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CRITICAL ISSUES IN GST

FOR REAL ESTATE SECTOR

-Mohita Patil
WRO 0563276
Aurangabad , Maharshtra
1
Contents

 Overview ………………………………….. 3 & 4


 Taxability ………………………………….. 5 & 6
 Critical Issues …………………………….. 7 – 14
 Ray of hope ……………………………….. 15 – 18
 Different point of views ……………….. 19 – 21
 Conclusion …………………………………. 22 & 23

2
Overview of current status

 GDP from Real Estate


6-8% Contribution

3
 RERA
 Continuous Demand
 Smart City Projects
 Pradhanmantri AwasYojna
 Government Schemes

4
Taxability of Real Estate

Previous Tax Regime VAT New Tax Regime GST


 1% of transaction value  12% of value of supply
 15% service tax on  18% GST on processing
processing fees fees
 No ITC available  ITC was available
 Same for under  More complex
construction & ready to  No GST on ready to move
move properties properties
 Simpler  Shows +ve impact on real
estate sector
5
Nifty Realty showed growing trend
initially …

6
Critical issues in GST for
Real Estate Sector
 Rigid Provisions
 Input Tax Credit
 Reverse Charge Mechanism
 Registration of Place of Business and Burden
of Record Keeping
 GST Returns
 Negative Cash Flows
 Anti profiteering
7
Rigid & Complicated
Provisions

8
9
10
Registration of Place of Business
and Burden of Record Keeping

11
GST Returns Preparation

12
Buyers Under
Construction

After
Completion

Investors

Financial Institutions

13
Anti Profiteering

14
Ray of Hope

33rd GST
Council
Meeting

No
ITC
Affordable
housing

15
Affordable
Housing
Value < 45 Lakhs

Non
Metropolitan
Metropolitan
Cities
Cities

Area< 60 sq Area < 90 sq


metre metre
16
Rate of GST Under New Scheme

Does the project fits under


Affordable Housing ?

Yes No

1% w/o 5% w/o
ITC ITC
17
Benefits of New Scheme
 Simpler Compliance
 Fair Price for buyer
 Unutilized ITC
 Cash Flow Issues
 Interest of Buyers/ Consumers

18
What do we think as an
auditor?

19
What Builders and Developers
think?

20
What a Price Sensitive Buyer
think?

21
Issues remain unsolved . . .

22
Long road
ahead for
improvement!
Thank You! 23