The shaping of GST is the latest roundup in the Real Estate Trends. It’s been 34 years to the forty-sixth amendment of Indian Constitution which brought voluminous variations in real estate field. After a long time, recently in 2014, the GST has been proposed in India as the 122nd Constitution Bill which is expected to bring some massive changes in the same field.
What is GST?
GST stands for Goods and Service Tax, introduced by Arun Jaitley, the Finance Minister of India. GST is a nationwide single tax which is said to cut back other indirect taxes like VAT, CST, Service Taxes etc. Though the rate of GST is not revealed yet but it is expected to lie in between 15%-18% and is cease to be implemented on 1st April 2017.
GST – As A Boon For Real Estate
To simplify this concept, let’s have a look on the current taxes applicable on real estate market.
Basically, the market of real estate assimilates three categories – cost of land, cost of goods and materials and cost of services executed. Both the Central Government and State Government impose different types of taxes on these, for instance, State Government imposes Stamp Duty as a tax on land and goods while Central Government imposes service tax for the service reciprocated. Not only that, there are further several taxes levied for contractors, sub-contractors, developers and builders in the form of Value Added Tax, Central Value Added Tax, Customs Duty, Excise Duty and more. It causes double taxation and ends up with a low profit for real estate marketers.
Implementation of GST is an all in all solution to this over-charging practice. GST is said to be the one and only tax of a certain percentage which will be levied on both goods and services and more than that the percentage of this tax will be same nationwide in India. This would be beneficial for those real estate marketers who are involved in such deals which are not limited to one state, for example, a marketer having two property deals, one in Kolkata and the other Property in Noida. As all other indirect taxes will be eliminated by GST, real estate business will be more profitable, simpler and it could introduce personal investment. Thus, the percentage of employment and economic growth of the country will be higher.
GST – As a bane for Real Estate
Beside the perspicuous convenience of GST, some surmised inconveniences stuck at some point.
It’s said that use of Dual GST will be complicated in the matter of billing while using single GST is less complicated. At some point, it is really confusing to figure out the advantage of GST for contractors and sub-contractors from a particular state with a VAT Rate as low as 1%-5%. It is not clear yet that if the implementation of GST will be benignant for the whole residential project or it affects partially.
These confusions will be cleared as soon as the GST Bill put into practice.
Author: Sumit Sighania
Sumit Sighania is currently serving the position of a Sr Executive – Content Developer at a3solutions.in. His responsibilities include writing and editing real estate content for the website. His main interests are photography, travelling and food.