Once, after the Goods and Services Tax (GST) has been successfully implemented in India there has been speculation regarding its impact. Considering the blog about property investment at smartowner that shows the latest taxation policy and estimations, it has been observed that there is a positive impact on real estate.
The GST impact on real estate
On the rentals
Under the implementation of the GST, the calculation of rental is very clear. The landlords who are earning rental income through residential use will not be taxed under the GST. However, the rental charges for commercial properties are about 18%.
On home loans
So before evaluating the GST and its impact it is essential to understand the components that affect the impact. The cost of taking a home loan is the interest payment of the principal amount. However, it does not have any impact on the cost since there is no implementation of GST on home loan EMI.
On real estate sector
The real estate industry reports for about 5% of India’s GDP making this as the second largest industry all over the country. It additionally has an impact on real estate sector including,
- Significantly reduce black money after the implementation of GST.
- Increasing the FDI under the GST.
- Implementation of GST on Barter Transactions and Intellectual Property Rights.
Advantages for the buyers and developers
- After the implementation of the GST, it has shown positive aspects on the investors. Even the buyers are completely revealed from taxation, including VAT, service tax, state tax, registration charges and stamp duty.
- According to the state government, each of the taxes is levied that are completely specified as per the state and its rules and regulations.
- The GST has completely washed away with the taxation which has reduced the extra burden on the buyers. This has completely changed the way in which the real industry has been so far.
- Moreover the unique process of charging a single tax of about 12%, depending upon the estimation of the property.
- This type of charges is equally implemented for both registrations as well as stamp duty charges.
- In addition to that, the implementation of indirect taxation has also been taking place, especially for the ready to move the real estate sector.
- However, the GST has made all taxes to fall into one category and named it as the cost of construction. Considering the article about property investment at smartowner where it has been expected that the additional taxation can drastically be reduced.
- Even the developers are found lots of advantages after the implementation of GST in India. Because the impact has drastically reduced the taxation, including legal charges, approval charges, VAT, central excise duty, entry tax collected by the state along with the taxation applicable for other services including service tax and few others.
Fortunately, the overall impact of GST is truly a very big boon to the real estate sector. At present, the industry is lagging behind in terms of transparency and accountability, which has not been fulfilled by GST. No matter what everyone who takes part in the real estate will definitely benefit from it.
