As the monsoon session of the Parliament is going to expire within ten days, the ambitious Goods and Services Tax (GST) Bill is going to be tabled on Wednesday in Parliament. The bill is touted as one of the most far-reaching tax reforms in India after gaining independence. The bill will propose to implement a single comprehensive way to levy the tax on manufacture, sale and consumption of goods as well as services in the national level by replacing all other taxes.
India is one of those countries that subsume more number of taxes such as VAT (Value Added Tax), service tax, excise duty etc. Analysts opinion that the passage of the bill is expected to boost the economy of the country. Along with other sectors, real estate also hopes to get further clarity and improve its functionality. Here is how the passage of GST Bill is expected to be impacting real estate.
- Once the bill is passed, builders will need to pay only one single tax. This will reduce the complexities and burdens on the builders.
- Homes which have completed its construction are less likely to be affected by the bill as the buyer has already paid the taxes.
- Under-construction properties and rental properties shall fall under the ambit of the new bill once it is passed.
- Since service tax will be applicable for the construction materials purchased by the builder, the cost of the properties is likely to vary. However, it can only be evaluated once the bill is passed.
- If the new rate will be more than the summing up of the present multiple rates (around 22-25%), then it will be a burden to home buyers.