GST- A positive development for Real estate
Bringing in GST (Goods and services tax) is going to be a positive development for the Real estate sector. GST shall bring a multi-edged positive impact on the Realty sector bringing in more transparency, abolishing multiple taxation system, making the system more systematic and streamlined.
In thecurrent scenario, the potential impact of the GST on the Real estate sectorshall be better for the economy and for the real estate in particular as itwill bring in more transparency and the things shall become crystal clear asinstead of many agencies there would be a single nodal agency which can makethe whole process streamlined and properly methodical attracting more FDI.
Byabolishment of multiple taxation system and levying a single consolidated tax,the things shall be more clear and transparent with no scope of confusion andno tax to be paid at different stages at different times. Hence GST shall bringin more transparency to the real estate sector providing an audit trail forbetter control and monitoring of the Real estate sector. Under GST, the unifiedtax system shall also stop the side effects of multiple taxation at differentstages which sometimes can result in inflated prices for the end-users.
To understand more in detail how GST isdifferent than the earlier multiple taxation system, it can be seen thatearlier there were three major taxes which were being levied like service tax,VAT and excise duty. Now GST is a single consolidated tax replacing all theabove taxes. Earlier there was no Input credit but after GST, Input creditshall be allowed to the contractor as well as the developer. Earlier the pricebeing charged by the buyer was a consolidated figure inclusive of all taxes butnow the buyer shall know the break-up of the total price figure which shall bethe cost plus the GST. This is how more transparency shall be brought in as thebuyer shall now be aware of the actual cost and how much tax or GST is beinglevied upon that cost.
GST is one solution to simplify the problem ofexisting complex tax structure subdivided like service tax and VAT at differentstages. GST shall also lead to uniformity in procedures across the nation whichhas diverse practices in different states prevailing earlier than GST. HenceGST can be considered to be a positive development for the Real estate sectorin the times to come.
By Mr.Parveen Jain, President NAREDCO