In India, one of the essential back bone sectors that helps millions to generate jobs for people is Real Estate. In the last few months, it has undergone drastic regulations due to DeMo, new RERA rules and now GST-not to mention that it was also under a cloud due to black money being parked in constructions by many realtors and threats from the gangsters. The sector has absorbed all the shocks and now it is gearing to take GST head on. How will GST influence builders and developers in Bangalore? Let’s see, if it will contribute to making it more organized and home buyer friendly.
Multiple taxation has been slashed
Relief to realtors with less paperwork
Reputed builders sought no time in adjusting to the new regulations of RERA. In fact, the 90-day period for updating on the website and getting registration numbers is a process being followed by all top developers in Bangalore. Many new projects and undergoing construction activities are now available to home buyers who can check the details on the website. Whether it is a luxury apartments for sale in Bangalore or affordable housing project, a builder can find GST applicable. Earlier, they had to do a lot of paperwork with land owners and local governing bodies. Being a long drawn process, the time to get documents in their own name is now condensed. The single tax structure is beneficial to builders, no matter in which area of the city, they choose to do projects. When they had to pay Excise Duty, Custom Duty and CST, they levied a minimum of 10% of that cost to potential buyers or investors to recover the money. Now, perhaps this will not be required and they can easily pass the benefit to the end user. It is also likely to decrease the money spent on construction in a big way. Earlier, there was no way a builder was able to derive profit from the slew of taxes and paperwork. With GST, the influence is away from paperwork and focus is on completion and handing of the comprehensive development of homes. This means they will continue to get money effortlessly to complete projects on time.
Corrupt practices will vanish
Rogue builders to desert the sector or will comply with norms
With the sweeping changes that have entered this sector, the fly by night builder and developers in Bangalore who indulge in rogue practices are likely to leave. They will not be able to cheat the home buyer anymore. RERA has already tightened the screws by making some rules compulsory. The further effect of GST is spread all across India for everyone who needs a home at an affordable price. Even the builders will not be able to escape the rules and will have to follow the RERA dictum. Since, there were many complains from buyers the genuine developers in Bangalore will continue to do business as usual. For them, it is only another way to consolidate their equity in the market and gain more respect with new buyers. As the metro witnesses more construction activity, reputed builders have welcomed the government move by accepting and adapting to it. As buyers’ needs are being addressed, there will be lesser aggrieved people to seek court intervention to get their dream homes. Bangalore’s realty sector leads the way for other cities also to apply the new rules. There are also good reasons why other metros will follow the quick implementation.
Input Tax Credit-The game changer for all
Value addition for the industry
Each project is handled in phases. When one phase is complete, the credits of the input taxes are cleared at every successive step. This means after every stage, (i.e. layout, planning, groundbreaking, labor, lying of roads, addition of water tanks, etc.) the implementation progresses. Only the value addition that is done comes under the gambit of GST. The home buyer will only have to bear the cost when the last of the supply chain delivery is done. They do not have to pay for the entire construction. How does this happen? By the clause that is present in the anti-laundering in the GST bill (under the law no. 17 of GST) itself. It becomes, by law and also mandatory to pass the benefit to the buyer.