GST is set to revolutionise the way we do our taxes. Real estate sector is one of the most important sectors of the Indian economy. This industry contributes around 5-6% to GDP.
The two probable rates for the real estate are either 12 or 18 per cent, even though the sector still awaits clarity on this. The impact of GST on real estate sector is expected to be neutral.
Recent advancements in the sector include implementation of the RERA (Real Estate Regulatory Authority) Bill, ‘Housing for All’ Scheme, slashing interest rates on home loans, and increasing FDI limit to 100%.
GST will ensure transparency in all the channels of the system and will boost the buyer’s confidence. The issues of multiple taxes can now be easily taken care of by GST. GST together with the Real Estate Regulatory Act would increase the efficiency in the system. It will remove the double taxation impact and look to free the home-buyers and investors from the hassles of paying several taxes.
The real estate community will reap the benefit of the new tax law having a positive effect on all ancillary industries. This sector enjoys a lot of benefits from facilities in SEZ and some are expected to be carried forward in GST.
There was no tax imposition on renting/ leasing residential property .With the effect of GST regime, the cost for the purchase of a residential property is likely to increase in major metropolitan cities.
However, GST will help in filling the overwhelming gaps currently existing under the supply chain management process. It will certainly reduce the tax burden on both developers and buyers.