Act shall be taken into account. The following illustration will help to understand how an appointment shall be made in the first AGM after the commencement of this Act, i.e., 1st April 2014

Illustration 1 (For individual auditor) :

Number of consecutive years for which an individual auditor has been functioning as an auditor in the same company [in the first AGM held after the commencement of provisions of Section 139(2)] Maximum number of consecutive years for which he may be appointed in the same company (including the transitional period)The aggregate period which the auditor would complete in the same company in view of columns I and II 
5 years (or more than 5 years) 3 years 8 years or more 
4 years 3 years 7 years
3 years 3 years 6 years
2 years 3 years 5 years
1 year 4 years 5 years

Illustration 2 (in case of Audit Firm) 

Number of consecutive years for which an individual auditor has been functioning as an auditor in the same company [in the first AGM held after the commencement of provisions of Section 139(2)] Maximum number of consecutive years for which he may be appointed in the same company (including the transitional period)The aggregate period which the auditor would complete in the same company in view of columns I and II 
10 years (or more than 10 years) 3 years 13 years or more 
9 years 3 years 12 years
8 years 3 years 11 years
7 years 3 years 10 years
6 year 4 years 10 years
5 years 5 years 10 years
4 years 6 years 10 years
3 years 7 years 10 years 
2 years 8 years 10 years 
1 year 9 years 10 years

What is the same network of Audit Firms?

Here the same network includes the firms operating or functioning, hitherto or in the future, under 

1.  Same brand name or
2.  Same trade name or
3. It has a common control.

As per the guidelines issued by the Institute of Chartered Accountants of India, for determining whether the firms or individual auditors are operating or working under the same network, the following factors must be considered:

  1. Ownership or control or management of the firms
  2. Sharing of professional resources amongst the firms
  3. Quality control processes among the firms
  4. Co-operation amongst the Audit Firms.

Other important provisions related to rotation

  1. Change in Audit Firm by Partner who certifies the financial statements of the company

Explanation to Rule 6 provides that a firm shall not be eligible for appointment if a partner of an existing firm (outgoing firm), who certifies the financial statements of the company, retires from the said firm and joins another firm of Chartered Accountants. Such a firm shall be ineligible for an appointment for a period of 5 years.

  1. Consecutive 5 years 

Consecutive years shall mean all the preceding financial years for which the individual auditor has been the auditor until there has been a break by five years or more.

  1. Rotation in case the company has appointed joint Auditors

Where a company has appointed two or more individuals or firms or a combination thereof as joint auditors, the company may follow the rotation of auditors in such a manner that both or all of the joint auditors, as the case may be, do not complete their term in the same year.

  1. Term of Audit amongst Partners

The members of the company may resolve for:

a) in the audit firm appointed by it, the auditing partner and his team to be rotated at such intervals as may be resolved by members; or

(b) the audit shall be conducted by more than one auditor.

Auditors’ right to resignation and the company’s right to remove an auditor

The rights of the company to remove the auditor or the right of the auditor to resign before the expiry of the term are retained. Also, the company can remove the auditor before the expiry of the term.

Applicability of Auditor rotation in case of a private limited company

Rule 5 of Companies (Audit and Auditors) Rules, 2014 provides that, the Rotation of Auditor is applicable in the case of private limited companies if, 

  1. The paid-up share capital of the company is Rs. 50 crore or more; or
  2. Has public borrowings from financial institutions, banks, or public deposits of Rs. 50 crore or more.

The companies below the threshold limits as mentioned above, small companies, and One Person Companies are not required to follow the provisions related to the rotation of Auditor or Audit Firm. The Auditor in such companies can be an auditor for any number of years.

Form 10BD, return of donation – Income Tax update for Trusts

Dear Trustees,

Re: New Provision of Income Tax to be followed by you.
As informed donation received by you to be filled in the form, you should electronically upload & sign no 10BD and should be uploaded before 15th May 2022 and every year.

The following details are to be filled up:

1. Name of the donor.
2. Address of donor.
3. Nature of donation.
4. Mode of receipt.
5. Amount of donation.
6. Section code under which donation was received.
7. PAN no. /Aadhar no./Tax Identification no. of the donor.

After uploading Form 10BD, Form 10BE is to be downloaded and this Certificate of Donation is to be issued to the Donor before 31st May of every year and contains the following details.

