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.
