Impact of GST ON REAL ESTATE SECTOR

PRAHLADRAI DALMIA LIONS COLLEGE OF COMMERCE AND ECONOMICS
CHAPTER NO.1
INTRODUCTION
1.1 CONCEPT OF TAX
Taxation is the inherent power of the state to impose and demand contribution upon
person, properties, or right for the purpose of generating revenue for the public purpose.
Taxes are enforced proportional contribution from person to property levied by the law
making body of the state by virtue of its sovereignty for the support of government and
all public needs.
1.2 BRIEF HISTORY OF TAXATION
Tax is today an important source of revenue for the government in all the countries.
More than 3000 years ago, the inhabitants of ancient Egypt and Greece used to pay tax,
consumption taxes and custom duties. Income tax was 1st introduce in India in 1860 by
James Wilson who become Indians First Finance Minister.
In order to meet the losses sustained by the government on account of military of 1857.
In 1918 a New Income Tax bill was passed and which was further again replace in
1922. Finally the Ministry of law and Finance the Income Tax was passed in 1961 and
brought came in force on 1st April 1962. And this also known as the Financial Year in
Current Era .i.e.(1.04.2019-31.03.2020)
TAXATION SYSTEM
Tax system of raising money to finance government. All government require payment
of money taxes from people.
Government use revenues to pay soldiers and police to build dams and roads, to operate
schools and hospitals , to provide food to the poor and medical care facilities, etc. and
also hundreds of other purposes without taxes to fund its activities ,govt. could not exist.
So, taxation is the most important source of revenues for modern government typically
according for 90% or more of their income.
IMPACT OF GST ON REAL ESTATE SECTOR
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WHY ARE TAXES LEVIED?
The Reason for levy of taxes is that they constitute the basic source of revenue to the
government. Revenue so raised is utilize for meeting the expenses of government like
defense, provision of education, health care, Infrastructure facilities like roads, dams,
etc.
WHAT ARE THE REASONS OF TAXATION?
1. Provide the basic facilities for every citizen of country.

2. Protection of life.
3. Responsibilities of citizen to the Nation.
1.3 MEANING OF TAX
The word Tax came from Latin word “Taxo, Tax are” which means To assess or
eliminate.
Tax can be defined in following ways:
“The Compulsory payments made to governments associated with certain activities are
called Taxes”.
“A specific amount of money demanded by government from its public levied on their
income, sales, wealth etc.”
“Taxes are the price we pay for a civilized society.”
Tax in general, is the imposition of financial charge upon an individual or a company

by the government of India or their respective state or similar other functional
equivalents in a state.
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1.4 DIFFERENT TYPES OF TAXES
Taxes are broadly classified into Direct and Indirect taxes.
A direct tax is a tax paid directly by individual on his/her income to the government.
Direct taxes become payable after the income reaches the tax payer. Direct tax rate is
not flat. The rates are progressive in nature-Higher the income, higher the rate. A Direct
tax is one that cannot be shifted burden by the taxpayer to someone else. Income tax ,
Corporation tax , Property tax are some example of direct tax.
A Indirect tax is a tax which are paid indirectly by Buyers , Suppliers , Society on goods
and services to the government. Tax is paid on consumption of goods and services.
Indirect taxes are payable even before the goods or services reach the tax payer. GST
and Customs are the major indirect taxes in India. Indirect tax rates are flat or fixed.
Hence they are called Regressive – the poor and the rich pay the same tax. The Whole
Burden of the tax shall be shifted on the Final consumer , depending on the overall
increase in the price of goods and services. It is convenient and difficult to evade. The
indirect taxes have wide tax base. Indirect tax is universaly accepted. Service Tax ,
Customs duty , GST , etc. are some example of indirect tax.
Direct and indirect taxes are defined according to the ability of the end taxpayer to shift
the burden of taxes to someone else. Direct taxes allow the government to collect taxes
directly from consumers and is a progressive type of tax, which also allows for cooling
down of inflationary pressure on the economy. Indirect taxes allow the government to
expect stable and assured returns and brings into its fold almost every member of the
society – something which the direct tax has been unable to do.
Both direct and indirect taxes are important for the country as they are intricately linked
with the overall economy. As such, collection of these taxes is important for the
government as well as the well-being of the country. Both direct taxes and indirect taxes
are collected by the central and respective state government.
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1.5 FEATURES OF INDIRECT TAXES
• Payment and Tax Load - The service provider makes payment of indirect
taxes and this is transferred to a final consumer.
• Liability of Tax – Here the seller or service provider makes the payment on
indirect taxes which are transferred to the final consumer.
• Nature – Initially, indirect taxes used to have a regressive nature. Yet, now
with the coming of GST, they have become quite progressive.
• Evasion - Indirect taxes are hard to evade due to direct implementation
through goods and services.
• Investment and Saving - Most indirect taxes are largely growth-oriented
since they de-motivate I
• Social Coverage - The indirect tax has a much larger coverage since their
charge falls upon each individual buying products or services.
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1.6 ADAVANTAGES OF INDIRECT TAXES
1. Govt. Revenue
Indirect taxes are a major source of tax revenue for Governments worldwide
and continue to grow as more countries move to consumptions oriented tax
regime. In India, indirect taxes contribute more than 50% of the total tax
revenue of Central and State Governments.
2. Invisible Burden On Consumer/Producer

Since value of indirect taxes is generally inbuilt in the price of the commodity,
the consumer pays the same without feeling a direct pinch. The supplier has a
psychological feeling that he is only collecting the taxes from the buyer and is
not paying out of his own pocket.
3. Wider Tax Base

Unlike direct taxes , the indirect taxes have a wide tax base. Majority of the
products or services are subject to indirect taxes with the low thresholds.
4. Ease of Collection
Indirect taxes are easier to collect as indirect taxes are mainly on
goods/services , for which record keeping, verification and control is relatively
easy(at least in organized sector.)
5. Low Collection Costs

Collection costs of indirect taxes as percentage of tax collected are lower as
compared to direct taxes.
6. Less Evasion
Tax Evasion is comparatively less in indirect taxes in organized sector due to
convenience of control.
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7. Tax On Luxury/Harmful Items

Government can levy higher taxes on luxury goods, which reduces the
wasteful expenditure. High taxes are imposed on the consumption of harmful
products (also known as ‘sin goods’) such as alcoholic products, tobacco
products, etc. This not only checks their consumption but also enables the state
to collect substantial revenue.
1.7 DISADVANTAGES OF INDIRECT TAXES
1. Higher Prices
Tax imposed on goods and services leads to higher prices for consumers. Higher
taxes on capital goods increases cost of machinery and techonology.
2. Lower demand/growth
Tax on goods /services increases its price, which reduces demand of goods and
services. Lesser demand means lower growth of industrialization.
3. Regressive in nature
Generally, the indirect taxes are regressive in nature. The rich and the poor
have to pay the same rate of indirect taxes on items of mass consumptions.
This may further increase the income disparities between the rich and the poor.
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1.8 BACKGROUND OF GOODS AND SERVICES TAX IN

INDIA
The Kelkar Task Force on implementation of FRBM23 Act, 2003 had pointed out
that although the indirect tax policy in India has been steadily progressive in the
direction of VAT Principle since 1986, the existing system of taxation of goods
and services still suffer from many problems. The tax base is fragmented between
Centre and States. Keeping Significance of GST in view, an announcement was
made by then our Ex-Finance Minister Mr. P. Chidambaram in his four budget
speeches24.
• Budget Speech 2004-05

• Budget Speech 2005-06
• Budget Speech of 2006-07
• Similar speech given in the Budget of 2007-08
NEED FOR GST
Imposing several taxes on goods and services can lead to high cost and inefficient tax
structure which can subject to shirking and revenue disclosures. The need for GST in
Indian Taxation System will add value at each stage and will set off the rates both at
state and at central level. Introducing GST, will increase the efficiency of taxation,
improves the economic growth and it will bring whole nation to one national market.
What happen in present scenario? Our present taxation system is very complex and very
confusing, corruption chance is there, which leads to distrust of government, there are
hidden tax for exports, whereas no charge applicable on Importing of Goods/Services
from one state to another.
Just to overcome these issues, Rajya Sabha introduced GST bill, which will bring
transparency to taxation and consumer will get to know how much tax amount they are
paying to government for sale/ purchase/ manufacturing.
Following are some of the points that can easily explain the need for GST:-
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Tax Structure will be Simple: – At present, there are huge number of taxes that has to
pay by consumers, with GST it will single tax to pay, which is much easier to
understand. For businesses, accounting complexities will reduce and results less
paperwork, which will save both time and money. GST will increase economic GDP
by 2%-2.5%.
Tax revenue will increase: Simple tax structure will bring more tax payers and in
return it will be revenue for government.
Competitive pricing: What GST will do? Well, it will eliminate all other taxes of
indirect taxes and this will effectively mean that tax amount paid by end users
(consumers) will reduce. As in Economics, lower will the prices, more will be demand
for that product, results in more consumption of goods, which will be benefited to
companies.
Boost to exports: If Indian market will be competitive in pricing, then more and more
foreign players will try to enter the market, which results in more numbers of exporters
and benefits to Indian Market. As far there is no tax rate is finalized, but yes GST is
much needed in the countries where, it lacks transparency and complex taxation system.
There is a question in everyone’s mind……”Do we have to pay tax at different rates
and at different levels? Is there no solution to this? Yes, the solution to this is
implementation of GST. GST will take away cascading effect of various taxes that are
charged on sale/ production/ purchase and so. Products reaches to customers at very
high rate as compared to manufacturing, so with GST there will be only one tax and it
will reduce burden to pay off.
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DIFFICULTIES OF OLD INDIRECT TAX SYSTEM
Tax Statement of objects and Reasons of the CGST Act explains the difficulties due to
the earlier tax system on goods and services that led to the new law as under-
a. Many Taxes
b. Cascading of taxes
c. Separate Economic Spheres
d. No Free Flow of Trade
e. High Compliance Cost
WHY GST IN INDIA?
It will boost domestic consumption of goods by 7 to 10 times as it will bring in

