A

Project Report On

“A Study of Impact of GST (GOOD & SERVICE TAX) on Real Estate

Industry At
Elite Properties Pvt Ltd”

Submitted by

Miss. Pratiksha Mane

Under the Guidance of

Prof. Deepika

Mirchandani Submitted

to

Savitribai Phule Pune

University

In Partial Fulfillment of the Requirements for Award of the Degree Of

Master of Business Administration

Batch (2022-2024)

Through

Trinity Institute of Management &

Research,Kondhawa, Pune411048

1
 ELITE PROPERTIES.
office No. 9 & 10 Konark Indrayu, 1st Floor, Above HDFC Bank, Kondhwa
Khurd, Pune 48. Ph:8888303175/8483933723

Company Certificate

TO Pratiksha Sampat Mane, Date: 30/09/2023

This is to certify that Miss Pratiksha Mane has completed her project work on the topic “A study
of Impact of GST (goods and service tax) on real estate company at Elite Properties”. during the
period from 1 August 2023to 30 Sept 2023. she has been sincere, hardworking, and punctual in
her work.We wish her success in future endeavors.

Company Seal.
Authorized Signatory.

2
 Student Declaration

I Pratiksha Sampat Mane, the undersigned hereby declare that the Project Report entitled A Study of
Impactof GST (GOODS & SERVICE TAX) on Real Estate Industry written and submitted by me to
the Savitribai Phule Pune University, Pune in partial fulfillment of the requirements for the award of
degree ofMaster of Business Administration. It is my original work and the conclusions drawn herein
are based on the material collected by myself.

Date:

Place: Pune Signature

3
 ACKNOWLEDGEMENT

I take the opportunity to express my gratitude to all of them who somehow helped me accomplish
this challenging project in ELITE PROPERTIES, Pune. No amount of written expression is
sufficient to show my deepest sense of gratitude to them.

I am heartily thankful to all the person who spent their valuable time and helped me a lot in
preparation of this project report.

I am grateful to Dr. Preeti Sharma and Prof. Deepika Mirchandani, for granting me approval to
undertake this project.

I would like to thank my guide without whose consent and support this project would not have been
completed.

Last but not the least, I would like to express my sincere thanks to all those people, known and
unknown, who have contributed in making this project a success directly or indirectly. Although
there may be many who remain unacknowledged in this humble note of gratitude, there are none
who remain unappreciated.

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S.N. Particulars Number of Pages
Acknowledgment 4 Pages
Annexure C (Company Certificate) 2Pages
Annexure D (Student’s Declaration) 3Pages
1 Chapter1- Introduction to Research 6-12 Pages
1.1 Executive Summary
1.2 Objectives of Study
1.3 Need/Purpose of Study
1.4 Importance of Study
1.5 Scope of Study

2 Chapter-2 Theoretical Framework Up to 12 to26 pages

3 Chapter-3 Company Profile Up to 28 to32 pages

3.1 Introduction to Company
3.2 History of Company

4 Chapter 4: Research Methodology: Up to 33 to38 pages

4.1 Introduction to Research Topic
4.2 Research of Objective
4.3 Research Design
4.4 Data Collection Sources
4.5 Literature Review

5 Chapter-5: Impact Of GST On Real Estate Industry 39 to 48 pages

6 Chapter-6: Finding & Suggestion 48 to 52 pages

6.1 Key Findings
6.2 Limitations
6.3 Conclusion
6.4 Reference

5
Chapter1- Introduction to Research

Executive Summary
Introduction of study
Objective of Study
Need/purpose of study
Importance of study
Scope of Study

6
1.1 EXECUTIVE SUMMARY

During SIP on impact of GST (Goods and Services Tax) on the real estate industry studied more about
the real estate sector and how it works and is considered as an important pillar on the economy of
any country and is also known to be a huge pillar in the economy of our country well. further
studied what is GST and Various types of GST, what were the pre- GST taxes that were imposed on
real estate sector and how it affects the profitability on real estate industry. GST has positives like
transparency and negative as well.

The project is based on secondary data. The information is collected from newspapers, articles, books,
journals etc. It helped to bring out the most accurate data, which will enable the study to vicinity of
its objectives, The data collected from the articles, textbooks etc has been appropriately analyze the
topic.

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1.2 INTRODUCTION OF STUDY
Real estate sectors consist of building, land and building under construction. There have been many point of
taxation under in this sectors both direct tax and indirect tax (GST). For example eland of sale attract capital
gain and attract direct tax under income head of Capital gain. Services of real estate like sale ready flat by
builder to buyers attract service which falls under GST. Under new GST regime rate of tax was 12 percent
under construction. In addition there was

outside GST if completion certificated has been issues. However, after comprehensive discussion GST council
again taken decision to reduced GST rate in March 2019. The rate of tax cut five per cent from twelve per
cent for residential property. There has been one percent from eight per cent in case of affordable housing
segment. There has not been availability of tax credit in new scheme.In pre-GST regime there was different
type of tax on real sector like excise duties, stamp duties, sale tax, central VAT (CENVAT) etc. In addition,
there was no ITC available these taxes. All these ambiguity and crucial procedure have been simplified under
new GST regime. All taxes have been subsumed in single unified tax and reduced number of compliances.
Stakeholder, like material suppliers, service providers also get benefit in new scheme. So that real sector is not
only connected with builders and house buyers also material supplier, service provider, transport agency,
professional etc are part of this industry.

1.3 OBJECTIVES OF THE STUDY

 To study the concept of Goods and Services Tax (GST) introduce in India.

 To understand the impact of GST on Real-Estate Industry.

 To acknowledge the advantages and challenges of GST in Real E-state

Industry.

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1.4 NEED/ PURPOSED OF STUDY

Policy Evaluation and Refinement:

Understanding the impact of GST on the real estate sector helps policymakers evaluate the
effectiveness of existing tax policies. This knowledge is crucial for refining and adjusting tax
regulations to ensure they align with the industry's needs and contribute to economic growth.

