GST has been introduced to the Indian tax system as of 1 July 2017 and it has affected almost all businesses in the Indian market.
The Goods and Services Act (GST) has been introduced into the system to combine various different taxes into one and it has changed the real estate industry.
Real estate sector is one of the biggest sectors of the Indian economy. It plays a huge role in the GDP of India. Since taxes like VAT, service tax, excise duty etc will not be levied separately the monetary benefit is huge.
Under this mandate, the realtors will have to source raw materials from registered vendors and thus will increase transparency.
Also, the end user will be benefited as he will not be liable to pay a lot of taxes for the property.
Meanwhile, for the real estate developers, the cost of most products will be decreased and so will the cost of logistics will decrease.
By streamlining the taxes a lot of extra costs will be decreased drastically.
Also, the developer will be entitled to take input credits on the sale of property under construction against the taxes that are paid by the buyer. Thus this will help bring down the project cost to the developers, and the developers will pass on the benefit of the price reduction to the buyer.
The other benefit of GST will be that landlords who rent out their property for residential purposes will be exempted from being taxed.
With regular invoicing from top to bottom, a lot of unrecorded money will also be streamlined and thus will help the economy of the country.
Thus all things considered the introduction of GST will be a win-win scenario for developers and buyers as the overall cost of projects will decrease and transparency will also be increased.