Tue, May, 2018

GST: A Positive Reform For The Real Estate Sector

Real estate industry in India in the recent past has seen a phenomenal growth, not just in the Tier 1 cities, but even in the Tier 2 and Tier 3 cities and towns. After the enactment of RERA it is now time for the GST to have a significant impact on this sector.

The GST will affect the prices of the construction materials like cement, steel etc. Initially the government had kept the tax rate to be 6% with the state levying 1-4.5% additional tax but now it will be common for the entire country thus maintaining uniformity.

The work contracts include both your residential as well as the commercial real estate projects. The tax will be levied on both and the builders will get the advantage of tax credit when they buy manufacturing materials like cement etc. Earlier much higher indirect taxes were imposed on such goods but with GST the rate has definitely come down and this is a positive sign for the builders.

The main motive of introducing GST is to bring in simplification and also curb the practice of the state charging higher tax from the builders. With GST, this will come to an end as there will be a much needed transparency. Similarly, for other components of construction too, the government has made an effort to lower the taxes thus giving some kind of relief.

So the GST is for the betterment of the builders and the buyers by maintaining uniformity, transparency and control.

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