Compliance and Regulatory Alignment:

Real estate companies need to comply with GST regulations. Studying the impact allows for an
assessment of how well the sector is aligning with these regulations, identifying any challenges or
areas where compliance can be improved.

Economic Analysis:

The real estate sector is a significant contributor to the economy. Assessing the impact of GST helps in
understanding how changes in taxation influence economic variables such as GDP, employment,
and investment in the real estate market.

Market Dynamics:

GST can have a profound impact on consumer behavior and demand in the real estate market. By
studying these dynamics, industry players can anticipate market trends, adjust their strategies, and
capitalize on emerging opportunities.

Investment Decision-Making:

Investors, including individual buyers and institutional investors, rely on a clear understanding of
the regulatory landscape. Research on the impact of GST in real estate provides valuable insights for
investors, helping them make informed decisions and manage risks effectively.

9
1.5 IMPORTANTS OF THE STUDY
The Goods and Services Tax (GST) has had a significant impact on various sectors, includingthe real
estate industry. Here are some important aspects of the impact of GST on real estate companies:

Unified Tax Structure:

GST replaced multiple indirect taxes, such as service tax, VAT, and others, creating aunified tax
structure. This simplification of the tax system has streamlined processes for real estate
transactions.

Input Tax Credit (ITC):

Real estate developers can claim input tax credit on the GST paid for goods and servicesused in
construction. This can help in reducing the overall tax liability and may lead to cost savings.

Transparency and Compliance:

GST brings transparency to the tax system and encourages compliance. Real estate companies
need to comply with GST regulations, making the sector more organized and accountable.

Reduction in Tax Cascading:

GST eliminates the cascading effect of taxes by allowing businesses to claim credit for taxes
paid on input goods and services. This can lead to cost savings for real estate developers.

Impact on Affordable Housing:

GST provides certain benefits for affordable housing projects, with a reduced tax rate. Thisaims to
promote the development of affordable housing, making it more accessible to the masses.

Effect on Property Prices:

Initially, there may have been some challenges and adjustments in the real estate market due to
GST implementation. However, over time, the streamlined tax structure and input tax credit can
contribute to stabilizing or reducing property prices.

Impact on Rental Income:

GST is applicable to rental income for commercial properties, which can affect property owners
and tenants. However, residential rentals are generally exempt from GST.

10
GST Rates on Construction Materials:

The GST rates on various construction materials can impact overall construction costs.
Understanding these rates and managing the procurement of materials becomes crucial for real
estate developers.

Boost to Organized Developers:

The implementation of GST may favor organized and compliant real estate developers, leading to
a more level playing field in the industry.

Compliance Challenges:

Real estate companies need to ensure compliance with GST regulations, which can be
challenging due to the complexities of the real estate sector. Ensuring proper documentation and
adherence to GST rules is crucial.

Positive Impact on Real Estate Investment:

The implementation of GST and its positive effects on the real estate sector can boost investor
confidence. A more transparent and standardized taxation system can attract both domestic and
foreign investment in the real estate market.

Challenges and Adjustments:

While GST brings benefits, there have been challenges in the transition, especially in terms of
understanding and implementing the new tax structure. Real estate stakeholders have had to make
adjustments in their business processes to comply with GST regulations.

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1.6 SCOPE OF STUDY
The scope of the impact of Goods and Services Tax (GST) in the real estate sector is broad and
multifaceted.

Tax Liability and Compliance:

Real estate companies need to navigate complex GST compliance requirements. Understanding the
nuances of the tax structure and ensuring accurate filings are crucial to avoid penalties and legal issues.

Input Tax Credit (ITC) Management:

The availability of Input Tax Credit can significantly impact a real estate company's cost structure.
Efficiently managing ITC is essential for reducing the overall tax liability and enhancing profitability.

Construction Costs:

GST rates on construction materials and services influence the overall construction costs. Real estate
developers need to factor in these costs when planning projects, and changes in GST rates can directly
affect the cost dynamics.

Affordable Housing Incentives:

The government provides certain incentives and reduced GST rates for affordable housing projects.
The scope for real estate companies lies in exploring opportunities in this segment to benefit from
these incentives and contribute to the affordable housing initiative.

Technology and Accounting Systems:

Real estate companies have had to adapt their technology and accounting systems to comply with GST
requirements. The scope here involves investing in and implementing robust systemsthat can handle the
complexities of GST compliance efficiently.

Impact on Property Prices:

The impact of GST on property prices is multifaceted. While the implementation of GST aimed to
reduce tax cascading and make properties more affordable, the actual impact on property prices can
depend on various factors, including location and market dynamics.

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Chapter-2 Theoretical Framework

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2.1 INTRODUCTION OF GST:
The introduction GST, or Goods and Services Tax, is an indirect tax imposed on the supply
of goods and services. It is a multi-stage, destination-oriented tax imposed on every value
addition replacing multiple indirect taxes, including VAT, excise duty, service taxes, etc.

GST rate on real estate was launched in the year 2017 (1st July, 2017.

The goal of this tax system is to do away with any double taxation. Its goal is to boost industry
confidence.

India Filings (2019): The research paper, all various taxes would be merged under GST, and
all home buyers will henceforth pay a standard tax of 12% on acquiring real estate, in
addition to stamp duty.

Real estate is one of the main sectors of any country. It is often considered to be a crucial pillar
of any economy. Real estate industry contributes between 6 -8% to India’s Gross Domestic
Product (GDP) and it stands second after IT industry in terms of employment generation.

The real estate sector had taken a huge hit in the financial crisis of 2008 and has been under
stress ever since. The government has taken many measures to boost the real estate sector.

The introduction of GST has greatly impacted the real estate sector. Although it has been
introduced in 2017, in a very short span of time, the government has already implemented
many major changes to the applicable rates of GST on the real estate sector.

The Real estate industry is one of the most pivotal sectors in India and has seen a phenomenal
growth, not just in cities, but even small towns. GST is another development tthat will have
asignificant impact on this sector.

