The real estate sector in India is in dire straits. The overall picture is one of doom and gloom. This industry has only itself to blame for the situation it finds itself today. It has for the longest time been a hotbed for corruption. It is also one of the unaccounted for sectors in the country. Considering that consumers spend a fortune on real estate projects, it is no wonder that they didn’t trust a sector where some elements were playing with them and their money.
Over the past decade or so realty prices have been going up and reached a point where they have become unaffordable to the common man. This is a very common scenario in the bigger cities across the country. These markets are so bloated that there is an inventory overhang in all the metros which can take years to completely disappear.
Take for example the case of Bangalore. Even though this city scores better than most of its northern and western counterparts, it also has its fair share of problems to face. There is an overhang of unsold inventory here and the market sentiment is down due to several factors.
Buying a house is not an easy decision to come to considering the way the market is behaving. But there are a few things that might just help it towards the path of revival.
The Goods and Services Tax which came into being on July 1st is expected to become a game changer for the sector. It brings in transparency to a sector in terms of taxation. In the pre-GST era buying a house would entail a number of taxes levied by both the central and state governments.
Calculating all the various taxes was a cumbersome exercise. If you had to purchase apartments in Yelahanka or any other part of Bangalore you had to pay VAT, service tax, stamp duty and registration charges. You will also be taxed according to the stage of construction the property was at the time of purchase.
After the GST was implemented buyers will be able to figure out the taxation system for properties on their own. The simplicity of calculating tax and the transparency around it have been widely launched.
If you are going to buy under construction projects then you will be charged 12% GST on the value of the property plus the stamp duty and the registration charges. If you were to buy apartments in Yelahanka or any other micro market across the country which has been completed you needn’t bother with GST at all.
Even though not everyone is a fan of this new tax regime, realtors are a happy lot and so is the common man in the case of real estate. The world of properties has always been a murky one. Any policy change that brings in transparency is a welcome change. The GST is expected to give the realty sector a push in the right direction and help it out of its current condition.