The Real Estate Sector is one of the most important sectors in the Indian economy. Due to rapid urbanization, economic growth and rising income levels in the country, the real estate sector has attracted significant investment over the past few years. The contribution of the real estate sector to India’s gross domestic product (GDP) has been substantial. While housing contributes approximately 5%–6% of the country’s GDP, the retail, hospitality and commercial subsectors have also grown simultaneously, meeting the increasing infrastructural requirements. The Government’s mission of Housing for All is driving the residential real estate activity, while the Real Estate ( Regulation and Development ) Act, 2016 (RERA) is making the sector more transparent.
The Construction Industry plays a very important role in the infrastructure development of our country. The nature of work carried out by the construction industry involves transfer of property in goods as well as providing of service. The taxability of transactions carried out by the construction industry has always been debatable and prone to litigation. The issues get aggravated wherein apart from movable goods and services, transfer of immovable property or land is also involved in such transactions.
During the implementation phase of GST, various issues have surfaced in taxability of transactions carried out by the Real Estate sector. The tax professionals and business community at large need to understand the complex provisions of law along with the impact thereof on the costing as well as the transaction values.
This book focuses on the recent amendments in GST law with respect to the Real Estate Sector with effect from 1st April, 2019. There is a major shift in the effective rates of tax of affordable housing apartments and other residential apartments. The benefit of Input tax Credit which was hither to available has been removed. The Ongoing projects have been given the option of either continuing with the old rates of tax by availing the input tax credit or paying tax at the new rates but without availing Input tax credit. The rates of tax for commercial units have remained the same with eligibility for input tax credit except for the commercial units in an Residential Real Estate Project.
The impact of the changes in the rates of tax , the eligibility for input tax credit, the effects on transition from old tax rates to new tax rates in case of ongoing projects have been explained with reference to the statutory provisions and comments thereon in this book. Various notifications have been issued to implement the new regime of taxation in the Real Estate sector and the effect of the various changes should be read simultaneously and not in isolation.