Experts believe that the Goods and Services Tax (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.
According to Ravish Kapoor, Director, Elan Group, “In the long run, GST will bring homogeneity and standardisation 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.”
Prashant Tripathi, group spokesman, Viridian Group, believes GST will benefit both homebuyers and developers. He says, “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.”
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.
According to industry specialists, 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 per cent 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 will not be liable to numerous charges. In any case, the effect of GST on the real estate sector cannot be totally evaluated till the time there is lucidity on the rate to be proclaimed.
Mohit Goel, CEO, Omaxe, says, “With Lok Sabha passing four bills related to GST recently, 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.”