GST to Boost the Real Estate Sector of the Country
Jul 17, 2017 Real Estate News
From July 1st, India’s biggest tax reform came into full force in all the sectors including real estate. There is still doubts and confusion regarding its applicability but none the less it is expected the structured taxing system will help in shaping the country better.
Goods and Service Tax is a uniform taxing system that will replace the current convoluted taxing system at the various national and state levels. It is also expected that the foreign investment will increase post GST which includes investment in real estate.
The service tax and value added taxes were levied on the buyer at the time of purchasing an under construction property. There were a number of non credible taxes like excise duty, customs duty, CST, entry tax, etc. that were paid by the developer. These costs were factored in the purchase price which was paid by the buyer at the end. These costs summed up to as much as 25 percent of the price of the property. All these taxes are now replaced by the GST.
GST of 12 percent will be applicable across the real estate sector. This will likely bring down the prices of the affordable housing segment urging people to buy and invest in them more and more.
GST will also reduce the involvement of cash component in the real estate sector as to get the input credit the input has to be sourced from the registered vendor. This will reduce the usage of black money for the construction.
The construction cost is expected to come down for the affordable segment. No such relief will be seen for the luxury segment though. Most of the construction goods are supposed to incur a GST of 28 percent. Further improved efficiency in logistics should also help in reducing the prices of the goods.
as introduced many major reforms for the real estate sector this year. RERA is one of them, which aims to bring clarity and a transparent transaction between the buyer and the builder. For years the interest of the buyers has been exploited by the developers. With RERA coming in full force from 1st May, the buyers have taken a breath of relief. The state has set up the Real Estate Association that will help in addressing the grievances of the buyers.
GST will further motivate the potential buyers to buy the properties since there will be a uniform taxing system. These reforms have come as a good news to the buyers and the builders both.
Goods and Service Tax is a uniform taxing system that will replace the current convoluted taxing system at the various national and state levels. It is also expected that the foreign investment will increase post GST which includes investment in real estate.
The service tax and value added taxes were levied on the buyer at the time of purchasing an under construction property. There were a number of non credible taxes like excise duty, customs duty, CST, entry tax, etc. that were paid by the developer. These costs were factored in the purchase price which was paid by the buyer at the end. These costs summed up to as much as 25 percent of the price of the property. All these taxes are now replaced by the GST.
GST of 12 percent will be applicable across the real estate sector. This will likely bring down the prices of the affordable housing segment urging people to buy and invest in them more and more.
GST will also reduce the involvement of cash component in the real estate sector as to get the input credit the input has to be sourced from the registered vendor. This will reduce the usage of black money for the construction.
The construction cost is expected to come down for the affordable segment. No such relief will be seen for the luxury segment though. Most of the construction goods are supposed to incur a GST of 28 percent. Further improved efficiency in logistics should also help in reducing the prices of the goods.
as introduced many major reforms for the real estate sector this year. RERA is one of them, which aims to bring clarity and a transparent transaction between the buyer and the builder. For years the interest of the buyers has been exploited by the developers. With RERA coming in full force from 1st May, the buyers have taken a breath of relief. The state has set up the Real Estate Association that will help in addressing the grievances of the buyers.
GST will further motivate the potential buyers to buy the properties since there will be a uniform taxing system. These reforms have come as a good news to the buyers and the builders both.
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