RERA and GST a great combo for real estate
The real estate sector, that until now was dis-organised, will be regulated with the Real Estate Regulation and Development Act 2016 (RERA) and GST. The customer will be more protected and greater transparency within thesector will be visible when the govt through legislation passed the RERA, which puts accountability on the developers in terms of financial disclosure, timely development of projects and maintaining good corporate governance practices. Home buyers confidence is now set to increase on the back of these sentiment-building measures of the government.RERA can surely compel realtors to dispense extra money. As per the reform, the builders have to transfer authentic documents and register their projects with the Real Estate regulatory authority. The real estate agents also need to register themselves with the RERA to conduct business and for this; they have to pay a registration fee.
The GST is the single-biggest tax reform to be ever introduced in India. GST aims at eliminating the difference in indirect taxes applicable across various states. The real estate sector stands to benefit from the fact that GST would provide more clarity on tax-credits for RE transactions and allowance of input credit would reduce the price of properties.
Now talking about the impact of GST on realty sector, it will benefit both realtors and real estate buyers. As per the new reforms, there will be 12% GST on on-going projects excluding stamp duty and registration charges. There is no tax on ready-to-move-in and completed projects. The GST will eliminate the VAT and service tax which together use to range from 7% to 9% (varies from state to state) and was difficult for consumers to calculate due to irregularities. The GST makes the tax calculation much simpler as the buyer has to pay only a single tax. The builders will also get the benefits of input tax credit and have to pay only one tax under the GST.
In conclusion, GST can cut back the worth of real estate properties to some extent and will promote sensible and straightforward taxation system and RERA will build the real estate sector more reliable due to which Foreign Direct Investment (FDI) will increase. Thus, both RERA and GST will contribute in the development of our country and will go well together for the real estate sector.