The Impact of GST on real estate
Among all sectors that contribute to India’s GDP, the real estate sector is one of the most significant and fastest growing sectors today. While real estate is seen as a major ‘growth engine’ for Indian economy, the advent of GST along with RERA will usher in a solid level playing ground for all the industry stakeholders while also uniting the national market under a common tax regime.
As the economy is getting in a good shape with RERA & GST, there is an overall positive sentiment visible among consumers. And with ease of tax burdens on individuals which will in turn boost consumer spending with increased disposable incomes, investment in real estate is only set to turn more attractive than ever before.
Post RERA, the real estate market is focused on being more transparent and investor-friendly. And with GST coming in, the Indian Real Estate is poised for a remarkable structural reform with a more buyer-centric agenda and a lot more transparency in pricing, interest & tax rates.
Impact on the buyer
When talking from the buyers’ perspective, it can be said that the new tax reform will free home buyers and investors from the hassles of paying state and central taxes at different levels. With the removal of double taxation, the tax rate under GST looks quite favorable when it comes to the real estate market. Overall, there are chances that the purchase cost for home buyers in the luxury and premium housing segment might escalate but on the other hand, the prices ofaffordable housing and mid-level real estate segment should remain largely unchanged.The affordable housing project in particular is expected to enjoy the tax exemptions even after implementation of GST. This is very much aligned with the Government’s vision of Housing-For-All by 2022.
Significance of reforms like GST and RERA
Controlled and well-regulated systems are the real need of the hour in the direction of better tax compliance and improving the government’s fiscal position.Such rapid regulatory reforms would seal all the loopholes and will earn the buyers’ trust & goodwill, ensuring fair deals & procedural compliance.It is a major reform measure in organizing the largely unorganized sectors. This augurs well for the real estate sector as it is likely to bring in more stability while improving and expanding the sector on the global front. Coupled with this, big-bang reforms like RERA have a sole purpose to increase the transparency and accountability of developers. Overall, such initiatives further aim to develop buyer and investor confidence in the real estate market for the long run and should be greatly welcomed.
Therefore, as we enter a new era of unified and transparent systems, we affirm our complete support and commitment to this new GST regime.