The countdown for the biggest reform in indirect tax regime – Goods and Service Tax (GST) has begun. It is looked upon as a tax trigger, merging most of the existing taxes into single system of taxation. Jagmohan Garg, a Delhi-based real estate tycoon, believes that it one of the most awaited tax reforms, which will establish a benchmark of development in the economy.
Being a uniform indirect tax, GST is aimed at streamlining the entire taxation process. Like any other sector, the real estate will also come under the ambit of the Goods and Service Tax. It is one of the major contributors to the country’s GDP, and happens to be the second-largest sector to generate employment in India.
Jagmohan Garg Delhi emphasizes that the implementation of GST is likely to have cascading effects on the real estate. It will help in ensuring transparency, alleviating the cost of property and shooting the demand. The cost of houses − if it is at a rate below the current applicable taxes that are levied by the central and state governments − will be reduced significantly. It is believed that the realty sector will attract a GST rate of 18 per cent. However, the variation in the taxation policies and practices across states will entail discrepancies in the residential real estate prices.
The implementation of GST will exempt the registered real estate developers from paying he input tax credit against the total purchases. Furthermore, it will minimize the high rate of stamp duties involved in property-purchasing formalities, such as booking and development agreements. Jagmohan Garg highlights that the overall taxation cost for commercial property will also be reduced as an aftermath of GST.
Certainly, GST secures great hope in terms of sustaining growth in the real estate sector. Its prospective benefits show that it is bound to have a brighter horizon for the realty industry.