REAL ES­TATE THE IM­PLE­MEN­TA­TION OF GST AND ITS IM­PACT ON REAL ES­TATE IN IN­DIA

Images Retail - - CONTENTS - – By Ir­fan Razack

Since a change of this mag­ni­tude takes time for peo­ple to fully com­pre­hend and com­ply with, GST and RERA may ini­tially cre­ate some con­fu­sion for the con­sumers.

ince a change of this mag­ni­tude takes time for peo­ple to fully com­pre­hend and com­ply with, GST and RERA may ini­tially cre­ate some con­fu­sion for the con­sumers. It may, in the ini­tial days of its im­ple­men­ta­tion, be con­fus­ing for the de­vel­op­ers as well. How­ever, af­ter a bit of a churn over a few months, things should com­pletely sta­bi­lize.

The rate of tax fixed for Real Es­tate is at 12%. Un­for­tu­nately, this fig­ure in­cludes land costs as well. Which means that hence­forth, the con­sumer will have to pay the GST not only for con­struc­tion but also for land – (Land was ex­cluded from VAT and Ser­vice Tax ear­lier). He will also have to bear the ad­di­tional bur­den of stamp duty. While

Sthese amount to in­creased costs for the con­sumer, the gov­ern­ment has as­sured peo­ple that with the im­ple­men­ta­tion of GST, there will also be a lot more op­por­tu­nity for sav­ings over­all, which in turn should negate th­ese costs.

We are in the process of eval­u­at­ing this for our­selves and th­ese are still early days. From a con­sumer stand­point, it’s tough to de­cide at this point whether re­alty prices will in­crease or de­crease post the GST roll­out. Only time will tell...

Gen­er­ally speak­ing, if the in­put costs go up, prices will go up. If the in­put costs go down, prices nat­u­rally will get cor­rected. Cur­rently, look­ing at the var­i­ous ex­ter­nal fac­tors, it’s dif­fi­cult to pre­dict any­thing con­crete. In my opin­ion, for the mo­ment, we should main­tain the view that things will re­main neu­tral.

RERA and GST might ap­pear am­bigu­ous for now and might make builders and fi­nan­cial in­sti­tu­tions to ‘wait and watch’ As the new pro­cesses and sys­tems of the RERA and GST guide­lines will take time to re­cal­i­brate in the busi­nesses, talk­ing on this per­ti­nent as­pect is one of the most cov­eted real es­tate czar, Ir­fan Razack, CMD, Pres­tige Group.

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