Gurugram: Experts believe that GST, which is relied upon to take off the country on July 1, will bring an impressive measure of straightforwardness and responsibility into the sector and limit questionable transactions.
The section of the four GST bills in the Lok Sabha and the Rajya Sabha, as of late, prepared for the acknowledgment of the greatest tax change Autonomous India has seen.
GST will bring uniform taxation the nation over and furthermore touch all sectors, including the real estate, after it commences on July 1. As GST is an indirect tax, at last borne by consumers, the primary stress of homebuyers is the manner by which GST will affect them and whether property will wind up noticeably costlier after its usage.
Developers say that GST will profit the real estate sector by overcoming the present regime of twofold and triple tax collection.
“In the long run, GST will bring homogeneity and standardization into the real estate sector. It will rescue end consumers from the hassles of paying various state taxes at different levels. Apart from the significant reduction in tax management expenses due to a single unified tax, the compliance costs will also go down. On the other hand, the service charge levied on the purchase of the property is likely to push costs up a bit. However, whether the home purchase becomes costlier or cheaper will depend on the final applicable tax rate,” Ravish Kapoor, director of Elan Group, said.
Prashant Tripathi, group spokesman of Viridian Group, says GST will benefit both homebuyers and developers.
“The removal of multiple layers of taxation with the implementation of GST will prove to be a boon to the real estate sector. Once the policy is implemented, not only would the sector be streamlined, it would also save potential buyers from multiple taxation. The same would be equally beneficial for the real estate companies, as there would be significant reduction in tax management expenses due to a single unified tax regime, resulting in reduction in compliance costs,” Tripathi said.
A few developers say that GST will get an outlook change terms of a solitary tax structure, which will undoubtedly be significantly lesser than the present excise duty, service tax, and between states exacts on the construction goods starting with one state then onto the next and imported products going from the drift and intersection distinctive states.
Industry specialists say that if a homebuyer purchases a property under development, there can be two ramifications. Service tax payable on property under development will be replaced by GST. Currently, there is a reduction for cost of land for ascertaining service tax on residential properties under development, achieving around 4% service tax.
Whatever be the circumstance, experts share the sentiment that GST will bring an extensive measure of straightforwardness and responsibility into the sector and furthermore constrain questionable transactions.
At present, numerous developers are charging diverse taxes at various rates because of lack of clarity.
Customers are liable to VAT and service tax, aside from indirect taxes as excise duty, octroi and entry tax. GST will bring all these charges under one basket and customers won’t be liable to numerous charges. In any case, the effect of GST on the real estate sector can’t be totally evaluated till the time there is lucidity on the rate to be proclaimed.
Mr. Mohit Goel, CEO, Omaxe Ltd, Says: With Lok Sabha passing 4 bills related to GST yesterday, the decks have been cleared for its implementation from July this year. It is the single most important indirect tax reform undertaken by the country till date. With the implementation of GST, the tax structure of the country will be more streamlined and unified, giving a boost to the economy of the nation. Though most components of real-estate will continue to remain out of its ambit for the time being, we are hopeful that its positive impact on the overall economy will also help the real estate sector.
First of all, it will manage indirect taxes in the form of VAT, Service tax, Stamp duty, Registration etc more transparently and hence will give confidence to the sector. GST is expected to bring down the total Project Cost and hence shall make home cheaper and it is a good news for the sector. The Developers had been paying multiple taxes amounting to over 22% approximately so far and hence this shall reduce the Cost of the Project.
With the complexities of multiple taxes gone after GST operational, the buyers would have their confidence going up as, so far, the taxation never exposed overhead Cost to the buyers in the past. It shall be a psychological advantage for the buyers as GST will expose lack of transparency in the sector.
Though farfetched, but higher expected GDP due to GST rolled out and helping Indian economy, may eventually benefit development of Infrastructure and hence the common man, thus tremendously moving real estate sector and making buying property for the common man an easy choice.Said by Mr Rahul Singla , Director Mapsko Group.