The question is, will the GST Bill be a boon for the real estate sector? Well, experts reckon that the Goods and Services Tax Bill is likely to be in favour of the real estate sector and is irrefutably going to benefit the entire realty sector of India.
India is soon going to witness a new era of tax reforms especially since the Parliament of the country has already put a stamp of its approval on this historic GST Bill. In addition to other prime sectors of the country, real estate sector will also avail tremendous benefits of this significant move of the ruling government. The GST Bill will replace mostly all predominant indirect taxes that currently exist, with one tax, all over the country, and thereby ensuring a transparent and efficient taxation system.
GST, once implemented, will replace all indirect taxes such as VAT, Service Tax, Stamp Duty, and similar other taxes with a single tax, resulting in a dramatic reduction in the cost for everyone including the buyers, and, therefore, increasing the demand in the real estate sector.
What is the current situation?
Currently, if you are a potential home buyer who is willing to buy a home anywhere in India, you are expected to pay Service Tax and Value Added Tax (VAT) on the purchase of a residential unit prior to its completion. In addition, you will also be paying a lot many indirect taxes such as excise duty, custom duty, entry tax, and so forth, that will be inbuilt into the final price of your residential unit.
How will the GST Bill improve the situation?
However, the story of the tax paying will change, once the GST is implemented. In other words, GST should replace all these multiple taxes with a single tax, thereby allowing a smooth flow of credits across the chain. Hence, experts strongly anticipate that GST will show a remarkable reduction in the construction cost and hence help in reducing the current prices of these residential units across India.
How will the GST Bill help in buying commercial properties?
Today, the commercial property developers are highly burdened with heavy costs as presently no credit is available for construction services that are used for developing a commercial property. But, once the GST Bill is implemented, there should be a smooth flow of credit across all channels, and this will help in reducing the project costs and thereby leave a positive effect on rentals. Furthermore, since all business entities including the trading companies will be able to take credit of the GST paid on rentals, it should in return also help the community to negotiate best rentals with prospective clients.
GST Bill is indeed good news!
In a nutshell, GST Bill all in all appears to be incredibly beneficial for the entire real estate sector regime, especially since a free flow of credit is expected across all channels, which will result in a sharp surge in margin in the developer community. Surely, these benefits will seep into the end consumers also.