Mr Sachin Sandhir, Global Managing Director, Emerging Business, RICS.
RICS, the world’s leading self-regulatory professional body for qualifications and standards in land, property, construction and associated environment issues, in association with RICS School of Built Environment, Amity University has recently announced the release of a white paper titled ‘Decoding GST and Real Estate Regulation’. The document was released by Shri Rajiv Ranjan Mishra, Joint Secretary (Housing), Ministry of Housing and Urban Alleviation, Government of India in the presence of Mr Sean Tompkins - Global CEO, RICS, Ms Amanda Clack FRICS - President, RICS & Partner & Head, Infrastructure - E&Y and Mr Sachin Sandhir, Global Managing Director, Emerging Business, RICS.
The white paper explores the nuances of the impact of GST and Real Estate (Regulation and Development) Act on the real estate sector and examines specifically if there are any issues that could cause ambiguities or discrepancies in the sector.
As per findings from the white paper, Goods and Services Tax (GST) could shift focus of real estate developers towards the high volume, low to medium income segment. Mr Sachin Sandhir, Global Managing Director – Emerging Business, RICS said, “GST will lower real estate costs for the affordable segment of housing while increasing costs for the premium segment. A large part of the real estate market- almost 70 per cent, is skewed towards middle to high income segment of housing. We might see developers (especially smaller developers) shift their focus to low income housing to gain from GST”.
Shri Rajiv Ranjan, Joint Secretary, (Housing), Ministry of Housing and Urban Alleviation, Government of India while releasing the white paper said, “The attempt has been made in the real estate act to balance the requirements of all the key stake holders namely consumers, developers as well as real estate agents. We expect much more professionalism is going to come as we start progressing on this implementation of this act and ultimately, we may have a situation where projects are delivered as contemplated as per the time lines. Two of the states, Gujarat and UP also notified the rules before 31st October and many states are also at the advanced stage. We expect that the implementation of the act will start at the field level at the earliest and the benefits will start accruing to the sector, consumers, developers, everyone.”
The white paper concludes that GST by itself cannot be treated as a panacea to real estate market woes – both for the buyer as well as for the seller or developer. Broader policies in land and housing/ commercial stock management, ensuring availability of appropriate financing resources etc. will be just as important to leverage the opportunity posed by GST. Real Estate (Regulation and Development) Act, 2016, the other law that will have a long lasting impact on the real estate sector will help in ensuring that real estate projects get completed on time. Provisions in the Act such as imposition of similar penal interest for developers and homebuyers will incentivise timely delivery of projects, says the white paper.