It has been one year since the implementation of the path-breaking Goods and Services Tax (GST) in India. There have been ample challenges and confusions pertaining to the implementation of the Act, especially in real estate, which fell in the 12 percent tax slab. Higher tax incidence in comparison to the previous regime and increased complexity has resulted in dwindled buyer interest for under-construction properties. The impact of GST on real estate has been far reaching, discusses Rahul Singla, Director, Mapsko Group.
How has been the response of buyers towards GST on real estate?
The Goods and Services Tax (GST) was introduced in the country last year. It has brought in multi-edged positive impact in the residential realty sector: invited more transparency, abolished multiple taxation system, and made the system more systematic and streamlined.
What are the confusions prevailing regarding GST on under-construction properties?
GST was meant to create one nation. Every sector is facing some confusions relating to the implementation of it. With the passage of time, these doubts are getting cleared and the indirect tax is making the things more seamless.
Has the tax incidence on under-construction (UC) properties propelled sales in the ready-to-move-in market or vice-versa subdued sales in the UC segment?
There is no GST on ready-to-move in properties, which becomes one of the greatest advantages for this segment. On the other hand, buyers also prefer buying this property as they do not need to wait for it and they get what they see. All these have propelled the demand for this segment.
What challenges did the buyers and developers face while transitioning to the GST-era?
GST is a 'game changer' for its far-sweeping impact on the real estate sector. Developers and buyers across India have been placed under one unified tax umbrella. Developers were confused relating to the tax slabs; on the other hand buyers were not sure if property rates would rise due to the introduction of this indirect tax. Now in the post GST era, things are clear for the developers as well as for the buyers.
Have the stakeholders been able to overcome those challenges? If yes, how?
It has been a year and the understanding of the changes in taxation has been better by the developers and the homebuyers alike.
What is the impact of GST on home prices in your city?
There has not been much of a difference in home prices across the city with the introduction of GST.
Has the unified tax system simplified real estate transactions?
The unified tax system has simplified real estate transactions. It has replaced the multiple taxes levied by the Central and State governments and has subsumed of all the indirect taxes, including central excise duty, commercial tax, octroi tax/charges, Value-Added Tax (VAT) and service tax.
What’s the long-term impact of GST that the market must look up to?
The introduction of the GST has grabbed the attention across all the industries in the country. In the long term, the tax system will get the much needed transparency and accountability in the market.