India’s real estate sector has witnessed a number of developments in a short span of time. The country is on a growth spree. Rapid urbanisation is the buzzword. Housing for All is the ultimate dream. Even though demonetisation did have a slumping effect on the economy, it bounced back once Real Estate (Regulation and Development) Act, 2016 (RERA) and Goods and Services Tax (GST) kicked in. These two incredible initiatives have injected the required strength for the economy to turnaround.
Of course, there still is a little bit of uncertainty prevailing in the market. It is only a matter of time that homebuyers, developers, and every other real estate player are on the same page. It is widely believed by many that RERA and GST will go a long way in ensuring efficiency and transparency in the economy. They are also expected to instil buyer confidence, and also boost investments in the real estate industry. In short, this is an evolving phase for the economy. Hopefully, things will change for the better in coming months and years.
While GST has freed investors and buyers from the clutches of numerous state taxes at various levels, RERA has proved instrumental in fuelling the growth of the real estate sector in general. GST has removed the double taxation impact, while RERA has provided homebuyers and developers a level-playing field, ensuring time delivery of projects, fair practices and clarity. Homebuyers’ interests are now protected. Errant developers will be penalised. Due to RERA, developers and buyers will have the same type of information regarding projects.
Buyers now have more housing finance options due to more requirements for homes and advent of affordable housing. Realty will soon pick up more pace. In order to reduce the overall cost of a home, the high cost of construction and land must come down. RERA will likely align the sector and make this possible. A reduction in transfer of development rights (TDR) and ready reckoner rates will solve the problem to a great extent. Developers have responded well to RERA and GST. They won’t likely pass any extra burden to the end consumer.
GST is expected to make the construction sector flourish. The current rate for under-construction development assets is 12 percent on the property value. This includes land. Developers are now liable to input credit for paying excise on steel, fittings, cement etc. These costs were included in the cost of property. GST will benefit the NRI community greatly, boosting foreign investment. NRIs will now have a flawless, all-inclusive channel.