Goods and Service Tax known as GST is one of the most awaited policies of the government. Since a long time there have been rumours about how GST will impact the real estate industry but finally things have come to an end as the government has decided the tax credit rates for real estate. This is definitely good news for marketers, investors and builders who had been waiting for it since a long time and now the rates are finally out.

As per the current GST rates, all the work contracts come under the 18% slab along with total ITC. Though these rates may appear to be a little higher but when taken as a whole, the market will be neutral. Most of the construction contracts come under work contracts and therefore both VAT as well as Service Tax are applicable on them. As per the current policy, the Service Tax has been kept 6% for now while the VAT ranges from 1 to 15%. The effective tax is now somewhere around 11-18% which is still under the lower slab and is sure to make a difference.

As per experts, the real estate market is sure to benefit from GST. Although it will take time to understand the policy and get used to it, in the long run the market will grow. Things will be neutral for some time and then the sales will pitch high. Thus, you can easily say that GST will play a big role in the industry after RERA and demonetisation. But unless GST is implemented, it is difficult to say how the market will behave or how things turn out to be.

Stamp duty as well as registration costs remain the same while completed projects and land will also be exclusive of GST. For real estate, GST would be 12% including the value of land and in case of separate agreements the applicable GST rate will be 18%.

There are many projects which are under construction and therefore these might get affected as the current rate would be high but for the new projects GST would be perfect and would definitely help in the growth of the sector and the industry. The main motive of the government for coming up with GST was just to bring in transparency within the country by keeping the rates same throughout, which earlier faced a lot of issues. This would simplify the taxation and make things clear for everyone.