The GST (or Goods and Services Tax) is a tax reform that revolutionized the Indian economy after it rolled out on July 1st, 2017. It was successful in replacing the multiple tax system of the country which includes central excise, service tax, commercial tax, VAT, etc.
After implementing GST, India became a tax-neutral nation which evoked a mixed response from real estate buyers among which a majority of them are in favour of GST. The mixed response that forms mainly of positive remarks is due to GST being a unitary tax compliance system. It simplified the home buying process by eliminating the other tax burden that comes with buying a home.
Home buyers, especially under the low-income group who prefer buying homes with 600 square feet of carpet area have benefitted much since the tax came down to 8% from 12% as it was before charged.
Under construction projects are counted under the 12 % bracket the only clarity that property buyers have since the unitary tax reform got implemented. Confusion still remains when it comes to the rebate that a home buyer is entitled to which includes not only the percentage but also the tranche and mode of the rebate.
What the Indian Government had to say to project owners and contractors?
With the implementation of the GST, constructing housing facilities and apartments for the common mass became less of a burden for builders and contractors. The Indian Government thereby asked the builders and project owners to lower the prices for the flats that are either under construction or are ready to move in. GST provides a lot of benefits to the builders as the tax on such projects are cut short. Therefore, they were directed to decrease the instalments that were asked by them from the home buyers.
In case a builder or a project owner asks for a high price for a home, a buyer can file an application to the court against the builder for profiteering illegally under GST rules, section 171.
What are the challenges that the real estate stakeholders still face in the country?
Both buyers and builders still face many challenges when it comes to the transitions one need to go through while moving from the pre-GST era to the current GST regime. The challenges are as follows:
- Complicated tax slabs
- Complications and uncertainties when it comes to integration of the ITC (or Input Tax Credit)
- Opaque components of the GST which includes anti-profiteering provisions, and excluding land values
When it comes to the most significant issue with the GST, the regulations and rules mentioned under the anti-profiteering clause often become the topic of debate among stakeholders in the real estate industry.
The Goods and Services Tax will benefit the economy of India in the long haul. The blog article about property investment at smartowner under no circumstance undermines the Indian Government’s decision of implementing GST in the nation. The purpose of the blog was simply to paint a basic picture of the current scenario in the real estate industry under the GST regime. It is estimated that the real estate industry is in the works of becoming more streamlined as it is being backed by GST which will further strengthen the industry in the near future.