disproportionate price elasticity effects. It will drive India’s economic growth in the
next decade. GST removes multiplicity of taxes across states and will create a single
national taxation system and a single common market. GST was so designed as to have
an in-built mechanism for the seamless transfer of input tax credit. GST was enacted to
reduce cost of production and inflation in the economy. The need for GST in Indian
Taxation System will add value at each stage and will set off the rates both at state and
at central level.
GENESIS OF GST IN INDIA
▪ The move towards GST was 1st mooted by Union Finance Minister in the year 2006-
07.
▪ It was proposed that it would be introduce from 1st April, 2010 but the amendments
to be made in the existing Tax Structure. (VAT) took more time as the old reforms
to be abolished where by a new Road Map and structure of GST.
▪ The Empowerment Council of state ministers and central they both come together
and proposed the need of GST and it’s features in the year November, 2009.
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1.9 GST IN INDIA- AN INTRODUCTION
The Introduction of GST was done on 1st July, 2017, the historic indirect tax reforms.
GST law was extended to Jammu and Kashmir on 8th July, 2017.
WHAT IS GST ?
GST (Goods and Services Tax) is a indirect tax levied on goods and services. GST
is a single tax on the supply of goods and services. GST improve overall economic
growth of the nation. GST is a comprehensive indirect tax levy on manufacture, sale
and consumption of goods as well as services at the national level. It will replace
all indirect taxes levied on goods and services by states and Central. GST is “ONE
NATION ONE TAX”. It is Consumption Based Destination Tax.
FEATURES OF GST
i. GST would be applicable on “supply” of goods and services as against the present
concept of tax on manufacturer of goods or on sale of goods or on provision of
services.
ii. GST would be based on the principle of destination based consumption taxation as
against the present principle of origin -based taxation.
iii. It would be Dual GST with Centre and States simultaneously levying it on a
common base. The GST to be levied by the Centre would be called Central GST
(central tax-CGST) and that to be levied by the states (including Union Territories
with legislature) would be called state GST (state-tax-SGST). Union territories
without legislature would levy Union territory GST (union territory tax-UTGST),
iv. An integrated GST (integrated tax-IGST) would be levied on inter-state supply
(including stock transfers) of goods and services. This would be collected by the
Centre so that the credit chain is not disrupted.
v. Import of goods would be treated as inter-state supplies and would be subject to
IGST in addition to the applicable customs duties.
vi. GST would apply to all goods and services except Alcohol for human consumption.
vii. GST on five specified petroleum products (Crude, Petrol, Diesel, ATF & Natural
gas) would be applicable from the date to be recommended by the GSTC.
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viii. The list of exempted goods and services would be kept to a minimum and it would
be harmonized for the centre and the states as well as across the states as far as
possible.
ix. All Exports and Supplies to SEZs and SEZ units would be Zero-rated.
x. Input Tax Credit (ITC) to be broad based by making it available in respect of taxes
paid on any supply of goods or services or both used or intended to be used in the
course or furtherance of business.
PURPOSE OF GST
• One country–one tax
• To eliminate cascading effect of indirect taxes/ doubling tax/ tax on tax
• Subsume all indirect taxes at central and state level
• Reduce tax evasion and corruption
• Increase productivity
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BENEFITS OF GST
Removal of bundled indirect taxes such as VAT, CST, Services tax, CAD, SAD, and
Excise.
Less tax compliance and a simplified tax policy compared to current tax structure.
Removal of cascading effects of taxes .i.e., removes tax on tax.
Lower the burden on the common man i.e. public will have to shed less money to buy
the same product that were costly earlier.
Control of black money circulation as the system normally followed by traders and
shopkeepers will be put to a mandatory check.
GST is a transparent tax and also reduces the number of indirect taxes.
GST will not be a cost to registered retailers therefore there will be no hidden taxes and
the cost of doing business will be lower.
Benefit people as prices will come down which in turn will help companies as
consumption will increase.
There is no doubt that in the production and distribution of goods, services are
increasingly used or consumed and vice versa.
Separate taxes for goods and services, which is the present taxation system, requires
division of transaction values into value of goods and services for taxation, leading to
greater complications, administration, including compliances costs.
In the GST system, when all the taxes are integrated, it would make possible the
taxation burden to be split equitably between manufacturing and services.
GST will be levied only at the final destination of consumption based on the VAT
principle and not at various points (from manufacturing to retail outlets). This will help
in removing economic distortions and bring about development of a common national
market.
GST will also help to build a transparent and corruption-free tax administration.
Presently, a tax is levied on when a finished product moves out from a factory, which
is paid by the manufacturer, and it is again levied at the retail outlet when sold.
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GST is backed by the GSTN, which is a fully integrated tax platform to deal with all
aspects of GST.
These are possible only if the actual benefit of GST is passed on the final consumer .
There are other factors, such as seller’s profit margin , that determines the final price of
goods. GST alone does not determine the final price of goods.
DISADVANTAGES OF GST
1. Real-Estate will be impacted highly: One of the biggest cons of the GST can be
seen in the Real-Estate market and the effects will be very negative. As per GST, the
tax for a new home will increase to 8%, which will decrease the demand for a new
home to up to 12%, so isn’t that a big blunder in the Real-Estate market.
2. Same laws with a new package: Some of the experts who are saying that the GST
is just like an old wine in a newly polished bottle. They are claiming that the features
of GST which are SGST, IGST, and CGST are the same as the existing tax system. So
ultimately it’s just coming with a new name having same features.
3. Services will be costlier: The tax system before the implementation of GST was of
15 % and with the new GST, the tax has been increased to 18%. So many other services
are effected and the costs of them are increased like airline, telecom, and banking. Some
other heavily affected services are petroleum and insurance.
4. Businessmen will be affected: After the implementation of GST, the control of a
business in a state is in the hands of state or central government. The businessmen are
bound with law so they cant to their thing like they did before. Many businessmen in
the country has already risen question over the system.
5. Credit mismatch for income tax: The tax system is changing so surely for some
time people have to pay high taxes. So this is another big problem for the general
citizen.
Meanwhile, we can see the bonding between the state and the central government a lot
better already.
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TYPES OF GST
I. CGST (CENTRAL GOODS AND SERVICES TAX)

a. Levied by central government.
b. On any intra state transaction.(within the state)
c. It is being shared with SGST.(Intra transaction)
d. CGST has replaced with Service tax, Excise Duty, Customs Duty, Central Sales
tax, etc.
II. SGST (STATE GOODS AND SERVICES TAX)

a. SGST is levied by state , where the goods are being sold or purchased or
services are provided.
b. It is levied on Intra state transactions.
c. The rates are equal to CGST.
d. The State government collects entire revenue under SGST.
e. The following taxes were subsumed : Luxury tax, Entertainment tax, State tax,
VAT.
III. IGST (INTEGRATED GOODS AND SERVICE TAX)

a. IGST is applicable on inter states.(between two state)
b. Transaction of goods and services (as well as imports)
c. In case of sea, Nautical Miles(12 to 200) IGST will be payable.
d. It is collected by Central government, later on distributed to respective states.
e. It is charged when a goods or services is moved from one state to another.
IV. UTGST (UNION TERRITORY GOODS AND SERVICE TAX)

a. UTGST is applicable on goods and services supply within 5 union territories
of India. (Andaman & Nicobar Island, Dadra & nagar haveli, Lakshadweep,
Daman & Diu and Chandigarh.)
b. This will be charged in addition to CGST.
c. Delhi and Puducherry have their own legislature, so SGST is applicable.
d. For any Transaction within a Union Territory = CGST+UTGST)
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FRAMEWORK OF GST AS INTRODUCED IN INDIA
1. DUAL GST
India has adopted a Dual GST model in view of the federal structure of the country.
Tax is imposed concurrently by the centre and state , i.e. Centre and state
simultaneously tax goods and services. Now the centre also has the power to tax intra-
state sales & states are also empowered to tax services. GST extends to whole of India
including the state of Jammu and Kashmir.
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2. CGST/SGST/UTGST/IGST
GST is destination based tax applicable on all transactions involving supply of goods
and services for a consideration subject to exceptions thereof. GST in India comprises
of Central Goods and Services Tax (CGST)-levied and collected by Central
Government , State Goods and Services Tax (SGST) – levied and collected by State
Government/Union Territories with legislatures and Union Territory with Goods and
Services (UTGST) -levied and collected by Union Territory without Legislatures, on
intra-state supplies of taxable goods or services.
Intra-State Supplies of taxable goods or services are subject to Integrated Goods or

services Tax (IGST). IGST is the sum total of CGST and SGST/UTGST and is levied
by centre on all inter-state supplies.
3. LEGISLATIVE FREAMEWORK
There is single legislation – CGST Act, 2017 – for levying CGST. Similarly, Union
Territories without State legislatures [Andaman and Nicobar Islands, Lakshadweep,
Dadra and Nagar Haveli, Daman and Diu and Chandigarh] will be governed by UTGST
Act, 2017 for levying UTGST. States and Union territories with their own legislatures
[Delhi and Puducherry] have to enact their own GST legislation for levying SGST.
Though there would be multiple SGST legislations, the basic features of law, such as
chargeability, definition of taxable event and taxable person, classification and
valuation of goods and services, procedure for collection and levy of tax and the like
would be uniform in all the SGST legislations, as far as feasible. This would be
necessary to preserve the essence of dual GST.
4. CLASSIFICATION OF GOODS AND SERVICES
HSN (Harmonised System Of Nomenclature) is used for classifying the goods under
the GST.
A new Scheme of classification of services has been devised wherein the services of
various description have been classified under various sections , headings and groups.
Each group consist of various Services Codes. (Tarif)
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5. COMPOSITION SCHEME
In GST regime, tax (i.e. CGST and SGST/UTGST for intra-state supplies and IGST
for inter-state supplies) is payable by every taxable person and in this regard
provision have been prescribed in the law.
However, for providing relief to small businesses, primarily manufacurers,

