Thursday, 11 August 2016
Goods and Service Tax Bill – A boon for the buyers & sellers!
Real estate segment has witnessed a phenomenal growth in recent past. The growth is not just limited to Tier 1 cities, but even Tier 2 and Tier 3 towns. The industry is in the conflict of increased regulations, with bills such as the Real Estate Bill for Regulation and Development, which is still pending for approval. GST is one of those developments that will have a significant impact on this sector.
The implementation of this law will single-handedly solve many challenges faced by the real estate sector. This will also help in breaking the long slumber of this sluggish sector. The taxes being paid by the developers currently will go down by considerable percent.
Construction costs would also be reduced to some extent and this benefit can be passed on to the buyers, thereby spurring buying of homes, he added.
If a clear uniform rate for one tax that covers everything that the buyers need to pay in taxes to authorities, the whole payment process will become very easy and convenient for the buyers. In this case, even a higher rate would be more acceptable to the buyers than a lack of clarity.
However, the model suggested for GST Law restricts the availability of credit on goods and services to be acquired for the construction of immovable property other than plant and machinery. This clause in particular may lead to litigation, resulting in denial of availability of credits in certain situations.
The approval of GST Bill is the biggest indirect taxation reform being introduced in the country. It could be a turning point in the real estate sector which is currently plagued and loaded with a myriad of indirect tax issues.
We would like to believe that the bill brings a more comprehensive & uniformed tax structure to ensure greater transparency in the real estate sector.