Friday, 4 August 2017

How GST Influence Builders in Kerala ?







Real estate is considered as one of the vital sectors affected by one of the major significant changes initiated recently by Government of India - Goods and Service Tax Bill. Abbreviated as GST, it is scheduled to get effect from July 1 this year and the scheme is said to transform the way taxes are handled in every aspect.

As tax is a vital thing included in every transaction of finances, real estate is definitely going to get impacted on rise of GST. Notably, this sector is one of the worst in terms of illegal happenings and with its implementation, unauthorized moves by anyone will be trapped, followed by serious punishable actions to be imposed on the culprit. 



Introduction to Goods & Service Tax

Goods and Service Tax can be defined as an indirect tax applicable on production, sales, utilisation of all goods and services, aimed at merging many tax forms introduced by other governments such as VAT, CST, Service Tax, Purchase tax etc, forming a single tax reform nationally. It simplifies double taxation and follows a single taxation process throughout the country for easy administration purpose.

How GST Affects Best Properties in Kerala ?

Eventhough, all the terms and conditions of GST related to real estate are unknown, developers in Trichur can hope for benefits to a limit. It is to be noted that every schemes won't knock open the positive side, but can also have some negative impacts too, personally. Here we are going to discuss about the effect on the sector due to this big national move.

  • Best properties in Kerala will have a good time after GST comes to a full effect. They only have to give less amount of tax on a property trade, as multiple layer of taxes are merged into a single taxation process, resulting in reduced amount of charge. Real estators get a 10% less tax rate on the item after implementation of the scheme. Also, time and money on construction process will drop.
  • Full Input Tax Credit (ITC) to be initiated by the GST council has proved to be beneficial for the builders because they can claim the credit on taxes for items which are already purchased. Prior to implementation of GST, developers had no rights to request for money under any circumstances. Now, buyers too can grasp a small comfort from this move by passing this rule to the customers as well.

  • There are more positive sides for this scheme. People who are specialised in real estate industry can see an increased flow of finances to and from their hands. Demand for cash may also boost up, resulting in hike in sales followed by enhancing the scope of the field.

  • Till now, real estate industry has been crowded with numerous tax forms, with all taxes nearing to an approximate amount equivalent to one third of the property value. This urged many developers to go for corrupt practices, which can be totally ceased with GST coming into the play. It ensures a constant and white money to flow throughout the country.

  • Moreover, goods and service tax can lead to a better economy to live in. With increased flow of white money throughout the nation, thereby increases a chance for many poor societies to come up in every field, avoiding unauthorized incoming of money to the wrong hands. It enables builders to maintain their growth in a steady state without fear of fall in the middle.

How GST Affects Property Buyers ?

Those who are struggling under ongoing projects have a happy news to hear. They only have to pay approximately 12 % tax for the property instead of 25% in the current double taxation process, making the execution of several plans much easier and significantly saves a lot of time.

Eventhough, financial components like VAT, Service Tax etc, varies from state to state, customers can now buy a flat in Thrissur for just 12% tax and central tax rate is levied at 15%. Consumers can also ensure that they get complete answer for any type of query put forward on the dealer, avoiding them to fall in fraudulent activities.

Conclusion:  

Both RERA (Real Estate Regulatory Act) and GST (Goods and Service Tax) are merging together to bring a new set of rules to the real estate industry, which can aid in leading to a more transparent and continually growing nation to come up in the future. It can be concluded that GST will be beneficial for buyers, investors and developers to receive a profit earning method for all the members included in the project,  through the implementation of this scheme.  

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