suppliers of food articles, traders, etc., making intra-state supplies, a simpler method
of paying tax is prescribed, known as Composition Levy. Further, for small services
providers also, a scheme prescribing concessional rate of tax has been formulated.
6. EXEMPTIONS
Apart from providing relief to small scale business, the law also contains provisions
for granting exemption from payment of tax on essential goods or services.
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1.10 WHAT IS REAL ESTATE?
The term ‘real estate’ is defined as land, including the air above it and the ground below
it, and any buildings or structures on it. It is also referred to as realty. It covers
residential housing, commercial offices, trading spaces such as theatres, hotels and
restaurants, retail outlets, industrial buildings such as factories and Government
buildings. Real estate involves the purchase, sale, and development of land, residential
and non-residential buildings. The main players in the real estate market are the
landlords, developers, builders, real estate agents, tenants, buyers etc. The activities of
the real estate sector encompass the housing and construction sectors also. The real
estate sector in India has assumed growing importance with the liberalization of the
economy. The consequent increase in business opportunities and migration of the
labour force has, in turn, increased the demand for commercial and housing space,
especially rental housing. The real estate sector is one of the most globally recognized
sectors. Real estate sector comprises four sub sectors - housing, retail, hospitality, and
commercial.
The growth of this sector is well complemented by the growth of the corporate
environment and the demand for office space as well as urban and semi-urban
accommodations. The construction industry ranks third among the 14 major sectors in
terms of direct, indirect and induced effects in all sectors of the economy. It is also
expected that this sector will incur more non-resident Indian (NRI) investments in both
the short term and the long term. Bengaluru is expected to be the most favoured property
investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi
and Dehradun.
In History of the Indian Real Estate sector, The Real Estate Regulations and
Development Act (RERA) 2016 proves to be a revolutionary Act. It is introduced to
boost the investment in real estate sector and also to protect home buyers interests. The
Act encourages fair practices in the Real Estate Sector and aims to improve
transparency. The Act applies to new projects as well as the projects under construction
(which were to be registered before 31st July 2017). Commercial and Residential
projects are included under this act as well as Real Estate Agents or brokers are also
included under the umbrella moreover, the developers will have to submit the project
layout, government approvals and land title status the regulatory authority.
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The complexity of GST for real property is highlighted with the varying treatment
of commercial and residential sale and rental. For example, the sale of a commercial
property is classified as either a taxable supply or a GST free supply; whilst the
commercial rent is considered a taxable supply only. However, residential property
sales and residential rent is generally considered an input taxed supply unless the
property is sold as new residential where the application would be a taxable supply.
Vacant land can fall into all three classifications of taxable supply, input taxed
supply and GST-free supply. Farmland can generally be considered a GST-free
supply but there are some exemptions which might require the treatment to be a
taxable supply. These significant differences between the treatment of GST for real
property is dependant on the GST status of the vendor and the category of supply
sold to the purchaser. However, the valuer who uses historical sales data to
determine a comparable sales analysis and to determine the capitalisation rate
method for commercial properties is provided with little evidence or information
with regards to the GST status of the vendor, or the GST component in the recorded
sale price of properties.
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IMPACT OF DEMONETIZATION ON REAL ESTATE SECTOR
The real estate sector will remain the worst hit by demonetization as most of the
transactions that take place happen via cash and there is also a huge involvement of
black money. However, most of such transactions happen in secondary sales market
where a major chunk of transactions happens via cash. In simpler words, the resale
properties market will for sure take a major hit.
Experts also predict that the luxury segments of the residential segment in real estate
will also witness a major impact as this too has a number of transactions that happen
via cash. A very small part of the transactions happens via legal banking channels in
this segment. The demonetization will also show a dip in the luxury property prices by
about 20 %-30 % as most of the sellers try to offload the properties so that they can
generate liquidity. This, in turn, provides more options for the home buyers.
Experts also state that as the black money is being wiped out from the market, a number
of investors who have invested with unaccounted money will be eliminated from the
system and this will provide the real estate sector with the much-awaited correction.
COVID-19 IMPACT ON INDIAN HOUSING MARKET

The Coronavirus spread has further delayed a recovery that might have seemed possible
because of various government launched measures to revive demand though right now
it doesn’t seem like prices will go down immediately. Niranjan Hiranandani, national
president, NAREDCO, states that “Salvaging Indian realty, the second-largest
employment generator is critical, not only from the GDP growth perspective but also
for employment generation, since the sector has a multiplier effect on 250-plus allied
industries.”
The centre in the recent past had announced higher tax breaks and lower interest rates
on home loans to make purchases more lucrative, apart from setting up an Rs 25,000-
crore stress fund for stuck projects.
The demand slowdown in the residential segment has already curtailed housing sales,
project launches and price growth in India’s residential realty sector, which has been
reeling under the pressure caused by mega regulatory changes caused by the Real Estate
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Regulatory Authority (RERA), the goods and services tax (GST), demonetization and
benami property law.
According to rating agency ICRA, the pandemic, if not contained soon, would not only
significantly impact the economy but also adversely hit developers’ cash flows and
project delivery capabilities.
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CHAPTER NO.2
RESEARCH METHODOLOGY
2.1 INTRODUCTION
Research Methodology is a way to systematically solve the research problem. Research

is essentially an investigation, a recording and analysis of evidence for the purpose of
gaining knowledge. It is important for research to know not only the research method
but also know methodology. “The procedures by which researcher go about their work
of describing, explaining and predicting phenomenon are called methodology.”
Methods comprise the procedures used for generating, collecting and evaluating data.
All this means that it is necessary for the researcher to design his methodology for his
problem as the same may differ from problem to problem. Data collection is important
step in any project and success of any project will be largely depend upon how much
accurate you will be able to collect and how much time, money and Data effort will be
required to collect that necessary data, this is also important step.
collection plays an important role in research work. Without proper data available for
analysis is you cannot do the research work
2.2 TYPES OF DATA COLLECTION
Data can be defined as the quantitative or qualitative values of a variable. Data is plural
of Datum which literally means to give or something given. Data is thought to be the
lowest unit of information from which other measurements and analysis can be done.
Data can be numbers, images, words, figures, facts or ideas. Data in itself cannot be
understood and to get information from the data one must interpret it into meaningful
information. There are various methods of interpreting data. Data Sources are classified
into Primary and Secondary data.
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2.3 IMPORTANCE OF DATA AND DATA COLLECTION
Data is one of the most important and vital aspect of any research studies. Researches
conducted in different fields of study can be different in methodology but every
research is based on data which is analyzed and interpreted to get information. Data is
the basic unit in statistical studies. Statistical information like census, population
variables, health statistics and road accident records are all developed from data
2.4 TYPES OF DATA
• PRIMARY DATA
Primary Data constitute first-hand information which is collected for the first
time in order to solve research problem. Primary Data is important as it gives
reliable factual first-hand information for research purpose. Primary data are
collected exactly as per the data needs of research work/project under
consideration. Primary Data is costly and time consuming. Primary data has not
be changed or altered by human beings, therefore its validity is greater than
secondary data.
• SECONDARY DATA
Secondary data are easily or readily available in the published form and are used
for the conduct of research activity. This data are not collected by the researcher
through survey, etc. but are actually borrowed by the researcher for his research
purpose. Secondary data are supportive in character. Secondary data may not be
sufficient to meet the data needs of the research project. Secondary data are
available in published form so, data may be old and out-dated.
2.5 DATA COLLECTION

The research is conducted on the basis of Secondary data collected from the various
books, National and International Journals, GST Act, Research Papers, Government
reports, Working Papers, websites and other references etc.
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2.6 OBJECTIVE OF THE STUDY
GST has been one of the key reforms in the Indian Real Estate sector. GST has
completely altered the way the real estate sector used to work and made the taxation
system much clearer and hassle free for the buyers. Mentioned below are the objectives
based on which the study has been conducted:
a) To understand the basic of GST.

b) To study the objective of GST.
c) To explore the present condition of Real estate sector.
d) To analyze the impact of GST on Indian Real Estate Sector.
e) To study whether impact are positive or negative.
2.7 NEED OF THE STUDY
The Need of study have to fill the gap that has identified in the previous researcher.
Under this study we know that how much level of GST impact on the real estate and
analyze whether this impact are positive or negative.
2.8 SCOPE OF THE STUDY
a. It covers the aspects of Indian Real Estate sector scenario (during pre and post GST
implementation).
b. To highlights the impact of GST on real estate sector.
2.9 LIMITATIONS OF THE STUDY
a) The collection of primary data has not been undertaken in this study due to time
constrain.
b) The present paper highlighted the impact of GST on the real estate sector.
25
CHAPTER NO.3
LITERATURE REVIEW
The proposed is likely to change the whole scenario of current indirect tax system. It is
considered as biggest tax reform since 1947. Currently, in India complicated indirect
tax followed with imbrication of taxes imposed by unions and states separately. Experts
says that GST will more affected in real estate sector which help the economy to grow
in more efficient manner.
➢ DR. R. Vasanthagopal (2011) studied and stated that adopting GST against current
complicated indirect tax system in India will be great step in booming Indian
economy. Success of GST will lead to its acceptance by more than 130 countries in
world and a preferred form of indirect tax system in Asia also.
➢ Panda and Ratel (2015) analyzed the impact of GST (Goods and Service Tax) on
Indian Tax scenario. They have detailed brief description of the historical Indian
taxation system and its tax structure. Then the need arose for the change in tax
structure from earlier to GST model. GST has been discussed in detail in this paper
by the authors as the background, silent features and the impact of GST in the
present tax scenario in India.
➢ Gurnam Chand stated that demonetization has signaled an end of an era of cash
transactions in Indian Real Estate. Conclusion from the paper were that consumer
is the king again-with the reduction of unaccounted cash, the end user would be the
prime focus of attention for builders and developers. Black money out, technology
in-over the years, some firms have been developing propriety technology to brings
in a fair and easy payment system for real estate transactions.
➢ Agogo Mawuli (2014) stated ,“Goods and Service Tax-An Appraisal” and found
that GST is not good for low-income countries and does not provide broad based
growth to poor countries. If still these countries want to implement GST then the
rate of GST should be less than 10% for growth.
26
➢ Dani S (2016) A research paper on an Impact of Goods and Service Tax (GST) on
Indian Economy stated that GST would be impact negatively on the real estate
market. It would add up to 8% to the cost of new homes and reduce demand by
about 12%.
➢ Firth, (2012) GST on financial services as always been a subject matter of great
debate. There is a problem in taxing financial services due to their intangible nature,
the confusion around the location of services provider and services recipient and
the value of the services. The authors in their paper are trying to address these issue
specially for the country of Canada. In Canada, there is an exemption for financial
services, intermediary services in relation to financial services etc. The authors in
their paper have discussed the existing laws and suggested changes to the existing
laws for better efficiency in taxing financial services.
➢ Shripad S. Merchant, Rajesh Pednekar studies the state wise dilutions and
violations of the previous provision of The Real Estate Act (RERA) 2016 passed
by the parliament came to a conclusion that Central Government has to come out
with clear directives to achieve the objectives behind the law.
➢ Mansor, (2013) GST has always been considered as a tool in the hands of any
government to increase revenue. The Malaysian Government introduced the said
tax in Malaysia in order to reduce its budget deficit. The authors in the paper have
discussed the readiness of the Malaysian economy in adopting the said newly
introduced GST along with the reactions of various sections of the society.
➢ Empowered Committee on Goods and Services Tax (2007)

