REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016

1. REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016 FORM – 3 Chartered Accountant’s Certificate As amended on 31st May 2019

2. FORM 3 Amendment

3. Form 3 Under RERA RERA • Changes brought in through Amendment 5 of the Regulations • Gujarat RERA2019/Gen.Reg./Amdt 5. dated 31st May 2019 • The certificates to be issued by the project architect, project engineer, chartered accountant in practice • appointed by the promoter, • for project Registration/Alteration/Extension, Quarterly Project Progress Reportand for withdrawal of money from the separate account maintained under section 4(2) (l) (D) shall be in Form 1, 2 and 3 respectively. • The Form 3 shall be submitted electronically on GujRERA Portal. • The certifying professional has to affix his digital signature using utility on GujRERA portal accordingly. • The electronic submission of these forms shall be applicable when the same is made available on GujRERA Portal.”(From 8th June 2019) • Form 2 and Form 3 have been substituted and new formats have been notified.

4. FORM 3 UNDERSTANDING THE FORMAT

5. Format FORM 3

6. Use of Market Value as a measure of Cost Incurred and Paid Rule 3 (6) of General Rules - The promoter shall disclose,- estimated cost of real estate project as envisaged by the promoter by bifurcating the same into the market value of the land/ lease charges (as determined by the Government Approved Valuer). When will a promoter opt to disclose market value of land? S S Bhansali & Co Chartered Accountants Format FORM 3 Acquisition Cost of Land to be “Indexed cost of Acquisition” [Circular 2] OR “Prevailing ASR Value” [Circular 11] OR “Market Value of the land/lease charges – as determined by the Government Approved Valuer” Analysis: Circular 2 brought in optional indexation of land, Circular 11 stated that ASR/Jantri Rates or Indexed Cost of land whichever is higher. Now, regulation has also allowed Market Value and left selection of either of the 3 at the option of the promoter. Also, does this mean that either of these 3 options have to be exercised?

7. Format FORM 3 No Change

8. Format FORM 3 • Option to Tick (Yes) in case of Redevelopment/Rehabilitation Scheme has been made available. • The estimated cost of redevelopment entered into here would be reduced from iia (i) – Estimated Cost of Construction as certified by Engineer. • Where redevelopment has been reported in Annexure A, this filed is automatically taken as Yes. • The option to provide details in Estimated column is provided one time only and non changeable once submitted. Applicable | Yes/No

9. Format FORM 3

10. Format FORM 3

11. Format FORM 3

12. Format FORM 3

13. Format FORM 3 The physical progress of the project as certified by the architect (Form-1) and engineer (Form 2) seems in coherence with actual expenditure incurred & paid considering project specification: Analysis:Prima Facie or material lack of coherence between Form 1, 2 and Incurred and Paid needs to be reported by CA. The reason for Non-Coherence should be provided by the promoter. Yes No If NO The variation is on account of the following reasons provided by the Promoter of the project. 1.

14. Format – Annexure A FORM 3 OLD ANNEXURE

15. Format – Annexure A FORM 3 SAME AS OLD ANNEXURE

16. Format – Annexure A FORM 3 NEW PART OF ANNEXURE

17. FORM 3 DEFINING ROLES AND DECODING THE FORM

18. BREAKING THE Form 3 UP RERA Promoter/Auditor’s Experts Chartered Accountant

19. FORM 3 BREAKING THE Form 3 UP Auto Filled Chartered Accountant

20. Chartered Accountant FORM 3 BREAKING THE Form 3 UP

21. Auto Filled FORM 3 BREAKING THE Form 3 UP

22. BREAKING THE Form 3 UP FORM 3 The physical progress of the project as certified by the architect (Form-1) and engineer (Form 2) seems in coherence with actual expenditure incurred & paid considering project specification: Chartered Accountant Yes No If NO The variation is on account of the following reasons provided by the Promoter of the project. 1. Promoter

23. BREAKING THE Form 3A UP FORM 3 Promoter/Auditor’s Experts CA – Verified from A2S/Allotment Letter CA – Verified from Books of Accounts Promoter CA – Verified from A2S/Allotment Letter and KYC CA – Verified from A2S CA – Verified from Mortgage Deed

24. FORM 3 ONLINE FILING AND ESIGNING

25. uploading Annexure A FORM 3 Annexure A is the starting point. New Template can be downloaded or last uploaded annexure may also be downloaded.

