Impact of GST on New or Existing Real-Estate Developments by Devender Kumar Indirect Tax Expert Anil K Goyal & Associates

Impact of GST on New or Existing Real-Estate Developments by Devender Kumar Indirect Tax Expert Anil K Goyal & Associates

Current scenario of real estate developments is quite difficult; where demonetization affected this industry on another hand the big developers were delaying the projects or exiting with the promising projects and at the same time. The Honorable High Court / Supreme Court was asked to State as well as Central Government towards their action against the same. The issue converted into political form. The reasons for The Real Estate Regulation and Development Act, 2016 enacted. GST and RERA implementation were the most affected decision of Governments which helped the Developers as well as Consumers. GST and RERA make more impact on new as well as existing real-estate developments by making more transparency between developers and consumers. Where GST helps developers to reduced construction cost, RERA helps consumers for warranty and quality based property.

Impact of GST on New or Existing Real-Estate Developments by Devender Kumar Indirect Tax Expert Anil K Goyal & Associates
Devender Kumar, Indirect Tax Expert Anil K Goyal & Associates

GST allowed developers for enjoying the ITC benefits on under construction property which was the major change for indirect taxations and the developers were enjoying the same but the benefits were not going to end consumers. The Government initiated and GST’s Anti Profiteering is restricting the developers to enjoy cost reduction benefits of ITC and also binding the developers to pass on the ITC benefits to the end consumers. RERA‘s 5 years warranty clause binding the developers to the delivered quality based property with the responsibilities of repairs of any construction’s defect for further 5 years from the date of possession or handover. With this clause developer also binding their vendors to provide quality based products/materials with 5 years warranty which helps the consumers to trust on new as well as old developers. RERA will make assurance for consumers towards on-time delivery of property possession and restrict the delay of the project. This will build up more trustable way between developers and consumers.

GST subsumed of indirect taxes and earlier taxes were more complicated to understand by the simple consumer as it was depending upon state to state basis where different states have different amount of VAT, Registration Charges, Stamp Duty but with the help of GST the consumer can understand easily the rate of GST on under construction as well as ready to move property. The Developers were also paying various duties and taxes like sales tax, import duty, Octroi etc. which credit can not avail by developers. GST’s RCM is part of cash deposit the developers have to pay the same on services /goods received from unregistered which covered under RCM like transporters, legal services etc. This increased the cost of developers.

Conclusion

The GST and RERA were impacted lots on Developers and Consumers relationship. Where GST reduced the construction costs of Developers, RERA builds up the trust of Consumers on Developers which was very important for construction industries.

For more updates on news, articles, features on architecture, interiors and relevant visit: www.fortunestreets.com

more recommended stories

:)