Wednesday, 9 September 2015

Real estate industry kept on tenterhooks for the GST bill to be passed

The realty industry is waiting with anticipation and keeping its fingers crossed, hoping that Goods and Services Tax (GST)  Bill would be passed in this session of the parliament , so that proper rationalisation of taxes on purchase of materials are not pushed further back.

Experts term the postponement of the bill as unfortunate; however they still believe that this bill will meet its proposed deadline of 1 April 2016, they are hopeful that since the parliament has only been adjourned sine die, the government will convene a special session at short notice and clear the bill which has been pending for a long time. This bill was one the much legislation that was supposed to be taken up and cleared this session; however that could not happen because of the logjam in the parliament, because of which this session of the parliament had to be adjourned.

Currently the construction industry pays tax on tax on purchase of raw materials, market observers feel that the benefit of correction or lowering of these taxes would have helped builders to pass on the benefit to the consumers which would have resulted in a positive growth sentiment and volume of sales could have picked up across cities, since the bill could not be passed in this session means that it could be pushed by another year, however the industry is expressing hope, that the bill would be cleared in the very near future.

However, there are a few experts, who feel that there will be no major impact on the industry if the bill is pushed onto next year; they feel that while this bill will certainly make it easy for real estate companies to do business as there will one uniform tax structure across all states but there will be no major impact if the bill is not passed in this session of the parliament.

Currently there are two types of taxes that the real estate industry has to bear- Service Tax and Value Added Tax (VAT), and there is a huge overlap of taxes, also there is vagueness on the rate of tax applied because of the options available for companies for paying these taxes across states. The GST bill will make this process smoother for the companies.

Goods and Services Tax (GST) Bill has been in the news for more than a decade now, however it has only in the last few months that a conscious effort is being made to make into a reality, it is supposed to be simple, transparent, efficient, comprehensive and practical in its approach.

Since this bill is a major reform in the real estate sector a well laid out GST bill structure will be immensely beneficial for the industry as well as the consumers, hence the industry feels that the government should take a more proactive approach by calling a special session of the parliament and this bill cleared, so that this ambiguity is cleared as early as possible.

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