In the past few decades, the real estate sector has manifested tremendous growth and development across many cities, towns and villages. According to a study, it generates the second largest employment opportunities in the country. The sector operates under strict rules and regulations of the government established through varied taxes. Goods and Services Tax (GST) is one initiative that affected the real estate industry in a positive way. It is an indirect tax reform that is expected to balance the state economies and improve the country’s economic growth.
The Indian real estate sector amounts to nearly 5% of the overall GDP of India. With the launch of GST, there have been significant changes in the taxation process. Hence, comprehending the impact and effect of GST on this sector is paramount.
1. According to experts like Shahid Balwa, dealing in all raw material inputs like cement, steel, sand, bricks, wood, etc. is more organised under GST. It helped to create a vendor ecosystem in the realty sector that operates in a more organized manner.
2. Contributing nearly 5% of the Indian GDP, the real estate sector is undoubtedly a major contributor to the Indian economy. It has successfully created huge employment opportunities in lower end strata of the society. GST is expected to convert the business practises more transparent within the industry at all levels.
3. This makes the chances of crooked transactions minimal. Under the umbrella of GST, foreign investments have boosted. This benefitted investment in real estate for the Non-Resident Indian (NRI) community immensely. Owing to the availability of seamless comprehensive channels, the investments are much beneficial. Generalizing the taxation process favoured the foreign investments as well. Further, it will boost the NRI market for investing in Indian real estate.
3. The real estate sector of India is hugely benefitted by the facilities offered in Special Economic Zone (SEZ). The same facilities are carried forward in GST as well. Transportation of goods has become free under GST. One can easily cross state borders without getting in the queue for payments of state tax or entry tax. Furthermore, this initiative reduced paperwork as well.
Shahid Balwa of DB Realty reckons GST has a positive impact on the Indian real estate sector. Besides the customers, it will be helpful to the developers as well. More developments can be expected in the near future too.