Goods and Service Tax or more popularly known as GST is one of the most awaited policies of the government. Since a long time there has been rumours about how GST will impact the real estate industry but finally things have come to an end as government has decided the tax credit rates for the real estate. This is definitely a good news for the marketers, investors and builders who had been waiting for it since a long time and now the rates are finally out.
As per the current GST rates, all the work contacts will come under 18% slab along with total ITC. Though these rates may appear to be a little higher but when it taken as a whole the market will be neutral. Most of the construction contracts come under work contacts and therefore both VAT as well as service tax is applicable on it. As per the current policy the service tax has been kept 6% for now while the VAT ranging from 1 to 15%. The effective tax is now somewhere around 11-18% which is still under the lower slab and is sure to make a difference.
As per the experts, the real estate market is sure to benefit from GST. Though it will take time to understand the policy and get used to it but in the long run the market will grow. Things will be neutral for some time and then the sales will pitch high. Thus you can easily say that GST will play a big role in the industry after RERA and demonetization. But unless GST is implemented it is difficult to say how the market will behave or how things may be.
Stamp duty as well as registration cost is kept same while completed projects and lands will also be out of GST. For real estate GST would be 12% including the value land and in case of separate agreements the applicable GST will be 18%.
There are many projects which are under construction and therefore these might get affected as the current rate would be high but for the new projects the GST is just perfect and would definitely help in the growth of the sector and he industry. The main motive of the government for coming up with GST was just to bring in transparency within the country by keeping the rates sale throughout which earlier faced a lot of issues. This would simplify the taxation and make things clear for everyone.