GST would bring a
lot of transparency in the real estate sector and minimize unscrupulous
transactions. Under the current tax laws, VAT and Service tax charged by
different Contractors and excise duty, entry tax, octroi is paid on the
procurements.
GST law will increase the margin in the hands of
contractor/developer by removing all the above-mentioned taxes. Now whether
this benefit gets passed on to the end-consumer is unsure as pricing of real
estate is driven by market forces than on costing principles.
Real estate sector
enjoys a lot of benefits from facilities in SEZ and same are expected to be
carried forward in GST.GST will help in filling the overwhelming gaps currently
existing under the supply chain management process.
There will be many
projects of developers which would require the transition from current tax laws
onto GST. GST model law did not specify any provisions for the transition.
GST rate on Real Estate
Currently, the sale
of land and buildings has been kept out of the ambit of GST but it is expected
to be taxed within a period of a year. Construction of land and building will
benefit from the rates declared for cement, bricks, and iron under GST.
Source: cleartax.in
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