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Real estate developers have welcomed the implementation of the Goods and Services (GST) 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.
“GST augurs well for the growth of the real estate sector. By streamlining the tax structure, GST will enhance the ease of doing business in the country, which would ensure a steady flow of investments into the sector,” said Ravish Kapoor, Director, Elan Group.
M3M Group echoed a similar sentiment. “The real estate sector accounts for about 5 per cent of the country’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 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 India’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 GDP growth in a positive way,” said Atul Banshal, Finance and Accounts, M3M Group.
Mohit Goel, CEO, Omaxe Ltd, says, “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.”
The new legislation is expected to come into effect from July.