Implementation of the Goods and Services Tax (GST) secures great hope for a positive transition in the real estate sector. Manmohan Garg, the Delhi-based real estate tycoon believes that it is bound to have a multi-edged favorable impact on the overall realty segment. Being a uniform indirect tax, GST will abolish the multiple taxation system, making the existing system of taxation more organized and efficient.
The merging of most of the existing taxes into a single system of taxation will propagate transparency, making the country a unified common market. Manmohan Garg emphasizes that it is a revolutionary reform that is widely awaited. He explains that its impact will be positive for the overall economy, and for the real estate in particular.
The introduction of a single nodal agency instead of various agencies is likely to attract more foreign direct investment (FDI). Moreover, the replacement of the three major taxes, which were being levied like service tax, VAT and excise duty by a single consolidated tax will eliminate the scope of confusion at every level. It will provide an audit trail for better organization and inspection of the realty sector, says Manmohan Garg of Delhi.
Along with ensuring transparency, GST will alleviate the cost of property and shoot up its demand in real the estate sector. It will certainly prove to be a confidence booster for home buyers. As an aftermath of GST, the cost of houses will be reduced to a great extent (if it is at a rate below the current applicable taxes that are levied by the central and state governments). According to Manmohan Garg, it will also help in alleviating the overall taxation cost for commercial property.
The registered real estate developers would not be liable to pay input tax credit against the total purchases due to the implementation of GST. Also, the high rate of stamp duties involved in property-purchasing formalities, such as booking and development agreements will be minimized significantly.
Without a doubt, GST is the much-needed solution to simplify the problem of existing complex tax structure in the Indian economy.