NEW DELHI (INDIA): Real estate developers have welcomed the implementation of Goods and Service Tax (GST). According to them, the GST will greatly improve a fractured tax system and help create an integrated Indian market.
The government of India has always made it clear that leasing of land, renting of buildings as well as EMIs paid for purchase of under-construction houses will start attracting the Goods and Services Tax. Sale of land and buildings will be however out of the purview of GST. Such transactions will, however, continue to attract the stamp duty.
“GST augurs well for the growth of real estate sector. By streamlining the tax structure, GST will enhance ease of doing business in the country, which would ensure a steady flow of investments into the sector,” said Ravish Kapoor, Director, Elan Group.
M3M Group echoed a similar sentiment. “The real estate sector account for about five per cent of the country’s GDP and is considered as the second-largest employer. However, the sector faces challenges in terms of fiscal policy decisions. One such bottleneck is multiple indirect tax levies, such as VAT, service tax, excise duty, registration fees, etc. Since the GST is to include multiple indirect taxes, it is bound to simplify tax compliance and minimise double taxation. Home-buyers stand to benefit. Moreover, GST is expected to add about 2 per cent to India’s GDP. With economy growing, the demand for real estate sector will also get a boost. However, there are some teething issues, which have been highlighted by various real estate bodies and we expect GST council to take note and resolve the same as we continue to contribute to the GDP growth in a positive way,” said Atul Banshal, Finance and Accounts, M3M Group.
Mohit Goel, CEO, Omaxe Ltd, Says: With Lok Sabha passing 4 bills related to GST yesterday, the decks have been cleared for its implementation from July this year. It is the single most important indirect tax reform undertaken by the country till date. With the implementation of GST, the tax structure of the country will be more streamlined and unified, giving a boost to the economy of the nation. Though, most components of real-estate will continue to remain out of its ambit for the time being, we are hopeful that its positive impact on the overall economy will also help the real estate sector.
The new legislation is expected to come into effect from July.
Under the current tax system, different states impose separate levies as goods move across the country. Truckers spend hours idling at internal borders, filling out forms and awaiting inspection. Small and medium-sized companies prefer not to grow rather than have to deal with the administrative burden of becoming national enterprises. Thus GST would be an improvement over an existing condition.