GST likely to benefit real estate industry
The Dollar Business Bureau
The Goods and Services Tax (GST), cleared by the Rajya Sabha last week, is a comprehensive indirect tax throughout India that has broad implications on all sectors including the real estate. The implementation of GST can bring transparency in the construction and real estate industry, as per the property consultants in India.
According to Shishir Baijal, CMD of Knight Frank India, GST will lead to an efficient warehousing infrastructure in the country. It will create further ease of doing business and also increase the transparency levels in the economy. All these factors will help in transforming the country as a favourite investment destination in the world.
He said that the GST will give the much needed boost to the retail industry and manufacturing sector. After the passage of the GST bill, the positive sentiments would have further improved if the Reserve Bank had reduced the policy rates on the back of a good monsoon and controlled inflation in the Indian economy.
The GST bill would benefit the real estate sector by creating a uniform tax structure. This would lead to better tax compliance by the builders and developers. Under GST regime, realtors see lesser tax burden on raw materials such as cement and steel. This will result in lower construction costs for developers, and lesser property prices to the buyers, said Cushman & Wakefield India MD Anshul Jain.
Another property consultant CBRE Chairman Anshuman Magazine said the GST bill is likely to have a positive impact on the real estate sector, which has linkages with more than 250 other sectors. Unified taxation will also infuse the much needed transparency into our taxation system. While the complete effect of this bill will take some time to be realised in some sectors.
Expressing similar views, Chairman and Country Head of JLL India, Anuj Puri said that GST will boost the manufacturing, warehousing and logistics sectors, while the retail industry and residential real estate will gain in particular. The direct impact of GST on real estate will depend on whether the final GST rate is more or less than the taxes paid currently.
The roll out of the GST will take some more time and the governments need to take care of the problems that arise in the initial period, probably till one year. The actual benefit for the property buyers may take much time to get manifested. The overall positive impact on the economy will be witnessed in the long run.