To achieve further significant breakthrough and the next logical step towards a
comprehensive indirect tax reforms in the country, Sri P. Chindambaram , the Union
Finance minister, announced during Central Budget 2007-08 to the effect that GST
would be introduced from April 1, 2010 and an Empowered committee would work
27
with the Central Government to prepare a road map for introduction of GST in India.
After this announcement the Empowered Committee of State Finance Minister
decided to set up a Joint working Group on May 10, 2007. The Joint Working Group
after intensive internal discussions as well as interaction with experts and
representatives of Chambers of Commerce and Industry submitted its report to the
Empowered Committee in November 2007. Deliberations and discussions are going
on continuously to work out a mechanism to introduce GST. Recently in the Budget
speech , during July 2014, the Finance Minister Mr. Arun Jaitly has announced that
the GST would be roled-out by the end of the financial year 2014-15(at central level).
➢ Huang, (2013) The authors examine the relation between the newly introduced
GST in Australia in 2000. And the mortgage costs between 1999 and 2001. The
study concludes that given that in Australia financial services industry is taxed on
input taxation basis i.e. the output mortgage services is not liable to GST and GST
paid on input services to provide these mortgage services are also not allowed. This
extra cost of sunk input tax is passed in the form of increased mortgage costs to
customers making housing costly post introducing of GST in Australia.
➢ Sam Chopra, (July 2017) Real estate sector has implications on developers, buyers
encompassing cost of land, material and building cost. The cost of materials in the
course of GST has undergone some minor changes like cement, paints and plasters
to be taxed at 28% while iron material at the rate of 18%, building houses with high
quality material may alleviate the overall cost as most of the materials fall in the
28% tax category. Also the service charge given to the realtor for assistance in
buying or selling the house, which is 15% now will considerably rise to 18% with
GST.
➢ FICCI (April 2013) emphasized GST to be a necessary condition for achieving

double digit growth in India, provided all the stakeholders are prepared for the
change.
➢ Kumar (2014) highlighted role of GST in eliminating economic distortions by

enabling the developing a unified national market with a common tax rate.
28
➢ Rizwana (2016) found GST to have a positive impact on the employment and
economic stability, thus improving the growth prospects of India.
➢ Herekar,(2012) The Ministry of Finance had set up the Task Force with Mr. V.
Kelkar as the chairman of the Task Force. The main task of the task Force was to
evaluate the impact of the proposed GST on the Indian Economy. The author in the
paper has studied the different parts of GST and their impact on the common man,
the business and the economy. The author has concluded based on secondary data
that if GST is introduced in India, it would have a positive impact on the overall
economy.
➢ Shrikant Paranjape (2017) the President of CREDAI Pune Metro, maintains that
“The impact of the GST on property prices will be difficult to gauge at this stage
because of the lack of clarity on abatement for land value. In a product, where the
major raw material is not covered by the GST and the completed unit is also not
covered by the GST, the input tax benefit will be hard to calculate or justify. Only
the market forces, the ready reckoned rates and times, will decide whether and how
much benefit will be passed on by the developers to the purchasers.”
➢ Niraj Dhar Dubey, DR. Devesh Kumar, aims at understanding the effect of
taxes that were levied earlier and effect of GST on Real Estate in the present
scenario. GST along with the present changes in the real estate sector may slow
down the growth in the short run but in future, these changes will be beneficial
for the growth of the sector.
➢ Ms. Shalini R, Dr. Mahua Biswas aims at studying the impact of GST on
construction. They stated that cost of under construction residential until will
increased the post GST implementation.
29
➢ Anurag P Iyer, Samar Singh Rajput studied and mentioned that many parts of
the provision are matter over which the Union are not holding exlusive
jurisdiction they need to be brought to light and an effective solution needs to be
implemented.
➢ Dr. Ansuman Sahoo, Anasuya Swain, this paper is an analysis of the impacts
and implications of GST on industrial sectors. It is noted that, buoyed by the
success of GST, more than 140 countries have introduced GST in some form or
other and is fast becoming the preferred form of indirect taxes in Asia Pacific
region.
30
CHAPTER NO.4
DATA ANAYLSIS
4.1 PRESENT CONDITION OF REAL ESTATE SECTOR IN

INDIA
The real estate sector is one of the most recognized sectors across the world. In India it
is next to agriculture sector i.e. second largest sector in terms of employment
generation. The growth rate of this sector is expected at 30% over next decade. Real
estate sector comprises four sub sectors - housing, retail, hospitality, and commercial.
The growth of this sector is well complemented by the growth of the corporate
environment and the demand for office space as well as urban and semi-urban
accommodations. The construction industry ranks third among the 14 major sectors in
terms of direct, indirect and induced effects in all sectors of the economy.
It is also expected that this sector will incur more non-resident Indian (NRI) investments
in both the short term and the long term. Bengaluru is expected to be the most favoured
property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai,
Goa, Delhi and Dehradun.
The Indian real estate sector market is expected to touch US$ 1 trillion by 2030 and
contribute 13 per cent of the country’s GDP by 2025. Retail, hospitality and commercial
real estate are also growing significantly, providing the much-needed infrastructure for
India's growing needs. Indian real estate increased by 19.5 per cent CAGR from 2017
to 2028.
In the period FY2008-2020, the market size of this sector is expected to increases at a
compound Annual Growth Rate (CARG) of 11.2%. Retail, hospitality and commercial
real estate are also growing significantly ,providing the much needed infrastructure for
India’s growing needs.
Mumbai is the best city in India for commercial real estate investments, with return of
12-19 per-cent likely in the next five years, followed by Bengaluru and Delhi-National
Capital Region (NCR), sectors such as IT and ITeS, retail, consulting and e-commerce
have registered high demand for office space in recent times. (IBEF, Dec 2016).
31
RECENT DEVELOPMENTS IN INDIAN REAL ESTATE SECTOR
Real estate sector of India is witnessing a transitional phase. With the implementation
of Real estate Regulation & Development Act (RERA), Real Estate Investment
Trust(REIT), GST, Benami Transactions(Prohibition) Amendment Act, Change in
Accounting standards IFRS and Affordable housing project of the government the
players of the real estate sector has to formulate their plans and strategies accordingly.
Following are the areas where the sector can feel the affect.
➢ Global capital flow into Indian real estate will increase.

➢ Developers will revamp their business models.
➢ Affordable housing will have the important place.
➢ More industries consolidation, Mergers and Acquisition.
➢ REIT will be acting as growth catalyst.
SOME OF THE MAJOR AND DEVELOPMENTS IN THIS SECTOR ARE AS

FOLLOWS:
➢ First REIT raised Rs 4,750 crore (US$ 679.64 million) and was launched earlier
in 2019 by the global investment firm Blackstone and realty firm Embassy
group.
➢ In January 2019, Ascendas acquired Chennai's Pallavaram IT Park for US$
35.70 million.
➢ Iconic RK Studios property which is located in suburban Chembur, acquired by
Godrej Properties.
➢ New housing launches across top seven cities in India are expected to increase
32 per cent year-on-year by 2018 end to 193,600 units.
➢ In September 2018, Embassy Office Parks announced that it would raise around
Rs 52 billion (US$
➢ 775.66 million) through India’s first Real Estate Investment Trust (REIT)
listing.
32
➢ New housing launches across top seven cities in India increased 50 per cent
quarter-on-quarter in April-June 2018.
➢ In May 2018, Blackstone Group acquired One Indiabulls in Chennai from
Indiabulls Real Estate for around Rs 900 crore (US$ 136.9 million).
➢ In February 2018, DLF bought 11.76 acres of land for Rs 15 billion (US$ 231.7
million) for its expansion in Gurugram, Haryana.
BEFORE GST:
To understand the impact of GST first we have to go through the previous charges that
were levied on buying & selling of properties. For this the data of major cities have
been taken into consideration.
Tax & Bengaluru Mumbai Pune Chennai Gurugram

