GST : What the buyers should do!

With the new Constitutional Amendments and subsequent supporting legislation cleared by the cabinet, renewed hope of GST implementation is in the market. Although the constitution amendment fixed 15^th September 2017 as the deadline, but recent consensual announcement by the GST Council of getting the law into force by 1st July 2017 comes as a welcome news.With the new taxation mechanism coming into force subsequently, the real estate consumers should be well aware about the nature, procedure and things-to-do post implementation as the GST law would have a multifarious effect on the real estate market altogether.

Presently the under-construction real estate is subjected to VAT, Service tax and stamp duty. Post GST implementation they will be covered under Central GST (CGST) and State GST (SGST) respectively with stamp duty remaining unaffected as it is con-sensually left out of the purview of the new taxation legislation. Now let us look at the prospective effect of the GST on net taxation on real estate units and thus its prices which is of more importance to consumers.

At present, if a consumer books a property when it is not completed, she pays service tax to the centre and VAT to the state. Whereas the developer pays numerous taxes and duties such as octoi, excise duty, customs duty, Central Sales tax etc. On the constituent building materials, transportation and equipment therein. Roughly estimated, this aggregately costs anywhere between 24-26% on the net value of property varying minutely between states. But with the newly introduced tax regime, if consensus is built on the 18% tax rate as proposed, it will evidently lead to cheaper property prices and thereby boosting consumer driven growth. Well that seems a good news for consumers, hence waiting till mid-2017 could surely save you certain bucks on your purchases,

Moreover, from the developer's perspective, GST regime would most certainly bring in an era where smooth and cheaper flow of credit is realized thereby ensuring more building companies and construction units starting up and getting into the segment of real estate. For a consumer/buyer, its a good news because it will usher in a much desired healthy competition which apart from reducing the cost per unit for the consumer, will also ensure better building infrastructure and facilities with multifarious perks and browny discounts associated within due to this competition amongst developers. Moreover the regime of goods and services tax also promised the much required transparency in the sector, which when clubbed with the new RERA act, will usher in an era of more accountable and clean real estate transactions which is surely in the interest of the end-consumers. Even the talk wherein GST regime is expected to bring in easy compliance of tax liability would end up helping the consumer, developer and market as a whole thereby making the sector an easy catch for the consumers and a realistic investment opportunity that they look up to.

Hence evaluating the chances of post-GST regime, it seems that most certainly it will end up reducing the burgeoning cost per unit of a particular real estate, bring in more accountability and transparency, provide more easy tax compliance and generate easy line of credit opportunity for both devlopers and consumers, thus creating a paradigm of a win-win situation. And since, the roll out is expected anytime soon, there is definitely no harm in waiting for it execute and thus produce its productive results on the real estate sector which will ultimately end up benefiting the buyer therein. Hence this waiting seems pretty worthy for everyone!