GST to boost real estate sector, why ?

The Goods and Services (GST) Bill which will be implemented on July 1, 2017 is expected to boost the Indian real estate sector. The new taxation system will bring a transparency in the Indian economy, by dong away with the different state and central taxes.

Under the new GST regime, steel products will incur a taxation rate of 18%, which is slightly higher than the 17.5% rate charged currently, while cement will attract 28% tax, compared with around 23-24% now. The government has also proposed a lower GST of 5% on coal, which is used in making steel and other products, which is much lesser than the 11.5% levied currently.

The total impact of the GST, will lower the taxes that the builder has to pay on construction material. GST will also help in cash component in construction, as inputs will have to be sourced from registered vendors to get tax credits. This will lead to a lower tax impact than the current indirect tax structure.

With lowering costs, the prices of building commercial and residential projects in the country are also expected to come down. The developer can pass the benefit to the consumer, and the cost of acquisition to the end consumer will also come down.

A single tax structure which covers all goods and services will make it easier for businesses to comply, and lead to lesser tax evasion in the long run, which is great for the Indian economy!