In this article we will see how GST will affect the Real Estate Market 2017 and How Prices of property will vary; will goes up or down.
What is GST – A Step to Simplify the Tax System in India. For more details you can see the article
The replacement of Normal Tax to GST is the biggest Tax transform in India in 2017. It will be applicable from July 1st 2017. GST will work on ‘ One Nation, One Tax’ philosophy and help to
- Eliminate the previous complicated tax structure
- Reduce extra tax burden on customers.
- Create a Uniform Tax Structure.
- Impact on Residential Real Estate:
Impact on Residential Real Estate:-
- Positive Impact on Residential Market
- Benefits of Stakeholders
- Easy Accountability.
- Market will grown up.
The Implementation of GST for Residential Real Estate Sector will have a positive impact booster among the property customers. GST might not be bring down the price of residential property over the short term but stakeholders of the residential market will take the benefits of GST. In Other words we can say the market will be improve as the comparison of last tax system because the accountability of property will be fixed at every stage.
Impact on Commercial Real Estate:-
- Slightly Negative Impact on Commercial Market
- Under Construction will come under 12%.
- Lease property will come under 18%
Under-construction real estate or sale purposes properties will come under 12% GST. This will affect slightly negative depending upon states’ prevalent service tax and VAT rules. For commercial or rental property, the GST does not explained in detail about this and hence it is covered under 18% GST rates with full input tax credit and this should turn out to be neutral for this sector.
Benefit to Developers :-
In the previous taxation system, the developers were also facing a big challenge of multiple taxes. They are paying customs duty, central sales tax, excise duty, entry tax, etc. thus there are various taxes and all the burdens was passing to customers.
Now GST will remove all the other taxes and by removing this taxes developers also can gain more profits.
You can see the changes in tax rate on construction material after GST;
- Cement will be come under the 28% GST Segment. Which is higher than the old tax rate.
- Iron Roads will be come under the 18% GST Segment. Which is higher than the old tax rate.
- Paint, wall fittings, plaster, wallpaper and ceramic tiles will be taxed at 28%, which is also similar to the previous average rate of 20-25%
- Sand lime bricks will be come under tax rate 5%, which is lower than the previous rate
The small changes in tax of these variables will reduce the high cost under a single taxation system.