There have been talks of Real Estate being brought under Goods and Services Tax which would lead to a big challenge for the industry already going through tough times.
Finance Minister Arun Jaitley had said earlier that there is a strong case to include real estate in the new indirect tax regime and that the GST Council will discuss it at an appropriate time.
The two key taxes on real estate transactions are Stamp Duty and registration, the rates of which vary between states. GST will make them uniform. Homebuyers already pay 12 percent GST on under-construction properties. There’s no clarity on how the implementation will happen but by bringing GST government might abolish stamp duty charges and make it more standardized across states.
The current rate of stamp duty, registration and GST on under-construction homes comes to about 18 percent. While developers pay taxes on different items they dont get tax credits and by bringing in GST on real estate there could be a case of Input Credits which should effectively bring the cost down for the customers. While the industry might have to again go through this challenge on implementation but if the costs can be brought down due to this input credits it would have a positive impact on customer sentiments and hence the sales.