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2.2 TYPES OF GST (GOODS AND SERVICE TAX):
Goods and Services Tax (GST) is a consumption tax that is levied on the supply of goods and
services. GST is designed to replace multiple indirect taxes that were previously applicable in
many countries. There are different types or components of GST, and the structure may vary
from country to country. As of my knowledge cutoff in January2022, here are some common
types of GST:

Central Goods and Services Tax (CGST):

This component is collected by the Central Government.

Levied on intra-state (within the same state) supplies of goods and services.

State Goods and Services Tax (SGST):

This component is collected by the State Government. Levied

on intra-state supplies of goods and services.

Integrated Goods and Services Tax (IGST):

Collected by the Central Government.

Applicable on inter-state (across different states) supplies of goods and services.Replaces
Central Sales Tax in the case of inter-state transactions.

Union Territory Goods and Services Tax (UTGST):

Collected by the Union Territory Government.

Levied on intra-union territory supplies of goods and services.

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2.3 GST Rates in Real Estate

The applicable rate of GST on the real estate was earlier between the range of 8% to 12%.It was taxed
based on the type of property. These properties were also eligible to claim the input tax credit. However,
in order to boost the real estate sector, the government of India decided toreduce the rate of GST levied
on eligible real estate properties. However, such reduction is conditional and the input tax credit will
not be available at the new and revised GST rates. This change has been in effect since 1st April2019.

Type of RealEstate GST Rate Input GST Input

Property Tax Rate Tax
(in effect till
31st Credit Credit
(from
March2019)
1stApril2019
onwards)

8% Available 1% Not
Residential
availabl
Property (affordable e
housing segment)

12% Available 5% Not

Residential
availabl
Property(non- e
affordable housing
segment)

Commercial 12% Available 12% Available

Properties

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2.4 ADVANTAGES OF GST

Input Tax Credit:

Although the GST rate of 18% on the supply of works contract in the construction sector may be
higher than the previous rates, the regime of local composition schemes is over, though now they
are eligible for full input tax credit. However, many of the listed construction services such as
constructions of dams, roads etc. which were previously exempted are now under the GST purview.
This basically means the average construction contract in the previous regime which used to hover
around the 11–18% range.

Simplified Tax Structure:

GST replaces multiple indirect taxes, streamlining the tax structure and making it simpler for
businesses to understand and comply.

Boost to Economic Growth:

By promoting efficiency, reducing tax evasion, and creating a unified market, GST
contributes to economic growth and development.

Benefit to Consumers:

GST aims to bring down the overall tax burden on goods and services, benefiting
consumers by potentially lowering prices.

Global Competitiveness:

A unified tax system makes businesses more competitive globally by reducing transactioncosts
and making exports more competitive.

Positive Impact on Inflation:

GST aims to bring down the overall tax burden on goods and services. By doing so, it can have a
positive impact on inflation, making goods and services more affordable for the end consumer.

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2.5 CHALLENGES FACED BY REAL ESTATE BECAUSE OF GST
IMPLIMENTATION:

Transition Period Challenges:

The transition from the previous tax regime to GST posed initial challenges for real estate developers and other
stakeholders. Understanding the new tax structure, making necessary adjustments in business processes, and
adapting to the changes required time and resources.

Impact on Construction Costs:

Despite the provision of Input Tax Credit (ITC), there were concerns that the initial high GST rates on
construction materials and services could increase construction costs. Developers had to navigate the
complexities of ITC claims to ensure that the benefits were passed on to the end consumer.

Compliance Complexity:

GST introduced a more complex compliance structure, especially for large real estate projects. Meeting
compliance requirements, filing timely returns, and navigating the online GST portal added an extra layer of
administrative burden for developers.

Delayed Input Tax Credit (ITC) Benefits:

In some cases, delays in obtaining the benefits of Input Tax Credit affected developers' cash flows. The time
lag between incurring input taxes and claiming credits could impact project finances.

Affordability Concerns:

While GST aimed to make properties more affordable by reducing tax cascading, the impact on actual property
prices was a subject of concern. Developers had to carefully balance cost considerations and market dynamics
to avoid negative consequences on affordability.

Tax on Unsold Inventory:

Developers were required to pay GST on unsold inventory, which could lead to increased holding costs. This
provision created financial challenges, especially in a market with slower sales.

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2.6 RULES AND REGULATIONS OF GST ON REAL ESTATE:

GST Rates:

Residential Properties: GST rates on under-construction residential properties may vary. As of my last update,
a reduced rate of 5% (without Input Tax Credit) is applicable for affordable housing, and 1% for affordable
housing under the concessional scheme. Commercial Properties: The GST rate for commercial properties is
generally 12%.

Input Tax Credit (ITC):

Developers can claim Input Tax Credit on goods and services used in construction against the GST paid on
inputs, such as raw materials and services. The availability of ITC can influence the overall cost structure for
developers.

Affordable Housing Exemptions:

Affordable housing projects meeting specific criteria may be eligible for lower GST rates. Affordable housing
has been given special attention, and developers may benefit from reduced tax rates to promote affordability.

Ready-to-Move-In Properties:

Properties that have received a completion certificate or those that are ready-to-move-in are generally not
subject to GST.

Treatment of Joint Development Agreements (JDAs):

Transactions involving Joint Development Agreements were subject to clarification under GST rules. It is
essential to understand the tax implications for both landowners and developers in such arrangements.

GST on Renting of Commercial Properties:

GST is applicable to the renting of commercial properties. Owners of commercial properties are required to
collect and remit GST on rental income.

Treatment of Input Tax Credit on Unsold Inventory:

Developers are required to pay GST on unsold inventory, but they can claim Input Tax Credit on the unsold
units.

Transition Provisions:

Transition provisions were introduced to address the impact of GST on ongoing projects and inventory that
was under construction during the transition period from the previous tax regime to GST.

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2.7 IMPACT OF GST ON REAL ESTATE:

The impact of GST on the real estate sector of India is multifold and can be discussed in case of
affordable housing, luxury property, under-construction property as well as in case of registration
charges and stamp duty charges.

