The Real Estate sector in India is expected to witness many upheavals and transformations in the sector in the coming months.
The much touted Real Estate Regulation & Development Act (RERA) is expected to bring about unprecedented transparency and accountability on the part of developers, with its consumer-centric approach. Many states are staring at the impending implementation of their version of ReRa. Maharashtra State has taken the lead and made ReRA effective from 1st May 2017. Further the Goods and Services Act (GST) and Benami Property Act are expected to have a huge impact on the businesses.
With the nearing rollout of GST from 1st July 2017, we will take a look at how GST is expected to impact the real estate industry.
GST on Real Estate
- All the duties / taxes will get absorbed except stamp duty.
- Flawless flow of credits of all tax paid on obtaining goods / service therefore it will decrease the tax cost.
- Widened tax base as many Government contracts, which is exempt, under current tax rule would be brought under the GST net.
- Although the rate is expected to be 12 % for this sector could bring the adverse impact, as this is on higher side as compared to the current tax rates, on this sector but this impact could be reduced due to availability of credits.
- Joint Development Arrangements (JDA) will also be brought under GST net.
- Transfer of input / capital equipment’s from one location to another, situated in different states would also attract GST levy.
- Concept of centralized registration will end and those having multiple sites in different state would require separate registration for each state.
- Transfer of existing credits would be allowed, subject to the conditions & admissibility of the same.