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GST’s role in pushing investments in the real estate sector

GST’s role in pushing investments in the real estate sector

The introduction of RERA, the GST, REITs, Benami Transaction Act and other government initiatives such as demonetisation, contribute to enhancing transparency and accountability across the sector. For the NRI market, it is anticipated that with the easing of purchase norms combined with these measures, there will much needed simplification to the transaction process which should contribute to increasing confidence in the sector. It is also important to remember that when buyers purchase properties, they focus on the value, their individual needs/requirements and potential appreciation of the asset, rather than on taxation slabs!

A uniform tax structure in markets such as Indonesia, Thailand, among others has been seen to be a catalyst to increase investment. With the introduction of input tax credits, there is now an incentive for added transparency at the construction stage, an area that has been of concern to investors previously. Limited visibility on transactions and questions around the credibility of companies across the sector has often been a reason for hesitance among investors, especially with respect to equity deals. A combination of these measures should in the long run help improve the perspective of investors and consumers towards the sector.

With the introduction of RERA and the GST, the real estate sector is metamorphosing into a transparent, tightly controlled and regulated industry. All these measures will in the long run create stable businesses, as well as contribute to reduce the trust deficit between the consumer, the investor and the developer .Hence, a simplification to the existing complex taxation system should be welcomed positively as we get more structured as an industry and as an economy.


 

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