GST Raids Expose Illegal Real Estate Schemes in Punjab
In a major crackdown in January, GST officials in Punjab have uncovered shady practices by some real estate developers in Mohali and New Chandigarh. These builders allegedly tricked buyers by selling plots and shops through illegal “pre-launch” deals, fake “land pooling” agreements, and an “Expression of Interest (EoI)” model – all without having actual land or proper approvals! Here’s a simple breakdown:
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What’s Going On?
Fake Land Pooling: Builders promised buyers plots through “land pooling” (where multiple landowners combine land for development). But raids found no real land existed!
EoI Scam: Developers used “Expression of Interest” (EoI) forms to collect money at discounted rates before getting RERA approval. This is illegal!
GST Evasion: No GST was paid on these sales because projects weren’t registered with Punjab RERA (Real Estate Regulatory Authority). This means tax losses worth crores!
Why Is This Dangerous for Buyers?
No Legal Protection: Unregistered projects mean if builders delay or disappear (like GBP Developers in Zirakpur/Derabassi), buyers can’t claim refunds.
Financial Risk: Your hard-earned money could vanish if the project is fake or stuck.
Legal Trouble: Buying illegal properties might lead to disputes or even demolition.
Just weeks after collecting large sums, Gupta Builders and Promoters (GBP) management in Zirakpur and Derabassi reportedly fled, leaving hundreds of buyers in limbo.
This was not GBP’s first brush with RERA; in May 2019, the authority imposed a ₹1.5 crore penalty on the group for launching a project without registration and only part-paid the fine.
What Are Authorities Doing?
GST Raids: After tip-offs, officials raided 4 builders in Mohali/New Chandigarh. They found fake deals, hidden bank accounts, and tax evasion. Investigations are expanding.
RERA’s Warning: Punjab RERA chief Rakesh Kumar Goyal said, “Using the EoI route to bypass RERA not only undermines the law but also erodes trust in the real estate market. We will take strong action against the violators to safeguard buyers’ interests”
Nationwide Issue: RERA authorities nationwide, including in Gujarat, have begun suo motu actions against developers marketing unregistered projects through EoI and pre-launch schemes. GujRERA is also running public-awareness campaigns warning buyers of steep penalties—up to 10% of project cost—for deals made before RERA registration, and encouraging reporting of unregistered pre-launch offers
What Should Buyers Do?
- Always Check RERA Registration: Ask for the project’s RERA number and verify it online.
- Avoid “Too Good to Be True” Deals: Steer clear of heavy discounts for early payments.
- Consult Experts: Confused? Talk to trusted advisors for safe options.
These raids highlight how some builders exploit loopholes to cheat buyers and evade taxes. While Punjab RERA and GST departments are cracking down, buyers must stay alert. Remember:
No RERA = No Safety.
Legal projects = Less risk, more peace of mind.
If you’ve invested in such schemes, report it to RERA immediately. Stay informed with our latest news on real estate in Ludhiana and all over Punjab, keep ask questions, and never rush into real estate deals!
