GST has eliminated all the other taxes and the developer’s profit margins can also be improved thanks to the benefit of being able to claim input tax credit. Developers will also find the GST regime quite simpler to work with, with the benefit of input tax credit being an added advantage.
Purchasing property is one of the biggest financial decisions that an individual needs to make. How the newly launched GST (Goods & Services Tax) will impact the realty sector? Will the property prices come down? Well, these would be few of the many questions on the mind of several prospective buyers. We are just in the second month of GST, with the new tax regimes having subsumed almost a dozen of state and central taxes including value added tax (VAT), excise duty and service tax. Under this new regime, industry experts opine that the benefits of investing in under construction properties will be more than the ones of investing in ready possession houses. This is because the under construction properties come under 18% tax slab of GST, however, the effective tax on such properties would only be 12% as under the new regime developers would be allowed input tax credits.
Impact on Real Estate Sector
Industry experts opine that as far as residential real estate sector, implementing Tally GST will act as a sentiment booster for the property buyers, though developers could face some short term challenges as far as transitioning the new tax regime is concerned. Some experts don’t expect too much of an impact on prices in the short term. Though there could be some impact on the companies as far as return filing is concerned, but that can be eliminated by having a reliable tally software.
If you are thinking that the residential real estate prices would come down over the short term due to GST, then you might be disappointed. However, the benefits out of it for all stakeholders of the residential real estate sector would be immense, as the sector’s perception would improve on the back of a simplified tax structure.
Will ready possession houses cost more?
The option of getting complete input set-off credit that developers enjoy on under construction projects won’t come into effect for ready possession houses. On this, developers opine that this would effectively increase the cost of the ready possession property for the buyers. While developers could still benefit for projects in nascent stages, they would have to bear the tax burden for the ready possession projects since they are kept out of the GST realm.
In the interim, the government has instructed developers to pass on any benefits that they could avail under the new tax regime to the property buyers through reduced costs/installments. Further, the government has also advised to all construction companies using tally services that in the apartments under construction, they should refrain from asking customers to pay a higher tax rate on installments to be received after imposition of GST.
Keywords: tally software, Tally GST, tally services
By: Riyaz Tamboli
Article Directory: http://www.articlecatalog.com
Copy and Paste Link Code:
Read other Articles from Riyaz Tamboli:
- What is Input Service Distributor in GST?
- Why would Businesses prefer GST over other Tax Structures?
- How does Taxation gets easy with the inclusion of GST Accounting Software?
- How Useful is Customer Profiling App in Profiling the Customer?
- How Data Is Secured With Tally ERP 9?
Article ID 1049930 (Views 126)