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Infra Talk: RERA, GST will boost buyer confidence
The Real Estate Regulatory Authority Act (RERA) has changed the paradigm of Indian market.
Ensuring that one buys a home in a Real Estate Regulatory Authority Act (RERA-compliant project is very important, don’t get swayed by any inducement or ‘sweetener’ that may be offered from the sales and marketing team of the project you are evaluating - unless they are RERA complaint.
RERA has brought in transparency and accountability on part of the developer, which in turn will enhance trust and confidence on part of the home buyer. I expect to see positive impact of RERA on the sector, which will be now regulated and operated in much professional manner. From the perspective of home buyers, it will enhance confidence in real estate developers, provide a stronger legal remedy and should result in many a “fence sitter” taking a “buy” decision – this is the ‘good’ aspect of the scenario. The concept of Goods and Services Tax (GST) was ‘one country, one tax rate’.
That has happened, but in a slightly different way – we have five tax rate slabs. Also, not all taxes and levies imposed on real estate across different states as also by the Centre have been subsumed into one single tax. We had expected that GST would bring about uniformity and single rate of taxation all over the country, plus ensure no instance of double taxation takes place.
Stamp Duty and Registration are very much a separate payment for the home buyer over GST, and this has sent out mixed signals.
My viewpoint is: among the factors that comprise a paradigm shift for Indian real estate, the implementation of GST and RERA easily top the list. Given the initial reports about the GST provision vis-à-vis real estate, the industry had high expectations - that GST would subsume stamp duty, registration and other additional levies.
Non-inclusion of these additional heavy duties is expected to result in an inflationary impact on real estate across India.
GST and RERA are part of the process that will bring in accountability and transparency to real estate. Some aspects may seem painful initially, but the over-all impact should be positive.