26. Summary – Annexure A FORM 3

27. Precautions – Annexure A FORM 3 Error in Row number 1 means error in Row 2 of your excel uploaded file Number of units should be same as total units in Commencement Certificate “Amounts received” should tally with the ledger balances of the allottees AFS should be registered where amount received in greater than 10% Mortgaged Units cannot be more than total units of the project Allottee name should be same as in allotment letter/Agreement to Sale In case of joint allotment, KYC, name and mobile number of 1st Allottee is to be added

28. Certificate – Land Cost FORM 3

29. Certificate – Other Than Redevelopment FORM 3

30. Certificate – Redevelopment FORM 3

31. CA Certificate FORM 3

32. CA Certificate FORM 3

33. CA Certificate FORM 3

34. CA Certificate FORM 3

35. CA Certificate FORM 3

36. CA Certificate - Loans FORM 3

37. CA Certificate – Bank details FORM 3

38. CA Certificate – Additional Information FORM 3

39. CA Certificate – Coherence FORM 3

40. CA Certificate – Not in Coherence FORM 3

41. CA Certificate – Submission FORM 3

42. Technical Changes FORM 3 Auto Fetching of Bank Account details from project alteration application For Redevelopment – One time data entry in “Estimate Column” shall be allowed There is no option of revision – Hardcopy representations will not be entertained Once CA certificate is E-signed, block submission details, Form 1,2 and 3 and Annexure shall be locked for editing. Preview is not available for Quarterly Return.

43. TECHNICAL GUIDE

44. Decoding the TECHNICAL Guide RERA • CA Certificate is the last in the sequence of the certificates to be issued for withdrawal of funds. (Chapter 3, Part 1, 2.0) • There is no legal requirement that the same CA should issue subsequent certificates for withdrawal from bank (Chapter 3, Part 1, 1.4) • The protection under SA-620 (Using the work of an Auditor’s Expert) shall be available only to the extent of “estimate of total project cost”. The CA cannot claim protection for areas of certificate falling under “accounting and auditing”. (Chapter 3, Part 1, 2.1 and 2.2) • The ultimate purpose of the Act in adoption of the concept of percentage of completion of work is to protect the interest of the buyers of real estate by ensuring that the promoter gets to withdraw only so much from the amounts collected from allottees, as is commensurate with the progress of work achieved. (Chapter 3, Part 1, 3.4) • Land Value: Promoter is allowed to withdraw actual cost or present fair market value of the land, whichever is higher (Chapter 3, Part 1, 4.2.1) • Construction and Development Costs: Material, Labour, Cost of Hiring or depreciation on Plant and Machinery, fees for obtaining permissions, design and technical charges, rectification and warranty costs, claims from 3rd parties.(Chapter 3, Part 1, 4.3)

45. Decoding the TECHNICAL Guide RERA • Costs not considered as part of construction costs(Chapter 3, Part 1, 6.0) • General Administrative cost • Selling Costs • R&D Costs • Depreciation on Idle P&M • Costs of unconsumed material delivered at site • Advance payment • Remuneration/interest on partners capital • Word of Caution: Capitalization of interest • Note: “In the absence of information about capitalisation of interest as part of cost of assets, the element of interest to be capitalised, if any, has not been considered in the project cost incurred though it is part of the total project cost incurred”

46. Decoding the TECHNICAL Guide RERA • Approach for certification(Chapter 3, Part 1, 10.0) • Receive from the promoter the necessary particulars of the costs incurred and estimated. • Receive certificates issued by the engineer and the architect • Reconcile the difference, if any, in the extent of work completed as certified by the engineer and the architect • Point out to the promoter the issues emerging from the reconciliation and get the fresh data after corrective action is taken • Accept the data as being correct, in the absence of reasons to believe otherwise. Document the analysis of the data and reasons which lent prima facie credibility to the data. • Work out the proportion that the project costs incurred up to a particular date bear to the estimated project cost. Express the proportion in terms of percentage

47. Decoding the TECHNICAL Guide RERA • Working Papers(Chapter 3, Part 1, 13.0) • a letter of engagement stating the nature of certificate required and the purpose for which it will be used • the relevant particulars, duly certified by the promoter to be true, received from him regarding the land cost and the cost of construction incurred during the period covered by the certificate as also the particulars to show cumulative land cost and the cost of construction incurred up to the date of the certificate; • working showing the manner of attribution of expenditureon interest to the project, that it is in accordance with the applicable AS, if any; • the certificates issued by the engineer and the architect; • a note on assumptions, if any made while issuing certificate with reasons; • a note giving reasons why any evidence is accepted or rejected or why any term or expression is given a particular meaning, etc.

48. Project Life Cycle SCENARIOS

49. Scenario 1 – Prior to Amendment FORM 3 Project Duration – 1.5 years ASR Land Cost – ` 5 crores Construction Cost – ` 15 crores Total Cost – `20 crores Expected Revenue – `70 crores Since land cost is a small fraction of the total project sales value, amount collected from allottees was blocked in RERA account until BU was received.

50. Scenario 1 – After Amendment FORM 3 Project Duration – 1.5 years Market Value of Land– ` 35 crores Construction Cost – ` 15 crores Total Cost – ` 50 crores Expected Revenue – `70 crores Since market value of land is now considered amount collected from allottees shall not remain blocked in RERA account until BU was received.