Earlier at the time of procurement of land, plot, flat, bungalow, or any kind of property government used to charge around 4.5 Percent as service tax and VAT at 1 Percent.
Generally, GST is not being charged on the acquisition of bare land, the implementation of GST comes in action when the accumulation of property takes place.
But now, under GST government will charge 18 Percent GST, that means now the purchaser will have to disburse an additional 13.5 Percent in the name of tax.
Moreover, on most of the construction substances, the government will charge 28 Percent as GST which will further upsurge their cost, therefore property proving to be more inflated that in today’s state of affairs. But the builders will be enabled to get input tax credit, but to pass on this advantage to the consumer will take some more time and initially for at least a year the rates are going to escalate.
In this case, GST era Stamp duty and registration charges will persist same as it was pre-GST as both are not embraced under GST yet. Maybe solicited in the future
GST could beget a whole heap of liberation to the real estate India. Modular production practice in the real estate India, land & plot selling sector in India to be refurbished consequent to implementation of GST.
The real estate India is one of the ultimate focal sectors of the Indian economy. The Land selling segment occurs as a key role in employment commencement in India. The eminence of Real estate India feasibly implicit with its average 5-6 Percent GDP input and elating exigency for more than 252 ancillary industries.
The real estate India and Land selling sector across the nation had a substantial progression of 22 Percent in its private equity investments for the year 2015 to 2016. During the third quarter of the year 2016, there was an upswing of 9 Percent in venture capital for suburban lands for the preceding quarter.
GST Protocol For Land Selling Segment
GST would get a lot of transparency in the land selling segment and abate devious transactions. Under all current tax laws, VAT and Service tax charged by several Contractors and excise duty, octroi, entry tax is trailed on the procurements. GST law will boost the margin in the hands of the developer/contractor by confiscating all the above-stated taxes. Now, whether this benefit gets dispersed on to the end-customers are tentative as pricing of land is navigated by market potencies than on price principles.
The real estate India delights a lot of benefits from facilities in SEZ and analogous are predicted to be carried headlong in GST. The GST will aid in obstructing the devastation gaps currently existing under the modular production governing method.
There will be several businesses of developers which would require the advancement of current tax laws onto GST. The GST model law did not insist on any provisions for the reversal.
The effect of GST on Real estate India is foreseen to be composed under the GST. Though still, there is going to be substantial benefits from GST as it will get a lot of requisite transparency and liability. Contractors/ Developers would acquire the benefits of various taxes, which will be assimilated by GST.
“Real estate India should be triumphalist with GST even though the rate declared is higher than the active rate”