GST – Goods and Service Tax, a kind of comprehensive indirect tax on sale, manufacture and consumption of different kinds of goods and services throughout India, with all other Central and State taxes intended to be subsumed under it. It is affecting the real estate sector though it is a little too early to exactly count the positives that will impact the buyers and developers. In an attempt to bring in a clear picture Magicbrikcs recently conducted a survery on “Will GST reduce the cost of property in India” with experts – V Suresh, former CMD, HUDCO; Vaibhav Sankla, director, H & R Block Inc; Siddhant Mehta, Delhi based CA and E Jayashree Kurup, head – content and Advisory, Magicbricks. What does GST mean in the realty sector? More importantly, will the buyers get impacted? This sentiment was echoed in one of the participant’s query.
Deepak Chauhan from Delhi NCR asked the experts, ”With the GST coming in, should I wait for its impact to seed in or should I go ahead in making an investment?” Suresh was of the opinion that the decision of property investment of buyers should not get stalled. Kurup voiced the same reason stating, “Property prices in the market might increase over the months, therefore investment plans should not be delayed. GST will take about a year or two to settle down, therefore if you are ready with finance and have chosen your investment destination then do not wait.”Like Chauhan there are many consumers in the market who have questions regarding GST. Here are some pointers:
- Central Taxes GST would replace Central Excise Duty, Service Tax, Additional Duties of Excise & Customs, Special Additional Duty of Customs, and cesses and surcharges on supply of goods and services.
- State Taxes GST would replace VAT, Central Sales Tax, Purchase Tax, Entry Tax, and Entertainment Tax, taxes on advertisements, lotteries, betting and gambling, and state cesses and surcharges.
- Eliminate excessive taxation. Central and state agencies often calculate taxes based not on the original cost of the product, but over and above the several layers of tax already levied on the product. This negatively affects the Gross Domestic Product of a nation. GST is also expected to disincentives tax evasion, lower tax rates, and make business operations easier.
Is GST positive for a developer?
Sankla shares, “Before GST, there was much compliance which created unnecessary costs. With GST, there is just one compliance. For developers GST comes as a relief as it reduces heavy taxes by a considerable percentage.”
Parveen Jain, NAREDCO president, opines, “The enactment of this law will single-handedly solve many of the challenges faced by the real estate sector and help in pulling the sector out of its long slumber.”
GST will bring in transparency on costing and finance. Additional costs borne by both buyers and developers will be diminished significantly. However, Kurup mentioned, “To ensure transparency in the real estate sector, just one tool seems insufficient. RERA also brought some degree of transparency in the sector.”