As government has taken all measures to hunt down unaccounted wealth and the sector which sees most of it come through is the real estate. So in order to boost more transparency and tax compliance in the segment, the finance ministry led GST Council shall finalize its take on the sector coming under the GST purview.
In accordance with the current provisions, only under construction projects attract GST implications @ 12% and ready to move in apartments do not attract any such levy. And such charges are levied on the acquisition cost of the property.
So, with the proposal under place, following changes in the real estate sector shall come up
The input tax credit advantage available to all industries shall also be available to real estate that means for all the tax paid on input credit amount can be claimed and developer shall need to pay tax on ultimate supply i.e GST charges only for value-addition in the supply chain process.
Lowered tax rates for real estate buyers as Input tax credit advantage being offered to developers: The advantage availed by the developers needs to be passed on to the customers as otherwise the anti-profiteering unit of the GST Council comes into play.
Completed immovable property may be brought under GST net: For the under construction property for which service tax has been replaced with GST. Such a tenet with completed or ready to move in property shall make the property expensive for the end buyer and the struggle for the real estate sector will further increase.