Charges
VAT 4.0% 1.0% 1.0% 2.0% 4.0%
Service Tax 4.5% 4.5% 4.5% 4.5% 4.5%
Stamp duty 5.7% 5.0% 5.0% 7.0% 6.0%
Registration 1.0% 1.0% 1.0% 1.0% 0.5%
charges
Total 15.2% 11.5% 14.5% 14.5% 15.0%
Taxation
It is clearly visible that tax and charges lies somewhere in between 11.5% to 15.5%.
AFTER GST:
Residential buildings which are intended to be sold to the buyers, partly or wholly, will
attract 12% GST. However full input tax credit will be available to the sellers. Four
states with non-composite VAT, the transaction value changes marginally from 10-11%
to 12% under the new tax regime. With input cost credits available.
Earlier states with composite VAT require developers to pay lower VAT rates on the
total property value without any input tax benefit or partial benefit. Under this regime,
developers pass on the transaction cost VAT (1%) and Service tax(4-5%) to buyers
(total 5-6%). Developers get offset for only the input service tax component. In GST
regime, the transaction cost increases to 12% with input credit available on both service
33
and material. Property transaction costs will increase by 6% in case no input credit is
passed on by the developers. If developers pass on the input credit to buyers, the
property price increase could be restricted to 1-2%.
Net Effect: If the developers pass on the credits completely and bring down the base
prices, then, Home buyers may marginally get benefit under the GST regime.
Nevertheless, stamp duty will continue to be applicable, irrespective of whether the
property is under-construction or constructed, in the pre-GST and post-GST regime.
Under the GST regime, many of the construction materials are under the 18 & 28
percent slab. For example , steel and steel products, are mostly in the 18% segment and
cement and prefabricated structural components for building or civil engineering, are
in the 28% slab. However, as the input tax credit is available on products utilized for
construction, the overall tax incidence is neutralized.
GST RATES FOR REAL ESTATE- INPUT MATERIALS
Description of goods Rate
Steel 18%
Cement 28%
Marble and granite 28%
Block of marble and granite 12%
Sand lime bricks and fly ash bricks 12%
Natural Sand, Pebbles, gravel 5%
Lifts and elevators 28%
34
4.2 IMPACT OF GST ON REAL ESTATE SECTOR
Goods and Services Tax (GST) came into effect in July 2017 and it has been a game
changer across all sectors of our economy. Real Estate being one of the larger sectors.
Meant to do away with the multiple taxes like VAT , Service Tax and others.
Real Estate is one of the most important sectors of Indian Economy and accounts for 6-
8% of its GDP. With the implementation of GST , the country stands to witness some
significant changes in this sector. The Impact of GST on real estate has been
phenomenal. Real Estate which used to be taxed at the rate of 12% is now taxed at the
rate of 5% and real estate giants believe that this compilation of taxes into a single unit
has indeed helped boost the sector and accelerate growth. Although taxes such as Stamp
Duty and Registration charges, and those associated with construction materials remain
separate, GST still helps to bring together a composite system of taxing with some
lucrative perks in this sector. Thereby, boosting investments in this sector, particularly
in the Rental Markets, especially in the case of properties rented for residential
purposes.
The highlight of the GST regime for the Real estate sector is the availability of Input
Tax Credits (ITC) paid on inputs, capital goods and input services. Under the erstwhile
regime, developers would be liable to pay a multitude of taxes such as VAT, Central
Excise, Entry Tax, LBT, Octroi, Service Tax, etc., the credits of which were not freely
available against the output tax liability. However, the GST regime provides for ITC
eligibility on construction and other services procured, thereby eliminating the
inefficiency ushered in by the cascading.
This paper attempts to shed light on the impact of GST thus far on the real estate sector
and highlighting the key issues.
A properties i.e. prior to the receipt of Occupancy Certificate (OC). Under GST, the tax
rate has been pegged at 18% (or 12% for specified affordable housing projects), with a
standard 33% abatement being provided towards the value of the land. Thus, the
effective GST rate for sale of under construction properties is 12%/8% of the entire
agreement value as compared to around 5.5% (i.e. 4.5% Service Tax and 1% VAT
under the composition scheme with limited credits) under the erstwhile indirect tax
35
regime. Needless to say, GST levy is over and above the stamp duty (around 5%)
payable on the agreement value.
VARIOUS TAXES APPLICABLE IN A RESIDENTIAL REAL ESTATE

TRANSACTIONS:
1. Service Tax – If you are purchasing an under-construction property, developer will

have to charge you service tax and deposit it with central government. This tax was
not applicable till 1st July 2010. The key reason for the same was contract between
builder and buyer for construction of residential unit was disputed as works contract
as it also includes value of land. Hence rules regarding taxes on work contract were
not applicable on residential complex construction. In finance act 2010, government
added an explanation to definition of construction of residential complex and made
it deemed service. For the simplicity sake government has given abatement of 3/4th
of cost of unit as land and goods for construction and only 1/4th of the cost of unit
is treated as service. Hence presently most homebuyers are paying 3.75% of cost of
unit as service tax (1/4th of 15%). Recently service tax on under construction
property has again been put under question as Delhi High Court ruled against this
and matter is sub-judice at Supreme Court of India.
2. VAT (Value Added Tax)- If you are purchasing an under-construction property,

you will have to pay additional VAT in some states such as Karnataka, Haryana and
Maharashtra. Developers charge this value added tax and deposit it with state
government. VAT has also been under dispute for long time and still there are many
states such as UP who do not charge VAT. Also unlike service tax there is no
uniform way of computing VAT across states. E.g. in Maharashtra under
composition scheme VAT is charged as 1% of agreement value whereas in Haryana
the same proposal was passed but not yet agreed by developers. In Karnataka VAT
is charged at 5% of agreement value of unit. To calculate accurate value of VAT
and not use composition scheme, developers will have to maintain proper accounts
of goods purchased for construction and VAT paid by them for the same to get input
credits which is cumbersome and makes it tough for buyers to understand.
36
3. Stamp Duty – Stamp duty is charged by state government, again at varying rates,
for registration of sale agreement for real estate transactions.
Incidentally if you are buying a ready to move-in property directly from developer
after he has obtained completion certificate from authority, you don’t need to pay
service tax and VAT hence saving 3.75% to 9% of property cost depending on state
where you are buying property.
Now lets understand how GST will impact these three taxes. Service Tax and VAT
will be replaced by Central GST and State GST whereas stamp duty stay unchanged
as it is out of purview of GST.
POSITIVE IMPACT OF GST IN INDIA:
• GST is a single taxation system that will reduce the number of indirect taxes.
From now, a single taxation term would cover all of those indirect taxes.
• The Prices of products and services would reduce , thus this system would
prove to be beneficial for the people who are fed up of paying high prices.
• This would reduce the burden from the state and the central government. With
the introduction of GST, all indirect taxes would come under a single roof.
• GST would not be charged at every point of sale like other indirect taxes so
in this way, market would be developed.
• Corruption-free taxation system. GST would introduce corruption-free
taxation system.
NEGATIVE IMPACT OF GST IN INDIA:
• The introduction of GST in the country will impact real estate market. This
would increase new home buying price by 8% and reduce buyers’ market by
12%.
• GST is a mystifying term where double tax is charged in the name of a single
tax.
• Most of the dealers don’t pay central excise tax and cheat the government by
simply giving the VAT. But all of those dealers would now be forced to pay
GST.
37
WHY GST WILL HAVE A POSITIVE EFFECT ON THE REAL ESTATE

SECTOR IN INDIA
1. Low cost on under construction
GST will lower rate on items like cement, steel etc leading to considerably lower
construction costs. This will lower the real estate prices and eventually be a benefit to
the common man.
GST, it is generally crucial in the real estate industry to have a uniform tax base. The
real estate developers currently pay tax even on the purchase of their raw material. GST
addresses such issued by making all the taxes uniform.
2. Revenue Neutral Rate
The method of tax operation in the real estate sector does not sync between the VAT
and Service Tax laws. Such a problem can be mitigated with the help of GST that would
help keep one transaction system- Revenue Neutral Rate (RNR) which is decided by
the State Goods and Service(SGST) and the Central Goods and Service tax (CGST)
departments.
3. Ease Compliances
With the help of GST , it will be easier to maintain an audit trail for better control and
monitoring, and completely benefiting the Indian real estate sector . It will effectively
reduce the complexity of compliance bringing in efficiency and smooth transaction.
38
GST ON UNDER CONSTRUCTION PROPERTY- AFFORDABLE HOUSING
It is important to note that if GST exemption is extended to affordable housing projects

(affordable housing is currently exempted from service tax and a clarification is
expected from the government for exemption from GST), then, affordable homes may
become cheaper under the GST regime.
GOVERNMENT DIRECTS BUILDERS NOT TO CHARGE GST ON

AFFORDABLE HOUSING
The government, on February 7, 2018, asked builders not to charge any Goods and
Services Tax (GST) from home buyers, as the effective GST rate on almost all
affordable housing projects is eight per cent, which can be adjusted against the input
credit. It said builders can levy GST on buyers of affordable housing projects, only if
they reduce the apartment prices after factoring in the credit claimed on inputs.
In its last meeting on January 18, 2018, the GST Council had extended the concessional
rate of 12 per cent GST, for construction of houses under the Credit-Linked Subsidy
Scheme (CLSS) to promote affordable housing, which has been given infrastructure
status in 2017-18 Budget. The effective GST rate, however, comes down to eight per
cent, after deducting one-third of the amount charged for the house/flat, towards land
cost. This provision was effective from January 25, 2018.
39
4.3 IMPLICATIONS OF TAXATION OF THE VARIOUS REAL ESTATE

TRANSACTIONS UNDER GST:
1. The pre-GST taxability of Real Estate Transactions
Nature of Duty Rate of Tax When was tax required to be paid?
or What triggered tax?
VAT* 1 to 4% On Sale of Under Construction Properties
Service Tax 4.5%
Registration Charges 0.5 to 1%
Stamp Duty Charges* 5 to 7%
* VAT, Registration Charges, Stamp Duty Charges vary from state to state
VAT was not applicable on completed or ready to sale properties
Under the erstwhile indirect tax regime, Cenvat Credit on inputs used for the
construction of a building or a civil structure or any part thereof was restricted too.
40
2. Taxability of Real Estate Transactions under GST
Particulars Applicability Rate Input Tax

of Credit
Tax
On ready-to-move Not applicable – Because Sale of – Not

(RTM) properties for building is treated as activity or available
which completion transaction which shall be treated
certificates are issued neither as a supply of good nor a supply
of service as per SCHEDULE III of
CGST Act,2017
On Under Construction Applicable as supply of services as per 8%* Available

