Mumbai, 17 April 2018: GST has simplified the tax treatment for the realty sector and has resolved some of the long-standing issues like valuation and tax type. It is seen as an additional benefit to consumers in the long term. However, the significant benefit primarily would be around increased input credit on the procurement of materials, as per a report by JLL and PwC, ‘Impact of GST on residential markets’.
Discussing the impact of GST on real estate sector, Kunal Wadhwa, Partner - Indirect Tax, PwC India said, “The impact on real estate sector has always been part of the limelight for any major reform. The implementation of the Goods and Services Tax is of no exception. While the change brings in more transparency and maturity to the sector, the requirements under the anti-profiteering law has been a contentious issue for this sector”.
Abhishek Goenka, Partner and Tax Leader - Real Estate, PwC India said, “The benefit to the end customer would be seen primarily in projects executed post implementation of GST, but the benefit may not be as significant as the Government’s expectation. The Government should engage with stakeholders to address their concerns. This would help the market gain the needed momentum as anything related to the sector significantly impacts the sentiments of the economy.”
Ramesh Nair, CEO and Country Head, JLL India said, “Goods and Services Tax (GST) has been a matter of discussion for both the demand and supply side of the real estate community. While a transparent uniform taxation system is good, the exact nitty-gritties of ‘how’ to implement this needs to be addressed swiftly. The government has issued certain circulars to set clarity in this sector, however, the need of the hour is to set up discussion forums across locations and engage with tax authorities and developers at different levels. This alone can address the concerns of this sector which plays a significant role in impacting the overall sentiment of the economy.”
Ramesh further added “GST which represents unified and simplified taxation policies of the country, will add to India’s attractiveness as an investment destination in the long run. It will further help in ease of doing business and creating transparency in processes. The benefit for the real estate sector in the future will be significant on account of growth of business and commerce in the country”
The report summarises that the end consumers may be technically entitled to some amount of relief though not significant, whereas the builders would be better off explaining the rationale of passing on or not passing on this benefit depending on their fact pattern.
About JLL India:
JLL is India's premier and largest professional services firm specializing in real estate. With estimated revenue for FY 2017-18 expected to be ~INR 3,200 crores, the firm is growing from strength to strength in India for over the past 20 years. JLL has an extensive geographic footprint across 10 cities (Ahmedabad, Delhi, Mumbai, Bengaluru, Pune, Chennai, Hyderabad, Kolkata, Kochi and Coimbatore) and a staff strength of over 9,500. The firm provides investors, developers, local corporates and multinational companies with a comprehensive range of services. This includes research, strategic advisory and consultancy, capital markets, transaction management, project and development services, integrated facilities management, property and asset management. These services cover various asset classes such as commercial, residential, industrial, retail, warehouse and logistics, hospitality, healthcare, senior living and education.
For further information visit www.jll.co.in
About PwC India:
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 158 countries with more than 236,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com
In India, PwC has offices in these cities: Ahmedabad, Bangalore, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai and Pune. For more information about PwC India's service offerings, visit www.pwc.com/in
PwC refers to the PwC International network and/or one or more of its member firms, each of which is a separate, independent and distinct legal entity. Please see www.pwc.com/structure for further details.
© 2017 PwC. All rights reserved