GST enters 2nd year ; Real Estate Sector still in learning stage

Good and Services Tax (GST)—India’s biggest tax reform post-independence— which was implemented on July 1 last year by the Union Government with an aim to transform the Indian Economy with its One Nation, One Market, One Tax, enters the second year but the Real Estate Sector is still in learning mode.

This new tax regime seeks to transform the Indian economy with its ‘One Nation, One Market, One Tax’ principle by subsuming a host of indirect taxes charged at varied rates by the Centre and states, therefore bringing uniformity in taxation across the country.

GST has started to show signs of acceptance across India. Government estimations show a growth of close to 100 per cent in registrations under GST as against previous tax regime, claiming that over 11 million business registrations in the first year.

For the Real Estate Sector, GST has seen a mixed bag of reaction with the sector is still grappling to take a complete understanding, said Mr Ramesh Nair, CEO and Country Head , JLL India, a firm Specializing in Real Estate, in a statement here on Friday.

JLL is India’s premier and largest professional services firm specializing in Real Estate.

There are different tax computation methods for different projects/phases of the same project and there is ineligibility of refund to developers under the inverted duty structure, considering inputs are procured at a higher rate of tax whereas output is charged at a lower tax rate, he said.

Explaining the GST impact on Real Estate, he said currently there is lack of clarity among developers on the exact implications of GST. Developers feel that the exact impact will be understood only after a thorough analysis of the implications on each input cost (in form of labour and raw material, namely steel, cement, bricks).

With regard to such raw material inputs — the challenge lies in estimating the cost of these commodities over the entire life cycle of the project. Since the purchase of these supplies is linked to construction progress it is difficult for developers to estimate upfront the costs and input tax credit received for the same, he pointed out.

There is the complexity of being on the right side of the NAA (National Anti-profiteering Authority) by passing on the benefit of input tax credit to the customer, despite an increase in any other costs, he said that there is no specific mechanism provided for offsetting any other increase in costs against the benefits of input tax credit.

Tax treatment of ongoing projects which were earlier under the VAT and Service Tax regime will now migrate to GST is complex. It is not just a simple change in an excel formula and involves a much deeper understanding of how input tax credit is to be calculated, he expressed.

The GST law still has to mature and compliance related processes need to be refined further. It is important that the government ensure clarifications to ensure major concerns, which need clarity once and for all are addressed, he said.

GST which represents unified and simplified taxation policies of the country, will add to India’s attractiveness as an investment destination in the long run and it will further help in ease of doing business and create transparency in processes.

It will benefit for the Real Estate sector in the future which will be significant on account of growth of business and commerce in the country, Mr Nair added.

In another statement, HomeKraft, an ATS company, CEO Mr Prasoon Chauhan said we believe GST has positively impacted the Indian Real Estate Sector as it has brought in a great level of transparency and unified taxation removing confusions.

After one year of GST implementation, Indian Real Estate market is now accustomed to new way of taxation and resurgence in housing demand in the Q1 with similar trends expected in Q2 and will further reiterate its growth, he said.

We believe developers with a clean track record, good fundamentals and execution will stand to gain as buyers will look for projects which are from these developers, he added.

 

GSTVના લેટેસ્ટ News અને Videos માટે લાઈક કરો Youtube Twitter