Properties (For Homes Schedule I of CGST Act, 2017
Purchased Under Credit-
Linked Subsidy Scheme)
On Under Construction Applicable as supply of services as per 12% Available

Properties (Other than Schedule I of CGST Act, 2017
above)
On resale properties Not applicable – Not

available
On Land purchase and Not applicable. As per Schedule III, sale – Not
sale of land is neither supply of goods nor available
services.
Works contract Applicable 18% Available
Composite supply of Applicable 18% Available

works
Contract
41

works
Contract to Government
Authorities

works contract – for use
by general public

works contract –
Affordable Housing
NOTE: The homes purchased under the Credit-Linked Subsidy Scheme (CLSS)
attracts 12% GST rate. The applicable rate will be 8% after cutting the 1/3rd amount
towards the cost of land.
3. Impact on Buyers
Under the earlier tax regime, buyers had to pay VAT, Service tax, Registration charges & Stamp
duty on purchase of properties under construction. Also since VAT, Registration charges &
Stamp duty were state levies, prices of properties varied from state to state. Moreover,
developers had to pay various duties like sales tax (CST), custom duty, OCTROI etc. for which
credit was not available.
Under GST, a single tax rate of 12% is applicable on properties under construction while GST
is not applicable on completed or ready to sale properties which was the case in previous law.
Hence buyers will benefit from reduction of prices under GST.
In the short-term, buyers may stick to “wait and watch” approach to gain more understanding
on the impact of GST on property prices and defer buying decision.
Also, in the long term, GST will a positive impact on buyers if the benefit of input tax credit
received by the developer is passed on to the buyer.
42
4. Impact on Builders / Contractors
Under the previous tax regime, developers had to bear Excise duty, VAT, Customs duty, Entry
taxes etc. on raw materials / inputs and Service tax on various input services like approval
charges, architect professional fees, labour charges, legal charges etc. ITC was not available
for duties like CST, Customs duty, Entry Tax etc. This would impact the pricing and
subsequently the burden was transferred to the buyer.
Under GST, developers’ construction costs are significantly reduced as multiple taxes are
subsumed and due to the availability of input tax credit. Also, reduction in cost of logistics will
be an added benefit. Hence developers may see improvement in margins.
On the downside, developers have to do multiple calculations to arrive at ITC in order to pass
it on to the buyers. Hence, in most cases, they can pass on the ITC only during the final stages.
This lack of transparency on ITC, may affect the developers since buyers may resort to “wait
and watch” approach and defer buying decision.
And, in the erstwhile laws, a large portion of expenditure remained unrecorded in the books.
Under GST, availability of credit on inputs and cloud storage of invoicing has reduced under
recording of expenditure.
5.Impact on other Stakeholders
The impact on the allied services like labour, material suppliers, service suppliers etc.
depends on the increase or decrease in the tax levied on these goods and services. This
will have a consequential impact on real estate industry as a whole.
For example, earlier cement was taxed at an effective rate of 27-31 percent which will
now be taxed at 18 percent. Increase in cement prices will result in consequential
increase in the overall cost of construction.
43
GST Rates for some of the goods relating to the construction industry are given below:
Product Rate of GST
Sand 5%
Sand & Fly ash Bricks 12%
Steel 18%
Paints 18%
Marble and granite 28%
Cement 18%
6. Reverse Charge Mechanism (RCM) & its Impact
The concept of RCM has been borrowed from the erstwhile Service tax law. The scope
of RCM has significantly expanded in GST which may adversely impact the
developers.
One of the significant additions to RCM under the GST law is, if goods are procured /
service are received from a person who is not registered under GST, a registered person
under the GST has to pay GST on all such supplies.
In cases where services are received from goods transporters, legal services received
from an individual or firm, services received from the government or local authorities,
like municipalities, etc. (subject to exceptions), developer has to pay the GST on the
same.
44
Also, under GST, the developer cannot adjust the tax payable under RCM against the
input credit available from the GST paid on the inputs. Instead, it has to be paid by
cash/bank payment.
This will increase the costs and has a negative impact on the developers, especially the
small developers.
7. Treatment of Input Tax Credit, Eligibility and Ineligibility
GST is built on the foundation of a liberal credit regime i.e. to allow credit of all goods
and services with minimal restrictions. GST law allows ITC of GST paid on inputs,
input services and capital goods against the construction / works contract services
provided by developers. However, the GST law restricts ITC of GST paid on goods and
services procured for construction of a building which is used for one’s own account.
The interpretation of the term “used for own account” is unclear as it ideally should
mean a building which is used for own business and not sold. However, the situation
when the building is leased out is unclear. Thus, properties developed for leasing/rental
purposes may not be entitled to ITC even though the rental income generated is taxable
under GST. Credit restrictions would also apply to commercial constructions or
immovable property (if it does not constitute “plant and machinery”) used in the course
or furtherance of business, thereby
increasing costs substantially. This is against the fundamental principle of free flow of
credits. Under the erstwhile service tax regime, restriction to avail ITC was only on
works contract services and not all goods and services.
Purchase and sale of lands/plots is a common phenomenon in the real estate industry.
As such sale of land is not considered as supply of goods/services and outside GST.
Contrary to this, GST law deems sale of land as an exempt supply and mandates
proportionate reversal of common credits. This would result in an increase in tax cost
as the credit attributed towards the sale of land shall be non-creditable. The effective
GST rate for sale of real estate sector is 12%-8% while the median rate of tax on
inputs/input services may be at 18-20% (cements, plywood, etc.) or 18% (subcontractor
services, etc.). This may result in accumulation of credit due to an inverted duty
structure (especially in affordable housing projects which attract tax at 12%). It would
45
be imperative to determine whether refunds under inverted duty structure would be

available, and if yes, would be computed at a registration level.
Under GST, credit of taxes charged on all input and /or input services which are used
or intended to be used in the course of furtherance of business would be available subject
to exceptions.
Conditions for Claiming ITC
A registered person will be entitled to claim input tax credit only upon fulfillment of
the following conditions:
He has the possession of tax invoice (purchase invoice) / debit note.
He has received the goods and /or services or both;
The tax charged on such supply is paid to the Government by the supplier.
The goods and services should not have been used for personal use.
Restriction on ITC
Input tax credit is not available on supplies received for construction of an immovable property
on his own account other than plant and machinery
NOTE: The word “construction” includes reconstruction, renovation, additions or alterations

or repairs to the extent of capitalization to the said immovable property.
8. Taxability of liquidated damages, cancellation charges, etc.

Developers may recover liquidated damages from their vendors i.e. subcontractors, etc.
for delay in delivery, performance issues, etc. Such damages may also get adjusted from
the invoice, thus resulting in net billing/payment. Taxability of liquidated damages/
cancellation charges have been matter of litigation even under the erstwhile indirect tax
regime. Given the wide coverage of the definition of services, the ambiguity on their
taxability continues even under the GST regime. In case of taxability of the same, it is
likely that the developer may have to bear the tax cost since the compensation/charges
would always be inclusive of taxes (unless recovered separately). The taxability of
liquidated damages/ cancellation charges have been matter of litigation even under the
46
erstwhile indirect tax regime. It has been clarified in an Advance Ruling2 that levy of
GST on liquidated damages would be covered under Schedule II entry no. 5(2)(e).
9. Decentralised GST registration

Due to the concept of decentralized registration under GST, every real estate developer
will be required to obtain registration in every state where construction projects have
been undertaken. It will be an arduous and a tedious task for the companies to execute
with the compliance requirements such as returns, maintenance of separate records, etc.
for each state. It should be noted that a proposed amendment to section 25(2) could
potentially allow registration at the project level within a state. This will need to be
analysed to generate any potential benefits.
Owing to the complications and ambiguities in relation to tax credits, etc. developers
may intend to explore the option of project wise registrations. An analysis is required
to ensure that credit accumulated on closure of one project does not lapse where
multiple projects are under the same GSTIN, as compared to separate registrations
obtained for each project.
10. Applicability of Stamp Duty
For the limited purpose of calculating the GST, stamp duty and registration charges
are excluded.
Stamp duty will continue to be applicable on both completed properties and under-
construction properties as was the case with pre-GST regime.
11. Place of provision of supply
The place of provision for services in relation to immovable property is the location of
the immovable property.
There may be possible issues where a single contract is entered into for provision of
services related to
47
immovable properties across two or more States. For example, in case of works contract
services, facility
management services, etc. outsourced to vendors, typically a single contract may be

entered into with the
vendor for which consolidated invoices may be raised at one location. Under GST, since
immovable property
may be located in more than one State, the place of supply would be each such State
where the immovable
property is located and hence, there may be a requirement for the vendor to raise
separate invoices (for which
separate contracts or invoicing may also be required).
12. Anti-profiteering
Anti-profiteering provisions mandate passing on the tax benefits arising from GST to
the customers by way of price reductions. Implementation of the anti-profiteering
provisions is one of the key areas of conversation
amidst the industry players. While the regulations seek to prevent entities from making
excessive profits on
account of GST implementation, an overarching anti-profiteering provision under the

GST law without clear
guidance or explicit rules has led to considerable ambiguity, primarily on account of

the following:
a. The level of granularity of anti-profiteering analyses i.e. at aggregate company level,

project level.
b. Whether the Indian tax payers can rely on mechanisms followed in other jurisdictions
which recently
48
introduced GST and had similar anti-profiteering provisions (such as Australia/

