GST the New Revolution in the Real Estate Market

Real estate has shown constant and consistent growth in our country. So there is a constant need of making new laws and amendments for revival and development of the economy. It not only gives benefits to people of the nation but also gives a positive push to the economy for moving forward. Application of GST in real estate sector will bring a positive change. GST stands for goods and service tax which is a kind of comprehensive indirect tax to be levied on the manufacture, sale, and consumption of the goods as well as services at the national level. It will be replaced by all the indirect taxes on goods and services levied by the Indian government. It will make things more transparent, avoid confusion and will be easy to calculate.
 
Impact of GST on the real estate market
The construction service has been taxable under VAT and service tax since a decade now. The industry does not function as expected as it has some loop holes which still remains unsolved for issues like  transfer of development rights in land, taxability development agreements made jointly, taxable value for goods and services, etc. So to overcome all this problem introduction of GST has been made. It’s indeed a thought in mind of people that how GST will solve the problem of an industry facing the problem of complex tax structures. The industry has two important taxes one being Service tax and other being VAT. Due to the different tax structure in different states available in multiple options to discharge it so this has given rise to a lot of disputes. So GST coming in the picture will bring pause to such issues as practices and positions will tend to remain common across India. So the taxes paid will almost remain to be same in the whole nation.
 
Benefits of the GST on the buyer’s side
The proposed GST will replace these multiple taxes with single tax being applied to the purchase of property. It also makes sure there is a smooth movement of credit through the chain. So the GST will reduce the construction cost in the hand of developer and further lead to less maintenance of prices in the real estate market. The only drawback will be if the rates of GST are kept high which is expected to be 27 percent though the best possible attempts are being made to keep it as low as possible which will lead to offset possible gains on incremental credits. Also, there will be no changes in the stamp duty charges it will remain to be as it is. Most of the buyers do not understand the mathematics involved in the calculation of taxes and only purchase property seeing the base value of the property. So a buyer is dependent on the clauses in the agreement and if the person is not somebody who understand or knows the law will not understand the entire document as it’s too lengthy and has difficult words. If there is clear uniform rate of taxes to be paid then it gets easy for the buyer to understand the whole tax process. So over here buyer would also accept a higher rate of tax rather being confused or unaware of it.
 
Benefits of the GST on the developer’s side
Due to the application of GST, it will bring down the project cost for developers and further make the houses cheaper to purchase. There are many taxes and duty which developer have to pay like Customs duty, Central Sales Tax, excise duty, entry tax, etc. the cost they bear comes up to 20 – 25 percent of the cost of material purchased so if the GST lowers down and comes under 20 percent then developers will be really benefited so part of their benefit could be transferred to the buyer which in return is beneficial for both of them. There is no doubt that GST will be a revolutionary in Indian taxation as it will help to evade around 16 taxes and will levy only one single consolidated tax. This will help to solve double taxation problems in the real estate sector.
 
Transparency
GST application will bring higher transparency through market mechanism it’s also great that real estate will be an integral part of GST design. GST will also provide an audit trail for better control and monitoring of the sector.
 
Hence, we as a nation should stand for all the positive things which will not only give personal benefits but also help the nation to make a forward move. In short implication of GST appears to be a positive factor for the real estate regime as it would increase margin in the hands of the developer and with the low housing prices will benefit the buyers too.