The impact of GST on affordable housing as discussed above has resulted in such properties being
taxed under the least tax bracket under GST i.e., at the rate of 1%. This has resulted in direct
benefits to the buyers.

In case of Luxury properties, the revised rate of taxation has resulted in the increased savings on part
of the property owners. The revised rate of GST applicable in case of luxury propertiesis 5%. However,
for such rates to be applicable, the input tax credit is not available.

The under constructions properties in India have had to face a huge set back due to a downturn in
demand for properties. The government of India has increased its efforts to boost the demand for
houses by reducing the applicable rates of GST. Another effort to boost the demand is by providing tax
benefits for the interest payments paid by the buyers. This will provide an additional incentive for the
buyers to purchase the under constructions properties. Such incentives coupled with the reduced rate
of GST ensure that the builders can sell their stock at the earliest.

The revised rates of GST do not have any impact on the registration charges or stamp duty charges.
Registration charges applicable on the eligible properties are usually 1% of the value of such properties.
This is charged by some states depending upon their laws as a way of standard fee charged in case of
sale of eligible property. The stamp duty levied on eligible properties is between the range of 5% to
10%.

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2.8 GST ON READY PROPERTIES:

If the Occupancy Certificate for the project has been received, then, no GST will be applicable. A
developer pays excise tax and VAT, on inputs like cement and steel, at 27.7 per cent and 18.1 per
cent, respectively, which vary from state to state. Now, under theGST regime, cement and steel
will be taxed at 28 per cent and 18 per cent, respectively, while other inputs like paint and white
goods, will be taxed at 28 per cent. The final product – the housing unit – will be taxed at 12 per
cent, with credit for taxes paid on inputs. As the tax levied on the entire cost including the land will
be 12 per cent, the amount would be sufficient to provide for the input credit for developers.

Hence, a buyer opting for a ready-to- move-in apartment, is saved from the tax burden. However,
the tax calculations under the GST regime, for the real estate market, are not so simple. For
example, the GST on under-construction projects will be charged to home buyers on the sale price
but the credit can be availed by the developers, only on the cost of construction. As the builder
will have to pay the GST on the full project and the input availed is only on the construction cost,
there may be a gap that is no less than 30 per cent. Consequently, construction property the
developer will hike the prices in that proportion, to make sure this gap is bridged.

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2.9 GST not applicable on sale of flats after issue of completion
certificate, Finance Ministry clarifies:

The Finance Ministry, on December 8, 2018, said the GST will not be levied on buyersof real
estate properties, for which the completion certificate is issued at the time of sale.However, the
Goods and Services Tax (GST) will be applicable on sale of under construction property or ready-
to-move-in flats, where the completion certificate is not issued at the time of sale, it said.

“It is brought to the notice of buyers of constructed property that there is no GST on sale ofcomplex/
building and ready-to-move-in flats, where the after the by the competent authority,” the ministry
said in a statement.

It further said affordable housing projects like Jawaharlal Nehru National Urban Renewal
Mission, Rajiv Awas Yojana, Pradhan Mantri Awas Yojana or any other housing scheme of
state governments, attract eight per cent GST, which can be adjusted by the builders against its
accumulated input tax credit (ITC).

For buyers, this means that either their purchase cost will increase, if they decide to purchase such a
property, or the overall spread of options will reduce. After all, not allunsold ready- to move-in
properties may possess a completion certificate.

Developers, on the other hand, may be left with no choice but to absorb the GST chargesin ready-
to-move projects that have not been given completion certificates. If they attempt to pass this
additional burden on to their buyers, their ready-to-move-in units that do not have completion
certificates will be at par with under-construction projects, in terms of the cost to buyers. The
burden of unsold inventory in the primary market is likely to increase, as more home buyers may
now consider buying resale units which are exempt from GST.

However, this announcement may be a blessing in disguise for the secondary market, as buyers
eyeing ready-to-move-in units will now certainly evaluate this option, rather than paying 12 per cent
GST on first purchase units.

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2.10 GST ON PROPERTY RENTALS:

“Credit/set-off of input GST is available to a developer, if the sale is executed prior to obtaining the
completion certificate or prior to first occupancy. However, this credit is not allowed if thedeveloper
chooses to rent out the property. Hence, we might see a spike in commercial rentals,” explains Amit
Sarkar, partner and head – indirect taxes, BDO India.

GST has also been levied on the renting of residential property, for use as an accommodation.
Consequently, tenants may witness a hike in rent payment under the GST system, as there is no service
tax applicable on residential properties, in the existing system.

GST on under construction property – Affordable housing:

It is important to note that housing projects (affordable housing is currently exempted from
service tax and a clarification is expected from the government for exemption from GST), then,
affordable homes may become cheaper under the GST regime.

23
2.11 EFFECT OF GST ON HOME LOANS:

Before evaluating the likely impact of the GST on home loan costs, it is important to understand
the components that will be impacted by the increased rates under the GST.The main cost of
taking a home loan, is the interest payment on the money. This cost will not change, as there is no
service tax or GST on it. Similarly, any stamp duty charged connection with the documentation
of the home loan, will not change with the GST, as stamp duty is not subsumed under the GST.

However, there are various charges that are levied by lenders on home loans. First and foremost is
the processing fee that is paid at the time of taking the home loan. At present,it is 15 per cent but
it will go up by 3 per cent under the GST, to 18 per cent. This is generally a one-time cost and its
overall impact on your home loan tenure, will be insignificant. The banks may also recover other
charges like advocate fees, valuation charges, etc., in connection with the home loan, which will go
up proportionately.

Like the processing fee paid at the time of application, you may have to pay prepayment charges,
in case you decide to prepay the home loan before the completion of its tenureor shift the home
loan to another lender. This is generally payable; in case the home loan is taken under a fixed rate
of interest. For floating rate home loans, banks cannot levy any prepayment charges. Housing finance
companies can, however, levy the prepayment charges, if you decide to shift the home loan to
another lender. However, for payment of the home loan from your own resources, the housing
finance companie cannot levy any prepayment charges.