Malaysia).
c. Whether transition costs incurred by the Company on account of GST

implementation may be absorbed
while computing the anti-profiteering obligations.
d. On which date such price reductions were/ are to be made effective.
The first administrative instruction4 on anti-profiteering was issued by the Government

for the real estate
sector. Recently, the National Anti-Profiteering Authority (NAPA) has issued few
orders – eg. one for a
company dealing in automobiles5 and another for one engaged in rice business6. In
both these cases, the
authority ruled in the favour of the companies. However, it is not clear from the rulings
as to exactly how the
revised price computations were carried out by the companies and how this
computation may differ basis the
nature of the product and business.
The sale price for the flats are dynamic and based on various factors i.e. saleable area,
floor and location,
payment terms, etc. In the absence of specific instructions, it would be difficult to

determine the benchmark
pre-GST price for passing on the benefit by reduction in prices.
The developers will have to rework their costing from scratch in order to ensure that
the benefit of reduced
costs is passed on to the customers to avoid defaulting under the anti-profiteering rules.
This could prove to be
49
a hassle for many developers especially in case of on-going projects on the appointed
day of GST roll-out.
13. Adjustments for cancellation of bookings, rebates etc.
The construction projects in the real estate sector are spread over a span of couple of
years. Consequently, the
taxability of the same is also spread across the years based on billing milestones
(defined in the development
agreement). Cancellation of booking after 1-2 years is a common event in real estate
industry where the amount
paid by the customer may be refunded in whole, or in part by the developer after
retention.
Further, offering rebates (like timely payment rebate, early move-in rebate, etc.) is also
prevalent in
the industry. However, the time limits prescribed under the law for issuance of credit
notes would lead to tax loss in many cases (as tax would have been paid but no
adjustment would be available). Thus, the issuance of credit notes on account of
cancellation of contracts or as a result of rebates offered pose a challenge for tax
adjustments on the refundable portion and this will increase tax burden on end customer
only as developer would not be in position to refund the tax amount back to customer.
50
4.4 IMPACT ON RESIDENTIAL REAL ESTATE

If we look at the residential property sector, sales are not just impacted by tax rates
but also by sentiment, and also on account of the trust deficit which the Real Estate
Regulation & Development Act - or RERA - now seeks to address. That said, if costs
do go higher under GST, the lower prevailing current home loan rates could assuage
the impact to some extent.Buyers and investors as well as developers are
understandably worried that the final ticket size of homes will increase even if the
Government levies GST at 12%, when compared to the existing service tax rates.
Developers are still awaiting further clarity on this, but they know that it is in the
interest of their business to keep ticket sizes range-bound. Evolving market dynamics
have already brought about a change in the manner in which developers work. Staying
customer-centric and delivery-focused to create a differentiated identity will be the
most logical and likely method for them to adopt.
IMPACT ON RENTAL HOUSING

Other doubts pertain to the rental housing market, which would naturally be impacted
if the Government were to tax residential leases under GST. The common
apprehension is that if this were to happen, the rental housing segment may see a huge
slump over the medium-term, since residential leases are currently not taxed at all.
Here, it is pertinent to note that residential leasing is an inherent demand which will
not evaporate merely by by higher taxes. Certainly, we may be looking at a rental
stagnation or marginal decline as the market readjusts to the new dynamics which
GST will infuse. However, rental housing demand is sticky and end-user-driven in
nature, so we are definitely not looking at a major slump in this segment because of
GST even if it does tax residential leases.
That said, rental yields in major cities could certainly moderate if GST is levied on
rental housing. In India, rental yields in housing are quite modest at around 2-4% on
an average. Rents may either hold steady or decline marginally due to increase in
housing stock. However, it is also true that most investors in the residential sector do
not invest for rental yields but rather for the capital value appreciation, so reduced
rental yields would not independently impact sentiment.
51
IMPACT ON REAL ESTATE BUYERS & INVESTORS
Under the earlier law, buyers were liable to pay taxes depending on the construction
status of the property, i.e., whether the property was under construction or complete.
When purchasing a property under construction, a buyer was subjected to the payment
of VAT, service tax, stamp duty, and registration charges. Properties purchased after
completion were exempt from VAT and service tax, and only stamp duty and
registration charges were payable. Moreover, the state where the property was located
was also a relevant consideration because VAT, stamp duty, and registration charges
— all being state levies — varied from state to state.
The biggest takeaway is that GST is a simple tax that applies to the overall purchase
price. All properties under construction will be charged at 12 percent of the property
value. This excludes stamp duty and registration charges. For completed properties, the
earlier provisions will continue and buyers will pay no indirect tax on sale of ready-to-
move-in properties.
IMPACT ON DEVELOPERS
Previously, developers were liable to pay customs duty, central excise duty, VAT, entry
taxes, etc. on construction material costs. They also had to pay a 15 percent tax on
services like labor, architect fees, approval charges, legal charges, etc. Eventually, this
tax burden was transferred to the buyer.Under the new regime, however, the changes
in construction costs are not as difficult. For instance, cement will now be taxed at the
rate of 28 percent under GST. This is higher than the current average tax rate of
approximately 23-24 percent, but a lot of additional taxes charged over the average rate
will now be subsumed under GST. Iron rods and pillars used in the construction of
buildings are now charged at the rate of 18 percent, which is less than the previous
average rate of 19.5 percent.
Furthermore, the reduced cost of logistics will result in a reduction of expenses as well.
The input tax credits will also help in increasing profit margins. A developer will be
entitled to take input credits on the sale of property under construction against the taxes
that are paid by the buyer. All this is expected to bring down the project cost to the
52
developers, and the developers will have to pass on the benefit of the price reduction to
the buyer.
Prior to GST, a huge percentage of each real estate project expenditure went unrecorded
in the books. GST will cut down this percentage due to cloud storage of invoicing. The
real estate sector will also benefit with the new tax law having a positive effect on all
ancillary industries since this sector has a stimulating demand for more than 250
ancillary industries.
4.5 INPUT SERVICE DISTRIBUTOR (ISD) CONCEPT
Under GST, an ISD concept has been proposed for transferring the tax credit of input
services between two or more locations. Any supplier of goods or services can be
considered an ISD. An ISD can transfer credit for all types of GST, including CSGT,
SGST, or IGST. Further, an ISD can be any supplier of goods or services. Considering
the possibility of multiple state registration, an ISD could be used as a tool to ensure
optimal utilization of head office related credit, resulting in actual cost reduction.
Furthermore, assesse of a reasonable size having ISD facility will have to file 61 returns
in a year.
4.6 COMPLIANCE REQUIREMENTS
Compliance requirements are bound to increase in the GST era, however, so businesses
will need to gear up. All assesses (including composite dealer) will now be required to
file annual returns on or before 31st December following the relevant financial year.
Moreover, assesses must file annual returns for each registered branch and warehouse.
There is a mandatory audit requirement by Chartered Accountant or Cost Accountant
where the registered entity’s aggregate turnover during financial year crosses Rs 1
crore. In cases where an audit is mandatory, the annual returns need to be accompanied
by a copy of the audited annual account and reconciliation statement that reconciles
annual returns audited accounts.
53
4.7 SWOT ANALYSIS
A SWOT analysis is a compilation of your company's strengths, weaknesses,

opportunities and threats. The primary objective of a SWOT analysis is to help
organizations develop a full awareness of all the factors involved in making a
business decision. Perform a SWOT analysis before you commit to any sort of
company action, whether you are exploring new initiatives, revampi internal
policies, considering opportunities to pivot or altering a plan midway through its
execution. Use your SWOT analysis to discover recommendations and strategies, with
a focus on leveraging strengths and opportunities to overcome weaknesses and threats.
A SWOT (strengths, weaknesses, opportunities and threats) analysis is a planning
process that helps your company overcome challenges and determine what new leads
to pursue.
The primary objective of a SWOT analysis is to help organizations develop a full

awareness of all the factors involved in making a business decision. This method was
created in the 1960s by Albert Humphrey of the Stanford Research Institute, during a
study conducted to identify why corporate planning consistently failed. Since its
creation, SWOT has become one of the most useful tools for business owners to start
and grow their companies.
54
1. STRENGHTS
1) It will dropping out the cascading effects of tax on production and distribution
of goods and services which will competitiveness and consequently, GDP will
increase.
2) It will apply all goods and services except some exempted products.
3) Tobacco is not exempted from the area of GST. It is treated as Sin goods and
come under the taxation with central excise tax.
4) Natural gas, Aviation Turbine Fuel (ATF), High Speed Diesel (HSD), Crude
oil, Petrol products are exempted till the GSTC (Goods and Service Tax
Council) discloses date of their formation.
5) Alcohol, real estate, custom duty and electricity are exempted from GST.
(Proposed article, 366 (12A)
6) GST would be dual taxation system. It would be charged intra-State by

Central and State governments. It would be called CGST (Central Goods and
Service Tax) and SGST (State Goods and Service Tax).
7) Sufficient availability of raw material and natural resources in the country is

supportive for the industry.
55
2. WEAKNESS
1) The doorstep goal is very ground level for traders and service providers.
It will raise appropriation of government ways and means which are
costlier than government’s revenue.
2) GST is a subsume of various States and Central taxes like excise duty,
cess, service tax, countervailing duty etc., but many more are left which
should be included like electricity, alcohol etc.
3) GST for States and Central (SGST, CGST) seems to be different, further
it can be diversified on the basis of location, geographical structure etc.
4) The tax rate is depends upon availability of fund in States. The States has
power to increase the rate according to their need.
5) This system is very fond of technology, but India is a developing country

where people are not habitual of technology.
6) High amount of money need to be invested which lead to high level risk.
7) Absences of Sales/Marketing expertise.
8) Purchase and Maintenance expenses of construction equipment are high.
56
3. OPPORTUNITIES
1) The rates of tax are set at ground level which will help States and Unions to
collect more revenue.
2) It will reduce the transaction costs and wastages of scare resources because
at a one registration people can do transactions from States and Unions. So, it
will connect the whole nation from a single click.
3) In indirect tax structure multiple taxes were charged from taxpayers. But GST
will eliminate the taxes on chain of transactions.
4) GST is also known as “One Point Single Taxation System”. This is a helping
hand for businessman’s, they can come to agreement on price modalities, supply
chain etc., without thinking too much about taxes imposed on them at later
stages.
5) GST will reduce average tax burden of consumers. They will be certain about
their taxes which will reduce evasion of taxes.
6) GST can provide the opportunity of Corruption Free Indian Revenue

