Is GST Revenue-neutral in Real Estate?

1. Q Menu ▼ Is GST Revenue-neutral in Real Estate? ©November 27, 2017 &Real Estate #gst for home buyers, GST impact on resale property, GST on completed flats, GST on real estate, GST on real estatetransactions, Gst on resale property, GST real estate, GST Revenue-neutral in Real Estate m Srishti Chandola ifc Like 3 Many people feel that the Goods and Services Tax i.e. GST has failed to fulfill the purpose in the residential market which has actually made the homes costlier. It was expected to reduce the burden on tax in the housing market. There, however, was a moderate expectation, one didn't expect it to make the residential market costlier especially for the average home buyers. Some of the developers advertise that they will be sharing the GST burden of the buyers. But, the reality here is that they are only passing the advantage of the input tax credit to the home buyers. This clearly shows that the home buyers are pretty reluctant to enter the residential market. Many home buyers are now waiting for the completion of the projects as the ready-to-move-in apartments do not attract any GST burden. For the home buyers, however, who have booked their projects which are under construction, GST is all of a sudden added to their budget. For instance, a typical apartment in Noida would cost somewhat around Rs 60 lakhs. As the construction cost is around 25% of the complete project cost, the burden of service tax under the previous regime would work out to 3.75%. In addition to this, the stamp duty of 7% and a few extra thousand rupees in the registration process will be added. All in all, the tax burden wouldn't have been more than 11%. But now, under the new GST regime, it would cost 12% of the project. With the similar stamp duty of 7%, the tax burden for home buyers' shoots up to over 19% from 11% earlier. While the developers can avail of the input tax credits, they can certainly pass on to the home buyers, only some of the developers have till now announced any such moves while glorifying it for sharing of GST burden. The developers argue that calculation of revised sale rate under the GST regime is a time-consuming and complex task. Builders have to depend on the contractors, to know VAT as well as excise duty and have to wait for the project to complete before you know how much rate difference is possible in the final calculation. The rate, moreover, the difference is not sufficient, to bridge the gap between the GST at 12% and service tax at 3.75%.

2. Also, under GST regime, apart from GST, numerous state and local taxes that are levied on the sector, in form of stamp duty, labor cess, registration charges, municipal tax, development charges, property tax, etc. and there is yet no means to subsume these under GST. With over 12% GST, registration, stamp duty and other local taxes, the burden on the sector are with numerous invisible taxes. If all taxes have been subsumed under GST, then tax rates have gone up or the government has compensated to the local bodies. Advantages under GST regime which might not reach the home buyers The experts point out that GST will not completely reduce the overall taxation it will also serve to portray good picture of the real estate sector. Bigger tax slabs are extensively hurting real estate sector. Cement rates are going up marginally as GST Council has imposed 28% tax on the product. Higher taxes on the materials will naturally transfer the customers. It is also being said that the prime aim under GST was to keep the taxes neutral through all the materials procured for development of the project. This certainly may be difficult in an ongoing project where the materials which are used for finishing are in biggest tax slab which will directly affect the construction cost. For some months after implementation of Goods and Services Tax, most of the manufacturers directly grow their profits, by not passing the advantages of excise duty from the previous tax system. Hence, GST has been beneficial as well as at fault for different home buyers, completely depending on whether the developer has provided discounts or not. ^ How to Maintain Wooden Flooring Leave a Reply Your email address will not be published. Required fields are marked * Comment Subscribe to our newsletter Want to be notified when our article is published? Enter your email address and name below to be the first to know.

3. Send Facebook jViFS1a %I L_d WBW, n Like Page Favista Real Estate Pvt Ltd about an hour ago #Gst Revenue-neutral in #RealEstate? Favista Real Estate Pvt Ltd Is GST Revenue-neu. Many people feel that the Good. FAVISTA.COM 1 P Comment A Share Twitter Timeline Tweets by @FavistaRealty Recent Blogs Is GST Revenue-neutral in Real Estate? November 27, 2017 How to Maintain Wooden Flooring November 23, 2017 Rules for Filing Tax are Similar for Residents and Non-residentsNovember 22, 2017 Favorable Property Investment Locations in MumbaiNovember 21,2017 Benefits of Hiring a Real Estate AgentNovember 20, 2017 Favista is a Real Estate Advisory Firm based in Gurgaon, India. Favista believes in making every property transaction experience simple and successful. The aim is to bring transparency, professionalism and simplicity to the complex world of real estate. Favista takes pride in keeping the needs and concerns of the customers in highest regards. Favista Real Estate has been founded by IIT + IIM/INSEAD alumni with experience in strategy consulting, internet marketing, venture capital having been part of companies such as McKinsey, Capital One, PartyGaming and SSG Capital. Favista is a full service brokerage helping buyers/investors buy, sell, rent or lease property in India. Favista offers best realty advice for Apartments and Flats for sale in India, land/plots for sale, New Residential & Commercial Projects in India and also assists selling properties at best rates. Favista.com is the only Property Site in India that lists 100% verified properties. Favista currently operates in Gurgaon, Delhi-NCR, Noida, Mumbai and Bangalore.Those intending to sell property in India will also find this website very useful owing to the extensive reach, high brand recall and trustworthiness in the real estate space. In order to make our customers happy and for us to reach our goals, we follow the key tenets of transparency and consistently maintain integrity in everything that we do. With this professional attitude, we are set to become your preferred choice for all real estate services in India.

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