Chintan Sheth, Director, Sheth Corp
By Chintan Sheth, Director, Sheth Corp
Goods and Services Tax (GST) would have impacted the real estate sector only if the minimum amount of tax received would have surpassed the previous system. The Government fixing the GST rate of 12 percent on under-construction properties is, therefore, a welcome move and will put an end to multiple taxes.
Unlike current practice, work contracts in construction will be considered as services and therefore the GST rate for the same will be effectively lower, as input tax credit (ITC) will also be available. The ITC facility will also reduce the cost of raw material procurement. GST will help cut cash component in construction, as inputs have to be sourced from registered vendors to get input tax credits.
However, the introduction of GST from 1st July curbing multiple taxes will be a positive sign for the industry and result in buyers coming forward to buy property. It will definitely prove to be a game changer for the real estate market in the long term.