The Goods and Services Tax (GST), which is believed to be the largest tax reform till now, can end the current complex and obscure tax structure. In order to reduce the gap between government, developers and consumers, MagicBricks recently organized a program called Real Estate-Rare and GST era in New Delhi. This step with a single indirect tax-structure system is expected to be more comfortable in tax collection across India. GST Council has fixed the rate of 18 percent GST for under construction property, in which the full input tax credit (ITC) for the real estate sector excluding the cost of land is included. We are going to tell you in detail detail all the rules put under GST above the property sector.
Real estate sector will look at the tax of 18 percent: Under the revised order from the government, Under Construction Property will be GST at the rate of 18 percent, which will be 9 percent state GST (SGST) and 9 percent Central GST (CGST). The government has allowed the reduction of land value equal to one third of the total amount charged by the developer, according to which the effective rate is 12 percent.
Stamp Duty and registration charges are out of the purview of GST: Stamp duty and registration charge (registration fee) are out of the purview of GST as these taxes are taxed on behalf of the State and property tax is also a municipal levy (Taxes levied on behalf of municipality).
Detained Returns this Year: Priyajit Ghosh of KPMG partner (Indirect tax) said that the new law was a challenge on the front of compliance and that's why the government has decided to adopt a liberal approach in this regard in the initial few months. The government has said that traders / businessmen will not be required to fill the detailed returns at this time, this time they will also get work from paying simple returns.
Initial Issues Compulsory: Deepak Kapoor of Gulshan Homes said that the plurality of rates (tax rates) in the previous tax regime had created much confusion. "The initial issues, inflation pressure and some short-term adverse effects make compliance difficult in the first 12-15 months, but GST has been beneficial in a global way," said Tina Rockyn, Director (Finance), Hinds India.
Easy Redressal of Taxation Issues: After GST, it will be easier to settle certain tax issues, because there will be no confusion about the jurisdiction between the Center and the States in relation to levy on services and goods. Priyajit Ghosh of KPMG Partner (Indirect Tax) said, "It will be very easy to troubleshoot taxation issues because the same rule will be applicable to everyone in the new regime."
Biggest headache for transition period developers and consumers: Deepak Kapoor of Gulshan Homes told that how the ITC will be calculated from the real estate transaction in the transition period, there is ambiguity at this moment, while the new law has come into force. He said, "After July 1, 2017, if an invoice is to be prepared for one unit, how will it be calculated? If a customer wants to buy a real estate product on July 1, then what should I tell him? Should I tell him that I am selling my real estate, but the actual price will be shown after 3 to 6 months, when I will get my ITC details. "
Unregistered Sellers will Become Headaches: In contrast to the past, in the event of being a registered trader, the liability for payment of taxes has been transferred from the provider of goods and services to the receiver. If the goods are purchased from a non-registered trader, then the person receiving the goods will be responsible for the reverse charge which will be linked to the buyer's compliance cost. Now, after GST, people will not be able to buy from any non registered trader.
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