Having been under constant scrutiny and news these past few months, the Goods and Services Tax (GST) has already managed to come under the ire of many for the taxes levied on certain products and services. However, as far as real estate and construction are concerned, many believe that the new GST is bound to bring a positive change.
With real estate has seen a notable increase in the past few years, this new implantation for the tax can prove beneficial to both home buyers and developers in more ways than one. While home buyers are already bound to benefit with the Real Estate (Regulation and Development) Act 2016 (RERA), the passing of the GST bill is sure to make things easier for developers.
It is expected that developers will gain some relief in terms of commercial property with the passing of the GST bill as they currently do not receive credit for the construction services. This leads to them bearing the entire cost which is considerably high. There is a high prospect of the restriction on credits related to construction being removed which will eventually reduce the burden of bearing the high cost from off the developers.
With the government levying a single tax on instead of the multiple taxes paid by both the home buyer and the developer, things look positive for everyone. Currently, home buyers pay both the VAT and the service tax while developers, too, pay their end of the tax in the form of customs duty, excise duty, etc. All in all, the taxes by both buyer and developer amount up to 22 per cent to 25 per cent. With most GST rates falling under 18%, it is expected that this too would be a respite to both the buyer and developer. However, things may take a turn for the worse if the government levies a 27% tax on real estate.
While it is yet unclear as to how the new GST rates might really impact construction and real estate, the prospects look promising according to most people, giving everyone a hope to expect the best under construction projects in Mulund.