The Goods and Services tax is here and the entire economy is trying to figure out how it will affect the various sectors of the economy. Construction and real estate sector will also face some major changes due to the implementation of this new law. Big construction companies, like Prithvi Edifice, have many 4 BHK Duplex Flats Magarpatta City Pune currently underway, and are worried that due to the high tax rate that would become applicable on them, the cost of their properties would rise, making it difficult for them to sell off their buildings or keep up the promises that they have already made to their investors.
Understanding The Real Impact Of GST ON 4 BHK Duplex Flats Magarpatta City Pune
Till now the construction industry had to pay tax which was around 6 percent and an additional VAT charge of 1 to 2 percent depending from state to state. Under the new law, the tax rate applicable to this industry has been raised to 18%. This may seem like a steep rise, leading to a huge increase in the prices of properties. But the truth is that, in the current set up, the real estate companies like Prithvi Edifice, were unable to take the benefit of input tax credit, and hence the entire tax paid was a direct cost for them. However, under the GST rules, these companies will now be able to enjoy the full input tax credit, and thus, the actual impact of the GST tax would be neutral for these companies.
From this perspective, GST is actually more beneficial for the construction and real estate industry.