GST to reduce tax burden, cost of homes

Founder and Managing Director of Casa Grande, Arun Kumar pointed out that the real estate sector was one of the fastest growing sectors all over the world, including in India. However, the sector has always been perplexed with multiplicity of taxes like VAT, service tax, stamp duty, etc., coupled with various disputes owing to ambiguity in the legal provisions. 

“A well-defined GST implemented in the country will bring about a relief for the real estate sector and its customers. It will not only reduce the tax burden but will also bring down the cost of ownership of a home. Implementation of GST will work on three major elements for the real estate sector—simplification of tax structure, reduction in construction costs and better development. We can expect a nationwide growth in the real estate business in the coming years,” he said.

Arun Kumar pointed out that the presence of several indirect components faced by developers at present had been a major cause for tax inefficiency in this sector. “A simplified structure means that property prices would come down considerably enabling better affordability for people looking for property options in Tier 2 and Tier 3 cities,” he added. 

Managing Director (India) of Cushman & Wakefield, Anshul Jain noted that the bill would benefit the property sector by ensuring a uniform tax structure, thereby improving the tax compliance by the developers. The GST Bill would replace most indirect taxes that currently exist, with a single one, thereby ensuring an efficient taxation system. 

Under GST, developers would see lesser burden of tax on input items like cement, steel, etc., as tax credits would be available for set off at various stages. This can lead to lower construction costs for developers across all asset classes, which could likely be passed on to property buyers/occupiers, says Jain. “But, the magnitude of impact of GST on the sector would hinge upon the final rate of GST decided by the government and more importantly on the actual implementation. 

The time frame for rolling out GST will stay take some time and the initial period, maybe up to a year, will mainly be needed to take care of any problems that arise in implementation. Hence, actual benefits for final consumers/ buyers and the overall positive impact on the economy may take longer to get manifested,” he added.