The Implementation of GST and its impact on real estate in India

The Implementation of GST and its impact on real estate in India
28/06/2017 , by , in EXPERT ZONE

Since a change of this magnitude takes time for people to fully comprehend and comply with, GST and RERA may initially create some confusion for the consumers. It may, in the initial days of its implementation, be confusing for the developers as well. However, after a bit of a churn over a few months, things should completely stabilize.

The rate of tax fixed for Real Estate is at 12%. Unfortunately, this figure includes land costs as well, which means that henceforth, the consumer will have to pay the GST not only for construction but also for land – (Land was excluded from VAT and Service Tax earlier). He will also have to bear the additional burden of stamp duty. While these amount to increased costs for the consumer, the government has assured people that with the implementation of GST, there will also be a lot more opportunity for savings overall, which in turn should negate these costs.

We are in the process of evaluating this for ourselves and these are still early days. From a consumer standpoint, it’s tough to decide at this point whether realty prices will increase or decrease post the GST rollout. Only time will tell…

Generally speaking, if the input costs go up, prices will go up. If the input costs go down, prices naturally will get corrected. Currently, looking at the various external factors, it’s difficult to predict anything concrete. In my opinion, for the moment, we should maintain the view that things will remain neutral.

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