How will GST influence the price of homes?

The change over to the GST regime in India is certainly one of the biggest tax changes that has taken place, since our independence. From July 1 2017, GST, i.e. Goods and Services Tax will effectively cut all the Gordian knot of taxation difficulty in the country. In other words, GST will replace all the numerous taxes imposed by the state and central governments. All other tax brackets, such as commercial tax, central excise duty, indirect taxes, octroi tax/ charges, service tax and value added tax (VAT) will be subsumed under one tax – GST.

Buying a property is one of the biggest decisions that any person has to take, financially. The question that arises is, how will GST influence the price of homes? Will the price of properties reduce? As all the taxes are being cut down and combined into one, the government has introduced an anti-profiteering clause that ensures that the developers don’t pass on the benefit to their final customer.

As stated by the analysts, the implementation of GST in the real estate market will be a sentiment booster for home buyers. When it comes to the residential sector, the execution of GST will definitely have a positive impact amongst property buyers. They might face some short-term challenges because of the newly introduced tax, but the prices won’t be majorly impacted. In the short term, GST might not be helpful to bring down the prices of residential real estate.

However, in the long term, it will benefit all the stakeholders related to the residential real estate sector. This is because a simplified tax structure will be used in the sector, and at every stage, accountability will be fixed. This will help to create a level of accountability on brokers and real estate builders which is extraordinary in the history of the Indian property sector.