GST, India’s largest tax reform, was implemented on the principle of “one nation, one market, one tax.” It has been three years since the Goods and Services Tax (GST) was introduced on July 1, 2017 and the impact of GST on Indian economy has been noticeable. Because of the numerous changes and reforms implemented in the last three years, the government, industries, and consumers have been on a roller coaster ride. The main goals of these improvements were to streamline procedures, reduce tax evasion, and rationalize rates. The government also prioritized the stabilization of GSTN, one of the world’s largest online tax systems.
Due to its compliance requirements, the GST has caused a lot of anxiety among taxpayers and dealers. Industry analysts had differing viewpoints on the impact of GST on real estate sector. The real estate industry, as we all know, provides roughly 7.8% of India’s GDP and is the second-largest employer after the IT industry. The introduction of this tax bill was sufficient to address the issues confronting the real estate industry and assist it in waking up from its extended slumber.
How did the change affect real estate?
The impact of GST on real estate is explained in the following points:
For developers, the implementation of GST reduced the cost of building. The introduction of GST reduced the cost of building for real estate developers because it combined several other taxes into one. The developers benefited from this since the margins between cost and selling price increased. The cost of logistics was also reduced, which was a bonus. Furthermore, since the cost of construction has increased for buyers, customer preference has shifted to already built residences. As a result, developers profit directly.
For real estate brokers and everyone else engaged, the new administration offered more transparency and accountability. As a result, buyer confidence increased, which was advantageous to the company. The impact of GST on Indian economy has been that it increased transparency for all the sectors, not just the real estate.
Benefits for the rental market
The rental real estate industry benefited and grew in popularity as a result. The change was brought about by a GST exemption on residential properties used for rental purposes, as well as an 18 percent GST on maintenance payments for each member that exceeded Rs. 7500 per month.
During the pre-GST era of taxation, real estate was subject to a variety of taxes, including VAT, stamp duty, registration fees, and service tax, all of which had varying rates and varied from state to state. The impact of GST on real estate has been so that it aided in the simplification of the taxation on real estate in India, which can range from 5% to 18% depending on a number of criteria. As a result, one can argue that the impact of GST on real estate cannot be accurately assessed at this time and that a clearer picture of the impact of GST on real estate will emerge only with additional time.