A single taxing system over a complicated, unstructured one is all what it takes for a country to revive. The real estate sector might taste bitter salt in the days to come since there are a lot of uncertainties and confusions prevail over GST, but as experts say, like any other industry that is reeling under uncertainty; real estate will in the long run will start harvesting profit and become profitable. Let us with the help of this article, learn how GST will impact the real estate industry ; at least as it seems so in the present day!
The revised order from the authorities state that under-construction properties will be taxed at 18% that includes 9% SGST and 9% CGST. The government has also allowed the deduction of land value, which is equivalent to almost one third of the accumulated amount usually charged by a developer. While taxing imposed on land sale will regulate the sector and streamline the objectives of encouraging a transparent taxing system for property industry; the price of property, as analysts say, actually also depend on the demand and supply chain.
Presently, stamp duty and registration charges are outside the ambit of the GST these are state levies while property tax is a municipal levy. In many countries where GST is implemented, the ambit of GST also includes immovable property. The government although says it has plans to eventually subsume all these levis within GST, how it is done and when is a matter of fact that need to be seen.
After GST, the nature of tax will no longer be complicated. Instead, the property owner can pay one single tax because many other taxes might be subsumed, but as stated earlier, when and how it is regulated and whether an owner need to pay tax only once or will it still be the same as it is existing - all of these will be known only after the full-fledged implementation of the GST and according to the announcements about update.
Post GST rollout, it is a likely fact that if you are a dealer who is yet to be registered, people might not do business with you. The tax liability is now on the receiver. So, if a consumer wants to do business, he needs to buy a property from a registered dealer to get equal value of his liable tax rather than paying more. So, vendors need to register.
It is to be concluded that the overall impact of GST on the property industry cannot be analyzed easily. It will take some time. But if things will be regulated and a transparent and systematic taxing system is introduced; it can be easily expected that consumers will be on profitable side and with them others such as vendors.
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