Last Night, the President of India, Pranab Mukherjee implemented the Goods and Service Tax , GST which is one of the revolutionary tax related reforms by the Central government. It will affect all the business sectors of the country including the real estate sector which is already facing major changes due to the implementation of the Real Estate (Regulation & development) Act (RERA). The RERA has made real estate developers and agents liable for any ambiguities in the business, wherein the buyers are liable to make timely payments as per the sales agreement.
Echoing sentiments to know whether the RERA and GST will go well together or not, we talked with various RERA and GST experts who incited the move by the government. There is chaos among the buyers and realtors. They are facing problems due to the lack of information related to the above reforms. The only solution to get rid of this to hypocrisy is by decoding the GST and RERA and by giving authentic information.
To start with, let’s talk about the RERA which was implemented by the Central Government on 1st May 2016. RERA will surely compel realtors to shell out more money. As per the reform, the builders have to upload 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 RERA also state that if realtors fail to comply with the rules they will be penalized.
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. The price of cement, paint, plaster, wallpaper, ceramic tiles and wall fittings may go up due to 28% GST which was earlier 20%-24% but the price of materials as iron rods and pillars (GST 18%, earlier tax 20%) and sand-lime bricks and fly ash bricks (GST 5%, earlier tax 6%) will go down. The tax on transportation and logistics are reduced under GST which will lay a huge effect the realty sector.
The GST will reduce the price of real estate properties to some extent and will promote good and simple taxation system and RERA will make 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.
The Real Estate (Regulation & Development Act) popularly known as RERA came into effect on 1st May 2016 after the government of India sought to promote discipline and transparency in the real estate sector of the country.
The government of Uttar Pradesh has notified the UP Real Estate (Regulation & Development) Act (RERA) on 29 October 2016. Counting to regulate the real estate sector in the state
We all have heard a proverb “Tit for Tat” but it seems that this is not true when it comes to the RERA.