GST to have positive impact on realty sector
04/08/2016 13:10
The enactment of this law will single-handedly resolve many of the challenges faced by the real estate sector and help in pulling the sluggish sector out of its long slumber. Heavy taxes that are being paid currently by the developers will automatically go down by a considerable percentage.
Under GST, developers would see lesser burden of tax on input items like cement, and steel, as tax credits would be available for set off at various stages. This can lead to lower construction costs for developers across all asset classes, which could likely be passed on to property buyers.
The direct impact of GST on real estate, in terms of tax outflow for developers and consumers, will depend on whether the final GST rate is more or less than the taxes paid currently.
Apart from the significant reduction in tax management expenses due to a single unified tax, the compliance costs will go down too.
However, the fact that the stamp duty allocated on property is not subsumed in the GST could prove to be a dampener for buyers.