The lenders can also charge you for any EMI default, either due to return of the cheque or ECS
return, on which the GST rates will go up. So, it is practically on all the charges thatare recovered by
the lenders that the GST rates will go up by 3percent.

24
2.12 REVERSE CHARGE MECHANISM IN GST AND ITS IMPACT ON
CONSTRUCTION COSTS:

The mechanism, where the recipient of services pays the service tax, is called as ‘reverse charge
mechanism’ (RCM). The same concept, with wider application, has been borrowed from the service
tax laws in the Goods and Services Tax (GST) regime.

A developer has to pay GST on services availed, like those provided by a person who is located
in a non-taxable area, services provided by goods transporters, legal services provided by an
individual or firm, etc. The developer also has to pay GST under the reverse charge mechanism,
on the services provided by government or local authorities,like municipalities, etc. Nevertheless,
some of the services provided by the government, like renting of premises, specific services
provided by the postal authorities, transport of goods by railways or by state transport
undertakings, etc., are outside the scope of the GST, similar to the service tax regime.

A significant departure under the GST laws, compared to the erstwhile service tax provisions, is
that under the reverse charge mechanism in GST, a person who is registered under the GST has
to pay GST on all the services and goods that are procured from a person who is not registered
under GST.

This has significantly expanded the scope of the reverse charge mechanism for all taxable persons
and it will adversely affect the developers. Moreover, the tax payableunder the reverse charge
mechanism under the GST, cannot be adjusted by the developer against the input credit available
from the GST paid on the inputs, but has to be paid by cash/bank payment.

So, under the GST, the builders are worse off due to the dual effect of the levy of GST on the
services availed from unregistered person, as well as the requirement to discharge the reverse tax
on goods received from unregistered suppliers. This will certainly increase the costs for the
developer, especially the small developers who were availing goods and services from
unregistered suppliers earlier and were not bearing the cost of taxes to that extent.

25
2.13 EFFECT OF GST ON TAX COMPUTATION OF RENTAL INCOME:

With the clubbing of taxes on goods and services, under the GST regime, the confusionabout levy
of separate tax on service and goods is done away with.

Unlike under the service tax regime, the threshold limit for applicability of GST has been increased
from Rs 10 lakhs to Rs 20 lakhs. So, many of the landlords who were covered under the service tax
regime, will go out of the indirect tax net, under the GST. It may beinteresting to note that for the
purpose of computing the aggregate limit of Rs 20 lakhs under the GST, all the taxable, as well as
exempt goods and services supplied, shall be taken into account. So, unlike the service tax regime,
where it is only the taxable services, which are taken into account for determining whether you
have crossed the basic threshold, under the GST, the value of all the service and goods supplied in
India, as well as exported, whether taxable or exempt, are taken into consideration for the Rs20 -
lakh limit. The GST is proposed to be levied at 18 percent on the letting-out of commercial properties.
There is one more major tax implication under the GST, with respect to rent on commercial
properties.

The parliament has borrowed the concept of ‘reverse charge mechanism’ from the service tax regime,
under the GST. However, unlike in the service tax regime, where the reverse charge mechanism is
applicable in case of services and is not extended to the sale or manufacturing of goods, the same
is made applicable for goods as well as services, under the GST regime. A person who is
registered under GST, who gets supplies of goods or services from a person who is not registered
under GST, will have to pay the GST under the reverse charge mechanism.

Under the service tax regime, there is no provision of reverse mechanism, with respect to the rent
paid by the lessee. The proposed GST provisions, due to the increased rate and the levy under
the reverse mechanism, will eventually make it costlier to take any commercial premises on rent.

26
Chapter-3 Company Profile

Introduction to Company

History of Company

27
 ELITE PROPERTIES.
office No. 9 & 10 Konark Indrayu, 1st Floor, Above HDFC Bank, Kondhwa Khurd, Pune 48.
Ph:8888303175/8483933723

3.1 COMPANY PROFILE (ELITE PROPERTIES PVT LTD):

Elite Properties Pvt. Ltd. is a complete guide for anything related to real estate. The Elite
Properties Pvt. Ltd. is founded by Mr. Jafar Pathan (Managing Director) in September 2011. Elite
Properties Pvt. Ltd. currently have1 other Partners: Mahesh Varma and there are no other partners
in the company except these 2 officials. is based in the kondhwa khurd that is in Pune. Which is
popularly known as oxford of the east. The companies follow systematic processing the field of
real estate marketing.

Our Trained and experienced business associates, business managers and vice president (marketing)
assist our investors to make right decision for buying plots, flats and villa’s. Elite Properties Pvt.
Ltd.is a trendsetter in the industry of real estate by converting un-organized and unstructured sector
into organized and structured sector. The company works on very different grounds. Elite Properties
Pvt. Ltd.act as a launching pad for career-oriented people and treat them as a business partners.

This company follows the MBO (Management by Objectives) approach by using this approach
company understands and fulfills the objectives of investors as well as employees. Because the
company believes in collective approach. The strategy of Elite Properties Pvt. Ltd. is different in
acquiring land at fastest growing areas and provide to their investors at relatively low cost or in short
company believes to providing right product at right cost at right time to the right person.

This company makes innovation in real estate sector and brings out desired changes according to
their investors needs and desires. Before starting any of the projects the company did lots of market
research, The company studied the market well and evaluates all the pros and cons of that project.
As a result the company gathered a great deal of data upon which the further investment and
development strategies of the company were determined.

28
3.2 HISTORY OF COMPANY:
Provide cost effectiveness to customers with innovation in marketing, finance, media management
and engineering.

SERVICES OF ELITE PROPERTIES PVT. LTD.

Elite Properties Pvt. Ltd. provide following services to customer –

 Marketing consultancy
 Project management
 Finance advisor and Project financing
 Engineering and Design consultant
 Selling/ under writing of new projects

FUTURE PROSPECT OF ELITE PROPERTIES PVT. LTD.

