GST Regime - Beneficial for Real Estate Buyers

The launching of GST is one of the biggest tax reform in India after independence. It replaces the complex and multiple taxes levied by the state and the central governments on the end consumers. It is to subsume all the indirect taxes like central excise duty, VAT (Value Added Tax) – calculated on material cost, commercial tax, service tax (calculated on labor or service) and octroi charges/taxes. The predominant philosophy of GST is 'One Nation, One Tax'.

The overall benefits for the economy will be:
• Easy compliances
• Create a uniform tax rate and structures
• Elimination of previous cascading tax structure
• Helps in reducing additional tax burdens on consumers
• Widening of the tax base
• More tax collection

The two most crucial points of the GST are:

The introduction of Input Tax Credit, in which the credits of input tax paid at each stage of the production or service delivery, can be availed in the further stages of value addition. Due to this, the end consumer will bear only the GST charged by the last dealer in the supply chain, meanwhile, it will have all the benefits of the earlier stages.

To make sure that the developers, manufacturers and service providers pass on the benefits to the end consumers, an Anti Profiteering clause in the GST Bill under section 171 of GST law is made. This makes them mandatory to pass on the benefit of tax reduction due to input tax credits to the final customers.

The implementation of GST will bring significant transformations in the real estate sector of India, in coming times.


Along with the GST, another unprecedented move in the history of Indian Real Estate property sector is the enactment of latest Real Estate and Regulation Act (RERA). It has already started addressing the issue of non-transparency and enforces a level of accountability on the real estate builders and brokers. For Residential property sector buyers, this will definitely act as a positive sentiment booster. This will subsequently benefit all the Residential real estate sector stakeholders.

Benefits to Buyers:

Simple & transparent taxes are applied to the property purchase price. The under construction properties will be charged at 12%, which is lower than the ready-to-move-in houses or projects.
• The buyers (consumers or builders) have to pay only a single tax on the materials and labors.
• There is no GST for Affordable housing projects which come under affordable housing schemes.
• The multiple taxations occurring, in tax cascadation during the transportation and in the logistics are reduced in the present GST regime.


There might be a marginal impact on the real sector in the short term due to a lot of confusions and implementation hurdles. But in the long term, future prospects are definitely bright for Real Estate sectors as the trust quotient of consumers/property buyers, on the builders and construction sector will improve.

The combined effect of simplified tax structure and the accountability affixed on the real estate developers, fixed at every stage will surely bring, cheers to both buyers and builders in the long run.