GST in Realty: Building Blocks or Stumbling Stones?

When GST was implemented on 1 July 2017, it set the foundation for a monumental tax structure that continues to be constructed, piece-by-piece, reshaping India's economic landscape. While the real estate sector, a cornerstone of the Indian economy, has been adapting to GST, the journey has unveiled a mix of opportunities and challenges, which we have captured through this article.

The Brighter Facet: GST's Positive Ripples in Real Estate

• Simplified tax structure
  Prior to GST, the real estate sector grappled with various taxes like VAT, service tax, and stamp duty, along with various rules and conditions for claiming the CENVAT credit, leading to a complex tax regime. GST streamlined this by bringing most of these under a single umbrella, reducing the need for developers and buyers to adhere to various laws.
• Increased transparency
  The Input Tax Credit (ITC) mechanism under GST ensures that developers pass on the benefits of tax credits to buyers, leading to a reduction in the overall cost of properties and increasing transparency in pricing. Despite changes in taxation and eligibility for the ITC, authorities were vigilant in ensuring that the benefits of rate reduction reached buyers. They provided multiple GST levy options during the transition period to guarantee that these advantages were appropriately passed on.