Comment on GST by Mr. Anshuman Magazine, Chairman India & South East Asia CBRE

15

“GST is unarguably a breakthrough reform the country has seen since our Independence. In its entirety, the new GST reforms promise efficiency, subsuming many indirect taxes.

With GST coming into full force on the 1st of July, the real estate sector will see a much-needed renaissance across its various segments. The impact on the overall economy will filter through to the real estate, construction, and warehousing sector. In construction, inputs such as cement and ceramic, tiles, building blocks and bricks, prefab structural components for buildings among others have been placed in the 28 percent category whereas, other components such as iron and steel have been placed in the 18 percent bracket. Work contracts addressing construction intended for sale were classified as a service and were placed in the 12 percent category.

It is noteworthy that the value of land would be included in the amount charged from the end-user. Pradhanmantri Awas Yojna (PMAY) has been exempted from GST. Unlike the previous regime, input tax credit has been permitted for the real estate sector. Moreover, ITC has a dual benefit – it will also increase tax compliance as it is only available upon purchase from GST registered vendors. Most importantly, the GST’s anti-profiteering provision enforces the benefit of ITC to the end user- a move which is likely to be positive for reducing project costs, which in turn might trigger buyer enthusiasm.

As a landmark economic reform, GST can create the transparency needed to encourage investment. Globally, a unified tax structure has been one of many catalysts for investments. It will thus be an asset for India, to enhance its economy’s resilience and achieve a high growth trajectory. With the scale of the real estate sector, it can create a cascading impact on economic growth across major business segments.”

You might also like More from author

Leave A Reply

Your email address will not be published.