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The Tax Publishers Inclusion of Home Buyers Under Category of Financial Creditors Pragya Bhandari The claims of home buyer have been covered within definition of financial debt and accordingly, home buyers would construe as financial creditors. This amendment under the IBC, 2016 protects the rights of home buyer in a real estate project. The learned author, in this article, attempts to delineate such amendment in detail. 1. Prologue To protect the interest of home buyers and allottees of apartments, further, to bring the transparency under the real estate sectors, the Insolvency and Bankruptcy Board of India (IBBI) has amended the Insolvency and Bankruptcy Code, 2016 (in short, 'the Code') which brought a immense boost to the home buyers. Pursuant to the amendment to the definition of financial debt under section 5(8)(f) of the Code, home buyers and allottees under the Real Estate (Regulations and Development) Act, 2016 (RERA) have attained the status of financial creditors under IBC. An explanation to section 5(8) has been inserted by bringing amendment w.e.f. 6-6-2018. Accordingly, any amount raised from an allottee under a real estate project would be deemed to be an amount having the commercial effect of a borrowing. It is included under the definition of 'financial debt' which means a debt alongwith interest, if any, which is disbursed against the consideration for the time value of money. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Inclusion of Home Buyers Under Category of Financial Creditors

Pragya Bhandari

The claims of home buyer have been covered within definition of financial debt and accordingly, home buyers would construe as financial creditors. This amendment under the IBC, 2016 protects the rights of home buyer in a real estate project. The learned author, in this article, attempts to delineate such amendment in detail.

1. Prologue

To protect the interest of home buyers and allottees of apartments, further, to bring the transparency under the real estate sectors, the Insolvency and Bankruptcy Board of India (IBBI) has amended the Insolvency and Bankruptcy Code, 2016 (in short, 'the Code') which brought a immense boost to the home buyers. Pursuant to the amendment to the definition of financial debt under section 5(8)(f) of the Code, home buyers and allottees under the Real Estate (Regulations and Development) Act, 2016 (RERA) have attained the status of financial creditors under IBC. An explanation to section 5(8) has been inserted by bringing amendment w.e.f. 6-6-2018. Accordingly, any amount raised from an allottee under a real estate project would be deemed to be an amount having the commercial effect of a borrowing. It is included under the definition of 'financial debt' which means a debt alongwith interest, if any, which is disbursed against the consideration for the time value of money.