Goods and Services Tax (GST) will dematerialize multiple taxability of states and UTs. Single taxation will be imposed on commodities across the country. The impact of this unified tax regime (GST) will be visible in every transaction being in function. Real estate sector is not hidden from GST purview. According to the GST announcement realty projects and properties are kept under 12% tax slab; this new rule will be legit for under construction and approaching projects.
Realty sector used to be one of heavily taxed sectors and the sector holds high expectation from GST. Previously, realty sector had to pay several state and centre levied taxes such as- service tax, Value added tax (VAT), excise duty etc on every property. GST will reform the existing tax system and dilute all these taxes into a single one i.e. 12% specific tax slab.
GST role on real estate
Regarding GST rollout real estate sector is multi-vocal. While a set of expert’s group opines that GST implementation would increase property price, the other one exactly visualizes the opposite. Government has already set 12% taxability upon under construction properties, till there is no clarity on the property prices across the country in respect to post-GST cycle.
As GST would subsume for than 16 different tax rates into a single one, thus NAREDCO (National Real Estate Development Council) thinks it will bring down property prices. Though the property prices will vary from state to state as VAT percentage is state wise individual. For states where indirect taxability used to be higher than 12% will benefit from lower property rates and states used to receive lower than 12% indirect tax rates will face the higher property rates. The GST rate for work contracts will also be counterbalanced by input credits. GST will bring out consolidated, made easy tax policy. Homebuyers can expect low property price by and large. GST probably will make real estate sector attractive choice of investment.
Mr. Saurav Talukdar, a potential homebuyer said, “As potential buyers we still don’t have any clear idea whether the property price will increase or decrease after GST implementation. But in Kolkata flats in Rajarhat have always been economical for every economical group by far. Let’s hope property price would further dip in, so that more people like me, can afford their own nests in Kolkata.”
GST will overall decrease the construction cost for the builders. Along with RERA GST is also framed to give rise to transparency in realty practise, as there won’t be puzzlement related to multiple taxpaying. Market is eagerly waiting for July 1, to witness dynamism of the market graph.
–LNN (Liyans News Network)