Services. The root of corruption found in political system. It will bring
transparency in Indian political system.
57
4. THREATS
1) Inter-States supply of goods and services are considered as import and IGST
will be applied (1%) in addition to custom duties.
2) The Central government promised for compensation to loss making States

for a period of 5 years. The compensation will be as: 100% for first 3 years, 75
% for 4th year and 50% for 5th year. So, it is possible that all States does not
implement it in effective manner to get compensation.
3) GST is not friendly with banking sector. Because the cost of goods become
cheaper after GST and it will promote export. Presently, 14% service tax is
being levied on baking transactions. GST will make these transactions more
costly. Over and above, in most of countries banking sector is excluded from
GST.
4) GSTC (Goods and Service Tax Council) will set the benchmark for resolving
the dispute on recommendations of GSTC. It means GSTC will lay down the
criteria for GSTC itself. It is against the principle of natural justice.
5) GST is not a guarantee in itself that it would not be influenced by political

parties and politicians will not use it as a win-loss game.
58
4.8 PESTAL ANALYSIS
PESTLE analysis, which is sometimes referred as PEST analysis, is a concept in

marketing principles. Moreover, this concept is used as a tool by companies to track
the environment they’re operating in or are planning to launch a new
project/product/service etc.
It is estimated that the size of the real estate sector may increase five fold to reach
USD676 Billion by 2025. Real estate firm DLF Ltd, Supertech ltd., Ansal Properties &
infrastructure ltd., Parasvanath developers Ltd., Unitech, Omaxe Ltd. And so on has
been playing a significant role in shaping up the real estate since inception. The Make
In India intiative has helped to accelerate leasing of commercial property by the
manufacturing sector. India’s Prime Minister MR. Narendra Modi approved the launch
of Housing for All by 2022.
• POLITICAL ANALYSIS
1) The Smart City Project
2) The Make in India initiative
3) Brihanmumbai Municipal Corporation (BMC) has introduced a single
window clearance for construction
4) The Rajya Sabha or the Government of India has brought into force the Real
Estate (Regulation and Development) Act, 2016.
5) The Securities and Exchange Board of India (SEBI) has proposed easier
regulations for real estate investment trusts(REITS).
• ENVIRONMENTAL ANALYSIS
1) As per the new draft notification, no new commercial Activity will be
allowed within the eco sensitive zone.
2) The local economy had lost about RS. 2000 crore in several months of the
ruling.
3) Projects of 45 developers including Jaypee, Amrapali, ATS, Logix, Ajnara
etc. were impacted.
4) Sales of inventories and progress of several projects drastically effected.
59
• SOCIOLOGICAL ENVIRONMENT
1) Demographic:
India represents 17.5% of the global population.
2) Education:
The adult literacy rate in 2006 was 62.8%.
3) Health:
In India, 29.8% population lives below the national poverty line in 2010.
4) Jobs in India:
The employment rate in 2011 for the population aged 15 and above in
53.6%. The unemployment rate of labour force is of 3.6%.
• TECHNOLOGICAL ENVIRONMENT
1. Usage of internet for booking, renting and buying property online. Some
of the top players of web based real estate companies are 99 acres,
Housing.com and commonfloor.com.
2. Change in construction pattern over the years which resulted in high raised
earthquake resistant buildings.
3. Usage of pre fabricated construction and dry wall technology have been
introduced to India Malaysia, Thailand and China.
4. Studio apartments are in trend for fully automated functioning.
• LEGAL ENVIRONMENT
Introduction of Real Estate Regulatory Bill
1. Depreciation
2. Consolidated Financial Statement (CFS)
3. Dividend
4. Financial statement authentication and board’s report Corporate Social
Responsibility(CSR)
5. Restriction on non cash transaction involving directors
6. Loans and Investments by Company
60
• ECONOMICAL ENVIRONMENT
1. New investments proposed by the government such as RS.7060 crore to
build 100 smart cities.
2. Investment friendly tax reforms can act as an economical tool to revive
almost dead Indian economy.
3. Ease of availability of financiers will aid the government in achieving its
home to all by 2022 program.
4. FDI norms have been modified to attract foreign players in Real Estate
Sector.
61
CHAPTER NO.5
5.1 CONCLUSION
From the above discussion , it is clear that GST can be considered as simple tax system
to work with as it has replaced all other prevailing Indirect taxes. This tax system aims
at removing every possibility of duplication of taxes. It is expected to be a confidence
booster for the industry. It will attract the interest of buyers and investors by bringing
more transparency in the taxation system. It will benefit both buyers and sellers.
A seller can take the input credit on the sale of under construction property against the
taxes paid by the buyer. Earlier, VAT and service tax used to be around 9% of the ticket
price of the property. Now that will be lower than GST applied to the sector, the builder
will have to pass on the benefit of the price reduction to the buyer. The price reduction
will be the result of the input tax credit that the builder will avail.
Earlier builders were charged for central Excise duty, VAT and entry taxes collected
by the state on construction material cost earlier. Further, they were charged @15% tax
on services like labour, architect fees, approval charges, legal charges etc. However,
under the new regime the changes in construction costs are not such big. Reduced cost
of logistics will result in reducing expenses as well. The input tax credits will also help
in increased profit margin.
Overall the GST will be easier taxation system to work with. Finally, we can conclude
that GST along with the present changes in real estate sector may slow down the pace
of growth in the short run but in future, these changes will be beneficial foe the growth
and consolidation of sector.
62
REFERENCE
1. http://www.thehindu.com/news/cities/chennai/gst-and-real-
estate/article19185900.ece
2. https://housing.com/news/gst-real-estate-will-impact-home-buyers-industry/
3. https://www.ibef.org/industry/real-estate-india.aspx
4. http://realty.economictimes.indiatimes.com/realty-check/here-s-how-gst-will-
impact-the-real-estate-sector-in-india/1740,www.ibef.org, Dec 2016.
5. http://indiaexpress.com/article/what-is/what-is-the-gst-impact-on-real-estate/
6. R & Biswas 2016, “IMPACT OF GST ON INDIAN REAL ESTATE
SECTOR”.IJBARR
63

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PRAHLADRAI DALMIA LIONS COLLEGE OF COMMERCE AND ECONOMICS

1.1 CONCEPT OF TAX

1.2 BRIEF HISTORY OF TAXATION

IMPACT OF GST ON REAL ESTATE SECTOR

WHY ARE TAXES LEVIED?

WHAT ARE THE REASONS OF TAXATION?

1. Provide the basic facilities for every citizen of country.

1.3 MEANING OF TAX

Tax can be defined in following ways:

“Taxes are the price we pay for a civilized society.”

Tax in general, is the imposition of financial charge upon an individual or a company

IMPACT OF GST ON REAL ESTATE SECTOR

1.4 DIFFERENT TYPES OF TAXES

Taxes are broadly classified into Direct and Indirect taxes.

IMPACT OF GST ON REAL ESTATE SECTOR

1.5 FEATURES OF INDIRECT TAXES

IMPACT OF GST ON REAL ESTATE SECTOR

1.6 ADAVANTAGES OF INDIRECT TAXES

2. Invisible Burden On Consumer/Producer

3. Wider Tax Base

5. Low Collection Costs

IMPACT OF GST ON REAL ESTATE SECTOR

7. Tax On Luxury/Harmful Items

1.7 DISADVANTAGES OF INDIRECT TAXES

IMPACT OF GST ON REAL ESTATE SECTOR

1.8 BACKGROUND OF GOODS AND SERVICES TAX IN

• Budget Speech 2004-05

NEED FOR GST

IMPACT OF GST ON REAL ESTATE SECTOR

IMPACT OF GST ON REAL ESTATE SECTOR

DIFFICULTIES OF OLD INDIRECT TAX SYSTEM

WHY GST IN INDIA?

It will boost domestic consumption of goods by 7 to 10 times as it will bring in

GENESIS OF GST IN INDIA

IMPACT OF GST ON REAL ESTATE SECTOR

IMPACT OF GST ON REAL ESTATE SECTOR

1.9 GST IN INDIA- AN INTRODUCTION

IMPACT OF GST ON REAL ESTATE SECTOR

• One country–one tax

• To eliminate cascading effect of indirect taxes/ doubling tax/ tax on tax

• Subsume all indirect taxes at central and state level

• Reduce tax evasion and corruption

IMPACT OF GST ON REAL ESTATE SECTOR

Removal of cascading effects of taxes .i.e., removes tax on tax.

IMPACT OF GST ON REAL ESTATE SECTOR

I. CGST (CENTRAL GOODS AND SERVICES TAX)

II. SGST (STATE GOODS AND SERVICES TAX)

III. IGST (INTEGRATED GOODS AND SERVICE TAX)

IV. UTGST (UNION TERRITORY GOODS AND SERVICE TAX)

IMPACT OF GST ON REAL ESTATE SECTOR

FRAMEWORK OF GST AS INTRODUCED IN INDIA

IMPACT OF GST ON REAL ESTATE SECTOR

Intra-State Supplies of taxable goods or services are subject to Integrated Goods or

4. CLASSIFICATION OF GOODS AND SERVICES

IMPACT OF GST ON REAL ESTATE SECTOR

However, for providing relief to small businesses, primarily manufacurers,

IMPACT OF GST ON REAL ESTATE SECTOR

1.10 WHAT IS REAL ESTATE?

IMPACT OF GST ON REAL ESTATE SECTOR

IMPACT OF DEMONETIZATION ON REAL ESTATE SECTOR

COVID-19 IMPACT ON INDIAN HOUSING MARKET

IMPACT OF GST ON REAL ESTATE SECTOR

IMPACT OF GST ON REAL ESTATE SECTOR