The real estate industry from too long is waiting for the boom. It was in wait and watch mood that Goods and Services Tax (GST) will have a positive impact on it.
Real Estate sector was facing a slowdown because of the high prices. The high prices were basically observed because of the opaque transaction made in this sector, huge delays and much more that made this market sluggish.
In the backdrop of this scenario many steps were taken by the government which brought this sector under the limelight and the market witnessed the up growth. After many reforming initiations like “Housing for all” and RERA, the next thing that Real Estate along with all other sector is looking forward to is the Goods and Services Tax. The industry is in the peak of augmented regulations, with bills such as the Real Estate (Regulation and Development) Bill. GST is another development that will have a noteworthy impact on this sector.
The GST has come out to be a positive turn for this sector and the decrease of taxes has heightened up the investors to invest in this sector and to earn benefits. Since it includes more than 16 major taxes and levies into a single consolidated tax," NAREDCO. This further hopes that the affordable housing will now improve and also the additional cost over properties has also deducted.
The GST Council has resolute the rates for the new indirect tax regime which would vary from 5% to 28%, with the standard rates being 12% and 18%. While the luxury items shall be taxable at 28%, the commodities of mass consumption would be levied a tax of 5%. Once executed, this new tax will include 17 indirect taxes and will levy one uniform tax rate removing the gap in the taxation structure across the nation.
Currently, the home buyers have to pay a number of indirect taxes like the VAT, service tax, excise duty, which comes to a total tax of around 11% not including stamp duty. But under GST, the buyers will now have to pay a single uniform tax of 12% except stamp duty. But this will be in the case of the under construction properties not for the ready to move in or completed projects.
This industry is the second largest employer which approximately accounts 5% country’s GDP. But it was facing a problem because of the number of taxes levied heavily on the investors. Because of GST, the chances of double taxation has reduced to zero. Now the homebuyers are having a reason to smile as they will enjoy transparent procedure now.
Some positive points for the developers:
- As the taxes have been reduced this means that the cost of the house has also decreased. Some of the taxes were also paid by the developers like the Customs duty, Excise duty etc. these were transferred to the buyers in the total amount of unit. But after GST the cost of construction will come down. Now, this free flow of credit will boost home sales and increase the margin in customer’s hands.
- The construction material was brought under 20-25% of taxes by the developers but after GST implementation it has come between 12- 18%, which means reduced cost of production for the developers.
GST is all ready to get implemented on 1st July 2017 and all the homebuyers and the developers are eagerly waiting for it. Together with RERA, GST will go long way to transparency in the realty sector. The existing tensions of multiple bills will not get deducted from your life.
Another point to be noticed is the free transport of goods without any kind of stoppage that was being faced at the borders in the long line of tax payers, to cross one country. This has somewhere diluted the paperwork too.
All in all, this can be concluded that GST will print a bright impact on Real Estate Sector. HcoRealEstates can be a very beneficial option for you, because here you get umpteen of diversified projects such as Central Park 3 Cerise Suites, Godrej Summit and much more that can fulfil the desire of investment in dream property and enjoy lucrative result out of it.