With easy availability of finance, emergence of double-income families, fall in prices dueto
increased competition, government support regarding transparency in real estate, growth of
media, availability of disposable incomes, improvements in technology, reduction in bank loan
rate, growth in consumer base of rural sector, increasing awareness of people regarding property
documents, smart management decision, hardworking employee shows very bright future of Elite
Properties Pvt. Ltd.

29
3.3 VISION AND MISSION:

Vision:

At Elite Properties, our vision is to redefine the real estate landscape by being the most trusted and innovative
partner in fulfilling the aspirations of individuals and families. We envision a future where every home is a
sanctuary, every property+ investment is a pathway to prosperity, and every client's real estate journey is
marked by transparency, excellence, and personalized service.

Mission:

At Elite Properties, our mission is to be the premier provider of real estate solutions, exceeding the
expectations of our clients and setting the highest standards of professionalism, ethics, and innovation.

Goal of Elite Properties:

Building a strong brand and maintaining a positive reputation in the real estate industry are crucial
goals. A reputable brand can attract clients, investors, and partners and contribute to long-term success.

30
3.4 COMPANY MEMBERS:

Founders:

Jafar Pathan,
Mahesh Verma

Credits:

Architects: Cubix Architects

Aristocrat, lullanagar, Bibewadi, Pune.

RCC Consultant: Structure Vision

389, Somwar Peth, Pune 411001

Legal Advisor: Imran Makhani & Sameer kale

Camp, Pune 411001

Civil Engineer: Kazi Nadeem Alimooddin

31
Chapter 4: Research Methodology:

Introduction to Research Topic

Objective of Research
Research Design
Data Collection Sources
Literature Review

32
4.1 INTRODUCTION TO RESEARCH TOPIC

The real estate sector is the biggest employer in India after agriculture and currently employs over
40 million workforces over 250 sectors and ancillary industries. It plays an important role in
employment generation in India. Investing in real estate is not only a best investment, but it also
allows for transfer of the property from one generation to the next. The total market size of Indian
real estate is predicted to have doubled since 2008 and come to INR 7 lakh crore. India has the
largest housing market in the world, with over 75–80% share in the total real estate market size in
India. The expectation for growth is significant as India would need to develop over 170 million
houses until 2030 to meet the demand of the rapidly urbanizing population. The real estate market
of India is expected to touch US$ 180 billion by 2020. Only housing sector is expected to contribute
around 11% to India’s GDP by 2020.

Retail, hospitality and commercial real estate are also growing no doubt. It provides the needful
infrastructure for India's growing needs. New housing launches across top seven cities in India
increased27% per year in Jan-Mar, 2018. The Indian RES has witnessed high growth in recent times
with the increase in demand for office as well as residential spaces. But the way, in which the real
estate sector is developing, the study shows how the new indirect tax system of India affects the real
estate sectors.

In the before tax regime, when property under construction was bought, the purchaser was subjected
to the paid of VAT, service tax, stamp duty, and registration charges. Property bought after completion
were exempt from VAT and service tax, but stamp duty and registration charges were payable. The
newindirect tax system as GST will alone solve the challenges faced by the real estate sector and help
the sector to come out of its long slumber.

Objective of Research

 To study the concept of Goods and Services Tax (GST) introduce in India.

 To understand the impact of GST on Real-Estate Industry.

 To acknowledge the advantages and challenges of GST in Real E-state Industry.

33
 Research Design

At
Elite Properties Pvt Ltd

Research Objective

34
Research design refers to the structure and plan that a researcher outlines for a scientific study. It includes
research objective, data collection sources, Impact of GST on real estate sector, findings and suggestions.

4.2 DATA COLLECTION SOURCES

Secondary Data

Secondary data are those which have already been collected by someone else, and which have
already been passes through statistical processes. Those data are collected, printed reports, journals,
personnel reports, organizational data, letters, diaries, newspapers, articles books etc.
Textbooks
Journals
Newspaper
s Articles

35
4.3 LITERATURE REVIEW

GST was first introduced by France in 1954 and now it is followed by 140 countries. Most of the
countries followed unified GST while some countries like Brazil, Canada follow a dual GST
system where tax imposed by central and state both. In India also dual system of GST is proposed
including CGST and SGST.

 Govinda Rao (2009) “Goods and Service Tax – Some progress towards clarity” the
author in his article express his views on the first empowered committee report of
state finance ministers of Goods and Service tax to be implemented in India. He also
explainssalient features, shortcomings of the proposed GST. He suggests that the
proposed GSTmodel should overcome the shortcomings of VAT system. He also
through light on the challenges faced in the implementation of GST in India.

 Poonam (2017) in her study cleared that in the system of indirect taxation GST plays a very
important role. The cascading and double taxation effects can be reduced by combing central
and state taxes. Consumer’s tax burden will approximately reduce to 25% to 30% when GST
is introduced and then after Indian manufactured products would become more and more
inexpensive in the domestic and international markets. This type of taxation system would
directly encourage economic growth. GST with its transparent features will prove easier to
administer.

 Dr. R. Vasanth gopal (2011): Conducted a study on, “GST in India: A big leap
in the Indirect Taxation System” and concluded that switching to seamless GST from
current complicated indirect tax system in India will be positive step in becoming Indian economy.

 Nishitha Gupta (2014): in her study stated that implementation of GST in the Indian
framework will lead to commercial benefits which were untouched by the VAT system
and would essentially lead to economic development. Hence GST may usher in the
possibility of a collective gain for industry, trade, agriculture and common consumers
as well as for the Central Government and the State Government.

 Torgler (2011): tax morale is important to taxpayer awareness. On the other hand,
research by Tekeli using multiple regression analysis show that tax morale has
insignificant relationship on tax awareness.

 Mustapha (2011) stated that the influence of compliance behavior towards individuals’
awareness has been proven in various researches. From the findings of Razak and
Adafullah, Santi they found that taxpayers’ awareness is significantly associated with tax
compliance and this is also supported by study Jatmiko.