1) Name of Charitable Organization.
2) PAN
3) Aadhar
4) Approval number u/s 80G

There is a heavy penalty for not filling the form, Rs. 200 per day for Delay in uploading FORM 10BD. The Assessing Officer may also impose a penalty of a minimum of Rs. 10,000 to a maximum of Rs. 1 Lakh.

Department has made live form 10BD, return of donation. 31st May is the last date. Reporting template, instruction, and notification are there for quick reference.
#cbdt #tax #incometaxupdate #directtax #ca #incometax #incometaxreturn #taxplanning

Operational creditors to furnish extracts of GSTR-1, GSTR-3B, and e-way bills – IBC

Operational creditors to furnish extracts of GSTR-1, GSTR-3B, and e-way bills, with the application for initiation of the corporate insolvency resolution process.

The amendment provides the operational creditors to furnish extracts of Form GSTR-1, Form GSTR-3B, and e-way bills, wherever applicable, along with the application filed under section 9 of the Insolvency and Bankruptcy Code, 2016. These additional sets of documents can be used as evidence of transactions with the corporate debtor, debt, and default, easing the process of admission. These documents will also be submitted as part of the claims submitted to the resolution professional to help collate of claims. Further, creditors filing applications under section 7 or 9 of the Code are required to furnish details of their PAN and Email ID to ensure smooth correspondence.

Contact us – Income Tax Return, Future and Options Losses Carry Forward, Capital Gains Return, Tax Audit, GST Return, ITR Filing, GST Registration, etc.

Chartered Accountant in Pimpri Chinchwad

New TDS provision u/s 194R effective from 1st July 2022:

A person, responsible for giving out any benefit or perquisites to a resident arising out of business/ profession, whether it’s convertible into money or not, requires deducting TDS @ 10% on such aggregate amt.

Provided that no TDS if the value doesn’t exceed 20k in a year.

In the case of an Individual or HUF whose turnover, gross sales and gross receipts during the preceding FY don’t exceed 1 cr and in the case of the profession, gross receipts don’t exceed 50 lacs, the provision of 194R will not be applicable.

The scenario where this TDS will be applicable

Q. Whether benefits to employees under 17(2) are covered:
Ans. No, because it covers only the course of business/ profession

Q. Sponsored trips to clients

Ans. Yes, achieving targets and sponsoring trips for clients would be covered as non-monetary benefits and would be liable for TDS

Q. Prize Money awarded on winning lottery/ Games: Rummy India/ Dream11, Teen Patti:

Ans. No, since this is not a benefit given in the course of business/ profession as it arises as a reward of making a payment towards playing/ gaming

Q. Diwali/ Festive gifts to suppliers:
Ans. Yes, this is a benefit in the course of business. TDS will be applicable.

Chartered Accountant In Pimpri Chinchwad.

Chartered Accountant in Pimpri Chinchwad

Rights Of Homebuyers under – The Insolvency and Bankruptcy Code, 2016

Rights Of Homebuyers

Rights Of Homebuyers under IBC – The Insolvency and Bankruptcy Code, 2016 (“IBC”), as originally enacted, did not provide adequate protection and recognition of the interests of homebuyers in real estate projects. While the Homebuyers are vital stakeholders in real estate projects, the IBC, as initially crafted, did not protect them. This is because they were treated only as ‘other creditors’, not at par with financial and operational creditors, thus they were not only unable to start proceedings under the IBC but had no statutory voting rights in the Committee of Creditors.

Homebuyers recognized as Financial Creditors – Rights Of Homebuyers

On June 6, 2018, the Insolvency and Bankruptcy Code (Amendment) Ordinance was passed, which was replaced by the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018 (“2018 Amendment Act”) on August 17, 2018. By way of the said amendment, an explanation of Section 5(8)(f) of the IBC was added, which provides a definition of “financial debt”. It was clarified that the amount raised from an allottee under a real estate project shall be deemed to be an amount having the commercial effect of a borrowing. It was further clarified that the expressions “allottee” and “real estate project” shall have the meanings assigned to them under the Real Estate (Regulation and Development) Act, 2016 (“RERA”). As a result, Homebuyers/allottees were expressly recognized as financial creditors under the IBC, which enabled them to start corporate insolvency resolution proceedings (“CIRP”) against a defaulting developer under Section 7 of the IBC. It may be noted that homebuyers have been recognized as allottees under RERA. [See Section 2(d)].

