The Indian real estate industry has witnessed a robust growth in tier I, II and III cities. Development in Goods and Services Tax (GST) is a positive development for the realty industry that can have a significant impact. At present, though construction services have been taxable under service tax and VAT, a few basic issues need to be solved. The proposed shift to GST will strengthen the realty sector and solve many of its problems.
As of now with service tax and VAT being the primary levies, there is a constant dispute on the rate of tax since there are several options for discharging taxes across the states. Because of this, real estate developers have been following diverse practices. However, with GST being implemented the practices would be common across geographies. This will benefit real estate companies in bangalore as well as buyers.
Benefit to buyers
Presently, homebuyers need to pay VAT and service tax while booking an apartment before its completion. The developer on the other hand needs to pay CST, excise duty, customs duty, etc. all of which is added during pricing. All these taxes push up the cost of the residential unit to a great extent. GST aims to remove all these taxation system with a single system. Thus, it will bring down the cost of construction and aid buyers.
Benefit to commercial developers
Commercial developers will benefit immensely from the regime as most of them are burdened with high costs since there is no credit is available for construction services on a commercial property. Hence, most of them are rented out. GST will ensure a smooth flow of credit, thereby aiding developers.
Overall GST augurs well for the real estate industry. Smooth flow of credit will increase investment opportunities in india property bangalore and real estate builders can expect more transparency in the sector.
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