No Rise In Property Price With GST Implementation
May 27, 2017 Real Estate News
The government did clarify that the assets (property) costs will not shoot up underneath the Goods and Services Tax (GST) scheme. As per M Venkaiah Naidu, the prices of property, especially that of affordable housing will not be increasing with the implementation of this scheme.
Impact Of GST On The Real Estate Sector
The real estate industry is considered to be the second largest employer in India and it also accounts for an almost five percent of the India’s GDP. But there are some issues that the sector faces in terms of the fiscal policy and the macroeconomics conditions. It is a challenge to manage the multiple indirect tax levies lie the stamp duty, excise, VAT etc.
The GST will subsume the multiple indirect taxes; it will help in simplifying the tax compliance and also minimise the scope for any double taxation. Therefore the home buyers are still happy even though they will have to pay a little more if the standard GST rate is a bit high. However, the government is trying to keep the GST as low as they can. GST is expected to add almost 2 percent to the India's gross domestic product. This will give a substantial boost to our economy; consequently, there will be a boost for the real estate sector.
The buyers are not liable for paying any kind of indirect tax for any purchase of the ready-to-move-in properties. The impact of GST on the home buyers of the resale properties will be very minute. In case of the under-construction property transactions, the buyers will have to pay the VAT and the service tax. Most of the buyers of the under-construction properties take house loans in order to fund their concerned purchase and the mathematics that is involved in the process a lot baffling.
Impact Of GST On The Developers
GST will actually help in bring down the project cost for the developers; this implies that the home will become cheaper. There is a list of taxes and duties that one developer has to pay on procurement side like the Customs duty, the Central Sales Tax, excise duty and so on. These will be then passed to the final pricing of project i.e. to the buyer. Since as per the GST, all the multiple taxes are rolled down to one which will reduce the construction cost. This factor will help in bringing in way more liquidity in the real estate market and consequently boost the sales. The free flow of the credit for the builders/developers will translate into an enhancement in the margin in their hands.
GST will impose a great level of transparency in this sector which currently is a major issue. GST will also provide an audit trail for a much better monitoring and control of the real estate sector.
Impact Of GST On The Real Estate Sector
The real estate industry is considered to be the second largest employer in India and it also accounts for an almost five percent of the India’s GDP. But there are some issues that the sector faces in terms of the fiscal policy and the macroeconomics conditions. It is a challenge to manage the multiple indirect tax levies lie the stamp duty, excise, VAT etc.
The GST will subsume the multiple indirect taxes; it will help in simplifying the tax compliance and also minimise the scope for any double taxation. Therefore the home buyers are still happy even though they will have to pay a little more if the standard GST rate is a bit high. However, the government is trying to keep the GST as low as they can. GST is expected to add almost 2 percent to the India's gross domestic product. This will give a substantial boost to our economy; consequently, there will be a boost for the real estate sector.
The buyers are not liable for paying any kind of indirect tax for any purchase of the ready-to-move-in properties. The impact of GST on the home buyers of the resale properties will be very minute. In case of the under-construction property transactions, the buyers will have to pay the VAT and the service tax. Most of the buyers of the under-construction properties take house loans in order to fund their concerned purchase and the mathematics that is involved in the process a lot baffling.
Impact Of GST On The Developers
GST will actually help in bring down the project cost for the developers; this implies that the home will become cheaper. There is a list of taxes and duties that one developer has to pay on procurement side like the Customs duty, the Central Sales Tax, excise duty and so on. These will be then passed to the final pricing of project i.e. to the buyer. Since as per the GST, all the multiple taxes are rolled down to one which will reduce the construction cost. This factor will help in bringing in way more liquidity in the real estate market and consequently boost the sales. The free flow of the credit for the builders/developers will translate into an enhancement in the margin in their hands.
GST will impose a great level of transparency in this sector which currently is a major issue. GST will also provide an audit trail for a much better monitoring and control of the real estate sector.