The 2018 Amendment Act was challenged before the Supreme Court in Pioneer Urban Land and Infrastructure Limited v. Union of India on the grounds of it being violative of Article 14 and Article 19(1)(g) read with Article 19(6) of the Constitution of India. The Supreme Court rejected the challenges and upheld the constitutional validity of the 2018 Amendment Act. The Supreme Court on reading and interpreting Section 5(8)(f) of the IBC, observed that Homebuyers/allottees were included in the main provision i.e. Section 5(8)(f) from the very inception of the Code, the Explanation being added in 2018 merely to clarify doubts that had arisen in relation the status of Homebuyers. Therefore, the Court held that the 2018 Amendment Act does not infringe Article 14 and Article 19(1)(g) read with Article 19(6), or 300-A of the Constitution of India.

Chartered Accountant in Pimpri Chinchwad

Minimum threshold requirement – Rights Of Homebuyers

On December 28, 2019, the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2019, was promulgated which was replaced by the Insolvency and Bankruptcy Code (Amendment) Act, 2020 (“2020 Amendment Act”) inserting provisos to Section 7 of the IBC. The second proviso states that with Homebuyers, an application for initiating CIRP under Section 7 of the IBC is to be filed jointly by at least 100 allottees or 10% of the total allottees under the said project, whichever is lesser. The third proviso further stated that matters already filed by individual Homebuyers but not yet admitted by the adjudicating authority before the commencement of the 2020 Amendment Act shall be dismissed if they are not modified to fulfill the minimum threshold requirement as stated above within 30 days from the commencement of the 2020 Amendment Act. The Apex Court upheld the constitutional validity of the 2020 Amendment Act in the case of Manish Kumar v. Union of India.

Submission of claims by Homebuyers

The above clarifies that the courts, as well as the legislature, have taken an active approach in not only recognizing but also protecting the rights of homebuyers. There are a host of issues that periodically arise for consideration vis-à-vis their rights, and one such issue is regarding the submission of claims by homebuyers.

Once a Section 7 application is admitted, the adjudicating authority has to pass an order under Section 14 of the IBC, declaring a moratorium and appointing an interim resolution professional (“IRP”). The IRP is required to then make a public announcement which is required to mention the last date for submission of claims by creditors. In terms of Regulation 6 read with Regulation 12 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”), the creditors may submit their claims within 14 days from the appointment of the IRP, failing which the claim may be submitted within a period of 90 days from the insolvency commencement date. In many judgments, the National Company Law Tribunal (“NCLT”) has clarified that rejection of the claim on the grounds of delay beyond the 90-day period is not sustainable, as the aforesaid provision is merely directory and not mandatory.

While this appears to be settled law, on June 1, 2022, the Principal Bench of the National Company Law Appellate Tribunal (“NCLAT”), New Delhi, comprising Justice Ashok Bhushan, Ms. Shreesha Merla, Mr. Naresh Salencha granted further relief to Homebuyers in relation to the filing of their claims. In the said case titled Puneet Kaur v. K V Developers Private Limited,[8] the NCLAT held that even claims of those Homebuyers ought to be included in the information memorandum who did not file their claims if the same were reflected in the record of the corporate debtor. The NCLAT held that non-consideration of such claims would lead to inequitable and unfair resolution.

The Appellate Tribunal further noted the difficulty faced by homebuyers in filing their claims. It was observed that the public announcement inviting claims is normally done in the area where the corporate debtor has its registered office and corporate office, and there is every likelihood that all the Homebuyers who are usually hundreds in number neither come to know about the CIRP nor do they file their claims within the stipulated period. The NCLAT thus observed that non-submission of claims within the prescribed time is a common feature in the insolvency process of almost all real estate projects. The Appellate Tribunal went on to hold that once the allotment letters have been issued to the Homebuyers and payments have been received, there is an obligation on the part of the real estate company to provide possession of the houses along with other attached liabilities. Therefore, the Homebuyers have every right to agitate their claim.

The NCLAT has recognized the difficulties faced by Homebuyers, who, as the NCLAT recorded in its judgment dated June 1, 2022, usually belong to the “middle class of society”, most of whom have taken loans from banks and other financial institutions, saddling them with liability. In doing so, the NCLAT furthered the trend of the courts, viewing homebuyers with a fair mindset and reiterating the need to protect homebuyers from the technical rigors and procedures contemplated in the IBC.

Chartered Accountant in Pimpri Chinchwad