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Impact of RERA and GST on Home Buyers

by admin on July 14, 2022
Impact of RERA and GST on Home Buyers

Implementation of RERA and GST has made Real estate more attractive investment

Fundamentally, property is a safe investment because it’s a tangible asset. Due to this physical aspect, you can never lose with property even in the worst case scenario. Impact of RERA and GST on Home Buyers has made Real estate investment more attractive, due to the implementation of these progressive reforms such as the Real Estate (Regulation and Development) Act (RERA) and the Goods and Services Tax (GST).

India’s real estate sector was primarily unorganized and unregulated, leading to delays in the deliveries of projects. This affected the credibility of the sector and necessitated the need for a regulatory body, to bring transparency and protect the interests of home buyers. RERA was rolled out, to bring an effective regulatory mechanism to resolve consumer grievances faster. This has increased the sector’s transparency, accountability, and credibility, making it a buyers’ market.

Similarly, GST replaced the multiple taxation regime with a uniform and simple tax structure, promoting ease of business. Besides this, developers can now avail of 100 percent input tax credit (ITC) on raw materials, reducing the construction costs and translating into better margins. This, in turn, will help them pass on the benefits to buyers. Moreover, unlike before, when multiple taxes including VAT and service tax were levied on a home buyer, now, a uniform tax rate of 12 percent will be applicable on the purchase of an under-construction house. This will eliminate the chances of double taxation. Further, the GST for affordable housing has been reduced to eight percent, making it a win-win situation for both, home buyers and developers.

While real estate serves as an asset that can provide good yields, it is important to keep in perspective certain indices, before investing. Some of them worth considering are location, valuation of the property, the investment purpose, the expected cash flows, and appreciation, besides ensuring that the development is initiated by established developers.

The real estate sector witnessed significant regulatory changes in the recent past that are poised to define the future of this sector. Prima facie, it is evident that the Real Estate sector will be heading towards a more transparent, competitive, value offering, hassle-free and definitely will be consumer-focused. All these present a very promising future for the home buyers.


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