Developers welcome GST Implementation

Guidance for taxpayers in relation to GST

Gurgaon: Real estate developers have welcomed the implementation of Goods and Service Tax – GST. According to them, the GST will greatly improve a fractured tax system and help create an integrated Indian market.  The government has always made it clear that leasing of land, renting of buildings, as well as EMIs paid for the purchase of under-construction houses, will start attracting the Goods and Services Tax. Sale of land and buildings will be however out of the purview of GST. Such transactions will, however, continue to attract the stamp duty.

“GST augurs well for the growth of real estate sector. By streamlining the tax structure, GST will enhance ease of doing business in the country, which would ensure a steady flow of investments into the sector,” said Mr. Ravish Kapoor, Director, Elan Group.

M3M Group echoed a similar sentiment.  “The real estate sector account for about five percent of the country’s GDP and is considered as the second-largest employer. However, the sector faces challenges in terms of fiscal policy decisions. One such bottleneck is multiple indirect tax levies, such as VAT, service tax, excise duty, registration fees, etc. Since the GST is to include multiple indirect taxes, it is bound to simplify tax compliance and minimize double taxation. Home-buyers stand to benefit. Moreover, GST is expected to add about 2 percent to India’s GDP. With the economy growing, the demand for real estate sector will also get a boost. However, there are some teething issues, which have been highlighted by various real estate bodies and we expect GST council to take note and resolve the same as we continue to contribute to the GDP growth in a positive way,” said Mr. Atul Banshal, Finance, and Accounts, M3M Group.

The new legislation is expected to come into effect from July.

Under the current tax system, different states impose separate levies as goods move across the country. Truckers spend hours idling at internal borders, filling out forms and awaiting inspection. Small and medium-sized companies prefer not to grow rather than have to deal with the administrative burden of becoming national enterprises. Thus GST would be an improvement over an existing condition.

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Neel Achary is the editor of Business News This Week. He has been covering all the business stories, economy, and corporate stories.