Real-estate developers have welcomed the implementation of Goods and Service Tax. According to them, GST will greatly improve a fractured tax system and help create an integrated Indian market. The government has always made it clear that leasing of land, renting of buildings as well as EMIs paid for purchase of under-construction houses will start attracting GST. Sale of land and buildings will be out of the purview of GST. Such transactions will, however, continue to attract stamp duty.
Â“The removal of layers of taxation with the implementation of GST would prove to be a boon to the real estate sector. Once the policy is implemented, not only would the sector be streamlined, it would also save potential buyers from multiple taxation. The same would be equally beneficial for the real-estate companies, as there would be significant reduction in tax management expenses due to the single unified tax regime, resulting in saving compliance costs,Â” said Prashant Tripathi, Group Spokesperson, Viridian Group.
Â“GST will be beneficial to the real-estate sector by removing double and triple taxation. In the long run, it will bring homogeneity and standardisation into the real-estate sector. It will rescue end consumers from the hassle of paying various state taxes at different levels. Apart from the significant reduction in tax management, expenses due to a single unified tax, the compliance costs will also go down. However, on the other hand, the service charge levied on the purchase of property is likely to push costs up a bit. Whether home purchase becomes costlier or cheaper will finally depend on the rates in the fine print of the Bill,Â” said Ravish Kapoor, Director, Elan Group.
M3M Group echoed a similar sentiment. Â“The real-estate sector accounts for about 5 per cent of the countryÂ’s GDP and is considered as the second-largest employer. However, the sector faces challenges in terms of fiscal policy decisions. One such bottleneck is multiple indirect tax levies, such as VAT, service tax, excise duty, registration fees, etc. Since the GST is to include multiple indirect taxes, it is bound to simplify tax compliance and minimise double taxation. Home-buyers stand to benefit. Moreover, GST is expected to add about 2 per cent to IndiaÂ’s GDP. With the economy growing, the demand for the real-estate sector will also get a boost. However, there are some teething issues, which have been highlighted by various real-estate bodies and we expect the GST Council to take note and resolve the same as we continue to contribute to the GDP growth in a positive way,Â” said Atul Banshal, Finance and Accounts, M3M Group.
Mohit Goel, CEO, Omaxe Ltd, said, Â“With the Lok Sabha passing four Bills related to GST, the decks have been cleared for its implementation from July this year. It is the single-most important indirect tax reform undertaken by the country till date. With the implementation of GST, the tax structure of the country will be more streamlined and unified, giving a boost to the economy of the nation. Though most components of real estate will continue to remain out of its ambit for the time being, we are hopeful that its positive impact on the overall economy will also help the real estate sector.Â”
The new legislation is expected to come into effect from July.