Non-Compliance of Laws and Regulations and RERA
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- Last Updated on 8 October, 2021
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[2021] 131 taxmann.com 15 (Article)
ICAI has come out with the revised set of “Code of Ethics” and it is more vibrant and transparent now since the Ethics have been codified in great detail. Though various new concepts have been introduced, one of the interesting features is Responding to Non-Compliance of Laws and Regulations (NOCLAR). Though ICAI via recent announcement has deferred its applicability to 1-4-2022, this is going to be a big challenge in India where the compliance of laws and regulations is challenging even for well-organized corporates. Section 360 of the revised Code talks about the Non-Compliance of Laws and Regulations (NOCLAR).
The real estate sector has remained widely unorganized but after the introduction of The Real Estate (Regulation and Development) Act, 2016 (“RERA”). The Act was enacted to protect home-buyers as well as help boost investments. However, the new law is evolving and therefore this article attempts to harmoniously interpret NOCLAR and RERA together for the benefit of practitioners.
Just like while discharging the duty of statutory auditor for instance under Companies Act, 1956 (“company auditor”); the auditor shall be required now to coordinate with the RERA consultant and also would require working knowledge of the RERA law to understand the Non-compliance of law and regulations (NOCLAR). It is possible that expert help is also required to comment upon NOCLAR in the case of the audited entity.
A real estate auditee company working in more than one state shall be required to comply with rules and regulations made by specific State Authorities. Though the RERA Act is one but the Rules and Regulations have been legislated differently. There are variations in State Rules and Regulations which have been modified according to needs. Therefore, for instance, a real estate company having a different state presence shall require compliance in each state, and hence this may require a separate NOCLAR check by the company auditor.
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