Developers welcome GST bill

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By: Deepshikha Singh The Rajya Sabha on Wednesday approved the crucial Goods and Services Tax (GST) bill into law. The bill, which was first proposed in 2006, was stuck as the erstwhile United Progressive Alliance (UPA) and the National Democratic Alliance (NDA) failed to reach a consensus on the Bill for 10 years. The Prime Minister, Narendra Modi has thanked the leaders and members of all the parties on the occasion of passage of the GST Bill in the Rajya Sabha. Calling GST as the best example of cooperative federalism, the Prime Minister in a series of tweets said that this reform will promote Make in India, help exports and thus boost employment while providing enhanced revenue. Here are some of the views from the real estate industry: “The Goods and Services Tax is likely to be a game changer for the real estate industry which is currently facing the issue of multiple taxes of over 25 per cent in indirect taxes. It will benefit real estate sector by ensuring a uniform tax structure and improve tax compliance by developers.. GST will have a cascading effect for the homebuyers, as developers with more margins in their hands will be able to restructure the cost of the products in favour of consumers.”Brotin Banerjee, MD & CEO, Tata Housing “A single tax rate across the country will promote fair practices which will further encourage transparency and less evasion in the sector that supports in future growth of demand for real estate.”Ashok Gupta, CMD, Ajnara India Ltd “The presence of several indirect tax components faced by the developers at present are a major cause that bring tax inefficiency in this sector. A simplified tax structure would also mean that property prices would come down considerably enabling better affordability for people looking for property options in tier -II and II cities.” Kushagr Ansal, Director, Ansal Housing “Implementation of GST will basically work on three major elements for this sector; simplification of tax structure, reduction in construction costs and better transparency. We are predicting a nationwide realty sector growth by almost 15-20 percent than projected in the course of next 5-7 years. The customer demand is bound to increase due to reducing costs and improving transparency in the sector.” Deepak Kapoor, President CREDAI-Western U.P. & Director, Gulshan Homz “Currently, the homebuyers of this sector are under the pressure of two forms of taxes; service tax and VAT on the purchase of residential units when booked prior to its completion. There are numerous components of non-creditable tax costs such as CST, entry tax, customs duty, excise duty, etc. which is duly paid by the developer on its procurement side which are basically ingredients for the cost pricing of the units.” Dhiraj Jain, Director, Mahagun Group “There is no doubt that multiplication of taxes will be curbed through GST, but the only question will be what rate gets decided. The only dampener for this sector can be high GST rates, such as 27 percent that will counterpoise any possible gains on incremental credits. Also, stamp duty is not proposed to be incorporated under GST and will thus continue to remain as it is at present. Therefore, decreased cost of construction will take place once a lower bracket of GST is applied as the developers will be liable to pay much less than today, thereby allowing cost of units to fall which will directly benefit the end users.” Vikas Bhasin, MD, Saya Group “Commercial realty players will be hugely benefited as all the lost Cenvat credit, which is in current regime a cost to commercial developer can be availed if GST is applied in a free flow manner that will also help in reducing costs.” Manoj Gaur, President CREDAI-NCR & MD, Gaursons India Ltd “The fact that works contract would be taxed as a service under the model GST law is a welcome move and is expected to provide certainty on taxability of the construction sector. This should lead to reduction in tax costs as the tax would be now charged on the actual contractual base and there would not be any overlap of VAT and service tax on a certain portion of such contracts like under the current regime. However, for the developer, the aspect of valuation is a matter of concern as currently no deduction is provided under GST for value of land. This can contribute to higher tax burden considering that there is already an additional tax incidence in the form of Stamp duty on value of land.” Vineet Relia, Managing Director, SARE Homes