Impacts of the GST Bill on Indian Real Estate Industry
The services related to the real estate industry in India are taxable under the service tax and VAT. It is expected that the GST or Goods and Services Tax will be levied from the beginning of the next financial year 20172018.
Why Real Estate Experts Support The Implementation Of GST? ď śThe promulgation of GST is expected to usher in positive changes in the matters of indirect taxation. ď śThe experts are hopeful that GST would solve the complex issues and structures that have plagued the industry for long.
Clear the Ambiguous Tax Base and the Rate of Tax There are 2 primary tax bases namely the Service Tax and VAT. No overlap of the tax bases after the promulgation of GST. No dispute on the tax rates. Identical taxes paid by the home buyers across different states.
Replacement of Multiple Taxes with a Single Tax There are various types of non-creditable taxes like customs duty, excise duty, CST etc. paid by the builder. These costs are included within the unit’s pricing. All these taxes add up to between 22% to 25% of the unit’s pricing. The proposed GST would replace these taxes with a single tax.
GST to Reduce the Development Cost of a Home GST to smooth the flow of credits. It is expected that GST would reduce the costs of construction on the part of the developer. Ultimately, it would reduce the current prices of the homes or maintain the same level.
Greater Transparency Via the Market Mechanisms ď śGST regime would bring greater transparency in real estate transactions. ď śThe transparency would be brought by different market mechanisms.
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