GST to reward both builders and buyers
With less than a month for the Goods and Services Tax (GST) to come into effect, realtors expect that the new tax regime will streamline the real estate sector, benefiting both the developers and the buyers.
As per the prescribed guidelines, the construction of a complex, building, civil structure or a part thereof, intended for sale to a buyer, wholly or partly comes under the bracket of 12 per cent tax with full Inputs Tax Credit.
“GST will be a game-changer for the real estate sector as it will create a level playing field for all organised developers and builders in the country,” said Ashish R Puravankara, MD, Puravankara .
“A single consolidated tax system brings more clarity, transparency and avoids double taxation, which are relevant in the realty sector where developers and users end up paying multiple taxes and duties. Inefficiencies in the supply chain will slowly decline resulting in prudent working capital management, better pricing power for all stakeholders in the value chain,” he added.
Further, availability of ITC is a crucial provision, which has the power to bring down construction costs, observed Narasimha Jayakumar, CBO, 99acres. This could cut down property prices if developers pass on the benefit to the buyers. Further, foreign investment in the sector might head north on account of streamlined tax channels. Thus, GST, along with RERA, will go a long way in improving overall market sentiment, Jayakumar added. However, he said that in states like Karnataka, if stamp duty and registration charges are not rationalised, it might put an inflationary pressure on buyer’s pocket.
Meanwhile, a survey of the real estate sector sentiments conducted from January–March 2017 indicated that a large section of realtors are still unclear about the full impact of proposed government policies on the sector. The recently released survey, titled “FICCI-NAREDCO-Knight Frank India sentiment index” showed that a lot of those in the sector were still in the ‘wait and watch mode’, having just recovered from troubles post the demonetisation move.