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10 Benefits GST brings to Real Estate


by Pooja Bhatia,

India’s biggest tax reform structure- the Good and Service Tax (GST)- has been introduced with a clear objective of a) simplifying tax, b) ensure transparency of/through tax transactions and c) put the unorganized into the organized basket. So, how will such a major structural change help in shaping the real estate sector, if GST is to be implemented in the realty industry at effectively 12% rate? Well, our answer is an affirmative and we have many reasons to believe so.

We list 10 benefits of GST and Real Estate together:

  1. Buyer Convenience– Till now, property buyers found the tax-input cost of the total property value too complicated to understand. There was service tax+ state VAT+ Central Sales Tax+ Customs duty+ Entry Tax+ Excise Duty. VAT amount by far was the most important figure to be worked out since each state had their own VAT tax rate. Now, this mathematics becomes simpler since there is only one tax, which most of the buyers are familiar with, by now.
  2. Easy Calculation– So, it helps in working out the final cost of the property more methodically for the buyers too. Many times buyers did not account for the tax input cost and ended up paying more than their budgeted price for the property.


  1. Anti-Profiteering Clause– The Government has introduced an anti-profiteering to ensure that the builder passes on the GST benefit accrued to them (on the total construction cost) to the home buyer. The builder is entitled to a benefit of 15-20% of the overall construction expense incurred which can affect the property prices positively for the buyers.
  2. No Tax on Complete Projects– Though not a direct benefit of cost, but the fact that the buyers will not have to shell out more money for the project they invested in already, which is now completed, is a bigger plus for the buyers.
  3. Transparency– Structural reforms like GST ensure that the buyers have a cost advantage and that they know what they have to pay, in advance. It only increases confidence in the industry which has so far faced only buyer’s wrath of overpricing or for black money transactions.
  4. No-GST on Affordable Housing– This is a significant development from the GST view-point only as the government has kept the affordable housing projects under no GST regimen. It necessarily means No TAX INPUT.
  5. Improved Industry Sentiment– The government is bringing in a lot of reforms in the real estate sector to improve the professional bonding between the project developers and the buyers, in general for the larger good. GST works exactly to deliver. By giving input credit discounts to the developers, on construction cost, it will further-up the developer’s margin.
  6. Wider-Opportunity– The buyers will have a bigger choice of investment since there is a standard tax GST levied on any property transaction now. This means much more activity in the property business across India, barring location, thus bringing more attention to the till now untapped markets.

  1. Better Profiling of Real Estate Builders/Brokers– So far, the buyers have been pointing fingers at the real estate developers or brokers for an unprecedented increase in the final property cost. This miscalculation was led by many factors, but overall it means a growing level of distrust between the industry representatives and the frustrated buyers. GST is definitely a step towards correcting the situation.
  2. More Buyer Awareness– Till recently, buyers were not even concerned about the tax break-up or the total cost they had to pay in addition to the actual property price. There was less buyer response since they did not understand the tax complexity and did not make an effort too. Now, RERA and GST will help them look deeper and set the mood right for further development in the industry, led by enthusiasm and cheerfulness.
    Pooja Bhatia is a property news enthusiast, who likes staying updated on business and corporate news, lifestyle at home, home interior elements, location insights and rest of the information, to make living better. She is also an avid traveler (a blogger on holidays) and an avid reader and a part of this real-time information, she converts into real estate enthusiasm.

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