GST- A Complex Diktat To Small Market Players

GST now has added further trouble for real estate raw material suppliers. As the product itself, as a sample doesn’t attract GST but the freight and the packaging materials are payable under GST. Ever since GST came into action all realty stake holders are in a whirl of become eligible as GST complaint.
According to the small-scale suppliers the compliance cost higher in GST regime. The market analysis says that all SME vendors are needed to well-trained and advised to claim the transition provisions of GST under section 140 and claim input tax credit under Form GST TRAN-1.
After GST implementation almost 2 months are gone. But real estate sector is still finding it tough to grip the entire groundwork of the tax reform. It’s getting difficult for the real estate players working with the vendors and SMEs and getting them becoming GST-compliant as both the developers and suppliers are having vague insight of the newly introduced taxation regime. All the stakeholders have to upload their GST payment details; failing of compliance will indicate that they won’t be eligible to redeem input tax credits. Where realty players upload their documents it’s turning out to be the most complicated task for the SMEs and vendors just to understand this mechanism of uploading the tax details.

“SMEs and Vendors are people who are not technologically really well cooked. Thus the entire taxation regime appears to be highly unsettling for them. Besides it’s a monstrous task for the builders or brokers to make these people well-adaptable with the newly-introduced central policy. Firstly the prime real estate stakeholders should cope with increased compliance and revised costs under the new tax regime. Then the course of the transaction will consequently ease up,’’-said Mr. Mahesh Somani, The Chairman – National RERA Committee, National Association of Realtors India (West Bengal).

Complete awareness of the GST is the cry of the moment. Unless the entire demand and supply chain will be fully-equipped, the bewilderment circle will be getting bigger. GST is supposed to be the single taxation system, but it’s not as simple as the hot air. Where larger real estate houses have created systems to tackle regulatory changes, problems have been increased for the SMEs and suppliers. Still, GST benefit will take longer to be passed through the end-users, as there is still lack of preparedness in the market persists. While output is being charged at GST rates as relevant, computing input credit, filing GST returns, getting previous service tax and excise offset/credit, among others, is rather complicated to the realty dealers. There will be inflationary pressure, inadequacy in cash management and associated costs, which will inflict margin and liquidity pressure as well. Thus, real estate companies are insisting vendors and suppliers furnish invoices. There should be a well-designed frame-work to educate realty stakeholders and enables the vendors to comply with the updated tax frame.

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