36
 Agrawal, Goyal (2013) in his study on “Impact of GST on real estate and automobile
sector” describe about reformation of Indian economy after implementation of new GST
law. Paper focuses on the impact on various sectors and its allied. Paper made a critical
analysis of GST with previous law.

 Kumar (2015) in his paper on, “GST in Indian Economy: It's Benefits and Impact”
explore about basic concept of GST and it impact. GST benefit to business person as well
as consumer inter of reduction of tax rate and compliance burden.

 Dani, S. (2016) in his paper on, “A research paper on an impact of goods and service tax
(GST) on Indian economy.” Explain about GST concept in Indian economy. Paper
limited to descriptive study. Data taken from published sources.

 Suresh (2011) K in their paper on, “GST in India: A Study on Benefits and Challenges”
describe about benefit of GST in various sectors like real estate, electric, services sectors
etc. study explore about how GST is benefit with previous GST regime.

With the above reviews we can assume that GST is a tax reform which will change the
scenarioof the country as a support for this review study. And help the government to find
unethical deal in real estate industry.

37
Chapter-5: Impact of GST on Real Estate Industry

38
 5.1 INTRODUCTION TO GST IMPLEMENTATION:

GST is India’s biggest tax reform in the post-independence era. Prior to the introductionof GST,
a heterogeneous indirect tax structure existed in India which included levy of taxes by the center
and states under different tax laws. The earlier indirect tax framework had challenges of multiplicity
and cascading of taxes, apart from other issues and complexities, both technical as well as from
the perspective of ground-level practices

The GST regime implemented on 1 July 2017 has transformed the Indian economy with its ‘One
Nation, One Market, One Tax’ principle by subsuming a host of indirect taxes charged at varied
rates by the center and states, therefore bringing uniformity in taxation across the country. The
GST law ushered in numerous positive aspects such as uniformityin tax rates across India, widening
of tax base on account of transparent digital processes, subsuming of as many as 17 taxes and
multiple acesses, elimination of check posts at state borders etc. However, a year into the goods and
services tax (GST) regime, initial apprehensions have given way to general acceptance that the tax
structure is a work-in- progress as there are several concerns that remain to be addressed.

One of the biggest challenges in implementation of GST was the functionality of the technology
infrastructure and experience of compliance processes; as since inception, the portal had a slow
response rate, performance issues and bugs. The Government has constituted a committee to address
these issues and it is continuously working on improving the tax payer’s experience and various
steps at simplification of process have been continually introduced.

39
 5.2 HIGHLIGHT OF GST ON REAL ESTATE SECTOR:

The highlight of the GST regime for the Real estate sector is the availability of Input Tax Credits
(ITC) paid on inputs, capital goods and input services. Under the erstwhile regime,developers
would be liable to pay a multitude of taxes such as VAT, Central Excise, Entry Tax, LBT, Octroi,
Service Tax, etc., the credits of which were not freely available against the output tax liability.
However, the GST regime provides for ITC eligibility on construction and other services procured,
thereby eliminating the inefficiency ushered in by the cascading effect of taxes.

Effective Tax Rate:

From a real estate developer’s standpoint, GST would apply on sale of under-construction properties
i.e. prior to the receipt of Occupancy Certificate (OC). Under GST, the tax rate hasbeen pegged at
18% (or 12% for specified affordable housing projects), with a standard 33% abatement being
provided towards the value of the land. Thus, the effective GST rate for saleof under construction
properties is 12%/8% of the entire agreement value as compared to around 5.5% (i.e. 4.5% Service
Tax and 1% VAT under the composition scheme with limitedcredits) under the erstwhile indirect
tax regime. Needless to say, GST levy is over and above the stamp duty (around 5%) payable on the
agreement value.

This leads to an overall tax burden of around 17%-13%. Such a heavy tax burden on the transaction
results in cost escalations for the final consumers. However, GST allows broader level of ITC, the
agreement value should ideally reduce.

Multiple GST rates (5%, 12%, 18% and 28%) on procurement of inputs and input services isanother
aspect which adds complexity to the taxation system and leads to unwarranted classification disputes.
The Government has indicated that it will continue to work on rationalization of rates and try to move
towards a simplified tax rate structure. This has partially been recently addressed with rate reduction
from 28% to 18% coming into effect on27 July 2018.

40
5.3 VALUATION OF SUPPLY:

Sale of land is not eligible to GST. Consequently, the GST law provides for a standard abatement of
33% of the total contract/agreement value towards value of land for taxable realestate transactions.
While the allowance of abatement is welcome move from the Government, this is not representative
of the land value; especially in metropolitan areas where land value can exceed around 50%-60%
of the contract value. Thus, such provision creates a burden where the actual value of land is higher
than the 33% norm; which effectively taxes the value of land.

It should be noted that the GST law is silent on whether this standard abatement would prevail even
in case separate agreement is entered for land portion, or a separate value is demarcated towards land
component, which is the historical practice adopted in certain states.

41
5.4 IMPACT OF GST ON BUYERS:

Under the earlier tax regime, buyers had to pay VAT, Service tax, Registration charges & Stamp duty on
purchase of properties under construction. Also, since VAT, Registration charges & Stamp duty were
state levies, prices of properties varied from state to state. Moreover, developers had to pay various duties
like sales tax (CST), custom duty, OCTROI etc. for which credit was not available. Under GST, a single
tax rate of 12% is applicable on properties under construction while GST is not applicable on completed or
ready tosale properties which was the case in previous law. Hence buyers will benefit from reduction of
prices under GST.

