GST, once executed, will replace many taxes, for example, VAT/CST, excise tax and so on with a single tax, lessening costs for every one of the players and therefore, increasing the interest in the real estate sector as well as for home buyers.
The present structure of Indirect Taxes is exceptionally unpredictable in India. There are many types of taxes, that are levied by the Central and State Governments on Goods and Services.
Today, some of these taxes are levied by the Central Government and some are by the State governments. How agreeable will it be, if there is only the unified tax rate rather than all these taxes?
In this post, we will study that – what is Goods and Services Tax (GST) and its impact on real estate and home buyers.
GST is a tax that we have to pay on the supply of products and services. Any individual, who is giving or supplying goods and services is subject to charge GST.
The section of GST bill by the Rajya Sabha on 03 Aug 16, is being proclaimed as the most essential reform after independence by the financial experts.
It has been a long pending issue to simplify all the different types of indirect taxes and execute a “single taxation” system. This system is called as GST – an abbreviated form of Goods and Services Tax. The basic want of this system is to abrogate all indirect taxes and only GST would be levied. As the name recommends, the GST will be imposed both on Goods and Services.
GST was initially presented during 2007-08 budget session. On 17th December 2014, the present Union Cabinet ministry permitted the proposal for introduction GST Constitutional Amendment Bill. On 19th December 2014, the bill was launched on GST in Loksabha. The Bill will be timetabled and put forward for discussion in the coming Budget session. The present central government is specially set on to actualize GST Constitutional Amendment Bill.
“The real estate property and home buyers in India will be a standout amongst the most critical recipients.”
1) Presently, a real estate developer pays a set of independence taxes at various rates crosswise over states on raw material, construction and so on. These incorporate VAT, CST, service tax, excise tax, import tax to give some examples. With the help of GST, one would now wind up paying one tax at the time of construction, which would be the same all over the states.
2) This reform is going to cut down the construction costs by a considerable margin. The property rates in India would move towards stabilization crosswise urban communities and states.
3) The passing of this law will without any assistance illuminate a large number of the difficulties faced by the real estate sector and help in pulling the sector out of its long sleep.
4) The real estate industry contributes around 7.8% to India’s GDP and is the second-biggest occupation generator after the IT business. But, the immediate effect of GST on real estate, in terms of tax flow for developers and buyers, will rely upon the last GST rate.
1) With the uniform tax, engineers or you can say developers will have free input credits on GST paid for products and services obtained by them, which will diminish cost for them and can be passed as lessening to purchasers.
2) Today, when an individual investor goes to purchase any property, he winds up paying VAT and service tax and the tax rates shift crosswise over the states. But, now the Buyer will pay only one tax while obtaining property in India and this would be basic in all cases. But, the stamp obligation part would stay outside the GST gambit.
3) GST will enhance the general expense of under construction property for buyers, if the rate is superior than current applicable Service Tax rate of 15%. States, where VAT is not applicable till now, state GST will be charged. If the rate is moderately lower than 15%, GST can bring about price neutral or lower cost for shopper.
4) GST Bill is relied upon to support employment opportunities in the manufacturing and related sector. While this is publicized to be an indirect advantage to the masses, it will upgrade the purchasing limit of home buyers.
So, this was all about goods and services tax (GST), with its impact on real estate and home buyers. Once the tax rate will be finalized, the implementation of GST will be stabilized. But, one thing is clear that it will definitely going to benefit the transparency in the real estate in India and Home buyers as well.
In case you have any query or you need to share something, feel free to write us in a comment below!