HIT ON CONFIDENCE OF HOMEBUYERS:
There emerged a heightened need for a regulator to monitor and work out the plans of India’s Real Estate Sector, as also a uniform tax regime for myriad other industries, which led to the development of RERA (Real Estate Regulatory Authority) for each state and UT, and GST (Goods and Services Tax). Now with both of RERA and GST, the stakeholders of Real Estate Sector have started looking towards new opportunities and options with faith. Along with RERA, GST was supposed to bring about a whole new sense of transparency in this sector, wherefrom both the seller and the buyer will benefit from. But this seems like a long way from the proper implementation of a raw concept. RERA along with GST is yet to gather a speedy momentum and analysts determine why.
RERA came into force on May 1 2016 and was supposed to be properly put to work by May 1, 2017. However, only 13 states and UTs notified the rules on that date. Industry experts predict that what is required to take the best out of these two big plans, is their implementation of these rules in their truest spirit in a timely manner. These rules and regulations have been deemed by some developers as being potential and fundamental reforms which require substantial time for implementation, and for the results to show in the required field of work.
And among these speculations of how even after implementation of GST and RERA, when people still hope to see that spark of benefit in real estate sector, one area that requires immediate attention is Stamp Duty. It is said to have been allowed to continue to be imposed across states even after GST has come into proper force. The rates vary from state to state and the additional burden on the sector on account of stamp duties average from 5 to 7 per cent.
Previous Real Estate transaction taxes
Out of this above chart, the stamp duty exists even till date with a minimum levy set on 5 to 7 percent. Many states have deviated from the normal rules and adopted different procedures for the same policies. One of them is Stamp Duty, and this stands as an additional burden on the real estate sector, as well as cuts down on the true notion of GST and RERA, and if abolished by the State Governments, the final cost of housing units will most likely decline. This stands as a hit on the confidence of homebuyers who had eagerly waited for RERA and GST to spark some really low prices.
Although developers may still earn benefits from projects that are still in the nascent stage, they will have to bear the burden of extra hike in taxes on Ready-To-Move-In Projects, as they have been excluded from the GST ambit. We have also seen a sharp rise in the under 80 Lakh projects, and yet hope for a steady peak rise in this prosperous sector.