Eyeing Transparency in Realty Business with GST and RERA. Most of the real estate developers are registered in Maharashtra as per the Maharashtra Real Estate Regulatory Authority (MahaRERA) as of now. RERA is expected to protect the interest of the homebuyer and ensure timely delivery of projects. Both Goods and Services Tax (GST) and RERA will bring transparency in the real estate sector definitely. These acts are supposed to bring in boost within the real estate sector through their progressive and diversified roles.
Not only buyers but builders will also be benefited from these two acts. One of them such points is that RERA proposes to impose penalty on allottee for not paying dues on time. Also, the builder will have the opportunity to approach the regulator in case there is any issue with the buyer. In addition GST will help as subsume multiple indirect taxes levied on the developers.
GST and RERA are expected to actually bring down the project cost for developers which will inturn lead to cheaper homes. Both acts will provide an audit trail for better control and monitoring of the sector. Though RERA is a central law, its execution will depend on state governments, as real estate is a state subject. Advocate Parimal K. Shroff of Parimal Shroff and Co informed in an event organized by TREK (The Real Estate Kings) that, “RERA is a fabulous initiative and it will be a win-win for all the stake-holders.” He added that under RERA, all property brokers will have to register with real estate regulators in their states, thus sieving out the small-time players and consolidating major ones.
Developers have to be extra careful while uploading any documents for registration from now on. As the new orders from the RERA says that documents once uploaded by the promoter during registration or project update cannot be deleted. Advocate Anil Harish, Partner of the Law Firm, D. M. Harish and Co added, “The RERA is all set to bring in transparency into the Real Estate Sector. The act is bound to forge a symbiotic relationship between the discerning home buyers and genuine real estate developers. Specialized regulation and enforcement ensures consumer protection and fraudulent activities like money trail and curbing money laundering. The bill promotes transparency, fair and ethical practices, through disclosure of project details and contractual obligations between the project and the buyer.”
RERA and GST over all are expected to add many other rules which can regulate the real estate sector more comprehensively. Ravikumar, Director in the Indirect Tax practice of Ernst and Young said, “A simple single rate tax structure of 12% for home-buyers is a welcome move along with reduction in paper-work. GST will also help cut cash component in construction as products have to be sourced from registered vendors to get input tax credits.”
The government has informed developers to pass on any benefits that they may avail under the new tax regime to the homebuyers. Avinash Khater, who’s the chairman of TREK a group of 69 highly professional, ethical and experienced realtors of Mumbai comprising of the ‘Movers-and-Shakers’ in the real-estate consulting business said; “The real estate sector is the second largest employer in the country after agriculture and ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy. The housing sector alone contributes 5-6 per cent to the country’s Gross Domestic Product (GDP). GST and RERA will surely bring in the boost within the Real Estate sector through their progressive and diversified roles. “
After these acts are implemented the real estate market is expected to grow more for sure. The implementation of GST and RERA will ensure uniform tax rates and structures making the country tax neutral and rates stable in terms of business.