As on before GST regime, buyers were asked to pay VAT, Service tax, Registration charges and stamp
dutyo purchase of properties which are not constructed fully or are under construction. Also all the indirect
taxes were state levied and prices of properties vary from state to state. But from 1st july 2017, a single
tax rate 12% was applied on properties which are under construction therefore, buyers got benefit from
reduction of prices which are implemented under GST. The result of which under long term developers
will pass on the benefit they received from input credit tax. The condition changed from 1st of April 2019
when the council changed the tax regime for real estate industry as on demand for the housing unit increased
because of flexible GST tax regime where tax structure changed from 12% to 5% which are without input
tax credit and for affordable housing taxes changed from 8% which are with input tax credit to 1% without
input tax credit.

Before GST After 1st July On 1st April 2019 After 1st Aprill
2017 2019
VAT 4-5%(Vat 12% 5-12% 8-12
amendment act
2009) Schedule
2
Service Tax 14.5- 12% 5-12% 8-12
15%(Commercial
)and
4.5%(Residential
)
Registration Tax 0.8% 12% 5-12% 8-12
Duty 8% on 12% 5-12% 8-12
On affordableand
Purchas 1% on non-
e affordable houses
Tax On Property 12% 12% 5-12% 8-12

This table explains the tax structure before 2017 according to the VAT amendment act 2009 and after
2017till 2019. The tax slab on July 2017 was 12% which was similar for both affordable and non-affordable
housing unit. But in April 2019 it varies for both affordable housing unit and non-affordable housing unit
in India.

system due to which buyers also suffer and demand for housing unit reduced to bit margin. On 1ST April
2019,with the new improvising in the tax structure the developers got an opportunity to choose the option
between the tax regimes which will benefits in improving the tax credit facility and in turn helps in selling
more housingunits to customers under low GST regime.
42
 5.5 IMPACT OF GST ON DEVELOPERS / BUILDERS / CONTRACTORS:

Builders had to pay indirect tax duties like sales tax, VAT, Entry taxes, custom duty etc. for which credit
facility was also not available and therefore these indirect taxes were applied on raw materials, service
taxes like approval charges, labour charges, professional fees etc. which ultimately transferred the burden
of these taxes to the buyers who buy the housing unit from builders or developers.

But due to availability of input tax credit after the implementation of GST the cost of construction andall the
other expenditures reduced significantly as multiple taxes got illumed and one tax one nation was
implemented. On the other hand developers had to face input credit tax issues through which there was lack of
transparency in the whole

In other words, Under the previous tax regime, developers had to bear Excise duty, VAT, Customs duty,
Entry taxes etc. on raw materials / inputs and Service tax on various input services like approval charges,
architect professional fees, labor charges, legal charges etc. ITC was not available for duties like CST,
Customs duty, Entry Tax etc. This would impact the pricing and subsequently the burden was transferred
to the buyer.

Under GST, developers’ construction costs are significantly reduced as multiple taxes are subsumed and
due to the availability of input tax credit. Also, reduction in cost of logistics will be an added benefit.
Hence developers may see improvement in margins.

On the downside, developers have to do multiple calculations to arrive at ITC in order to pass it onto the
buyers. Hence, in most cases, they can pass on the ITC only during the final stages. This lack of
transparency on ITC, may affect the developers since buyers may resort to “wait and watch” approach and
defer buying decision.

43
5.6 ANALYSIS OF IMPACT OF GST ON REAL ESTATE:

 Input Tax Credit (ITC): Under GST, developers and builders can claim input tax credit on the
purchase of goods and services used in construction. This helps reduce the overall tax burden and
can potentially lead to cost savings.

 Streamlined Tax Structure: GST aims to simplify the tax structure by replacing multiple indirect
taxes with a single tax. This can lead to increased transparency and efficiency in the real estate
sector.

 Increased Compliance: GST requires businesses to maintain proper records and comply with tax
regulations. This can help in reducing tax evasion and promoting a more organized and transparent
realestate market.

 Impact on Homebuyers: GST may have an impact on the final cost of properties for homebuyers.
Thetax rates and input tax credit availability can influence the overall pricing of properties.

 Affordable Housing: GST provides certain benefits and concessions for affordable housing projects,
suchas lower tax rates. This can encourage the development of affordable housing and make it more
accessibleto buyers.

To analyze the specific impact of GST on real estate, it would be beneficial to consider factors
such as changes in property prices, demand-supply dynamics, compliance levels, and the overall
economic environment. Detailed data analysis and research can provide more insights into the
specific effectsof GST on the real estate sector.

44
5.7 THE IMPLEMENTATION OF GST IMPACTED PROPERTY PRICES IN
DIFFERENT REGIONS OF THE COUNTRY.

The implementation of GST (Goods and Services Tax) has had varying impacts on property
prices indifferent regions of the country. Here are some general observations

 Metro Cities: In major metro cities like Mumbai, Delhi, Bangalore, and Chennai, where
property prices are already high, the impact of GST on property prices has been relatively
moderate. The increase in tax rates and the removal of certain tax benefits under GST may
have led to a slightupward pressure on prices.

 Tier 2 and Tier 3 Cities: In smaller cities and towns, the impact of GST on property prices has been
more mixed. While some regions have experienced a marginal increase in prices due to the higher tax
rates, others have witnessed a stabilization or even a slight decrease in prices.

 Affordable Housing Segment: The affordable housing segment has received certain benefits and
concessions under GST, such as lower tax rates. This has helped in making affordable housing
moreaccessible and affordable for homebuyers. In some regions, the implementation of GST has
positively influenced the growth of the affordable housing sector.

 Input Tax Credit (ITC): The availability of input tax credit under GST has been a significant
factor in determining property prices. Developers and builders who can claim ITC may pass on
the benefitsto homebuyers in the form of reduced prices. However, the impact of ITC on property
prices can vary depending on the region and the specific dynamics of the real estate market.

It's important to note that the impact of GST on property prices is influenced by various factors,
including local market conditions, demand-supply dynamics, and economic factors. Detailed
analysisand research specific to each region can provide a more accurate understanding of the impact
of GST on property prices in different parts of the country.

45
5.8 THE IMPLEMENTATION OF GST WITH REGARD TO THE DEMAND/
SUPPLY DYNAMICS OF THE REAL ESTATE MARKET IN DIFFERENT
REGIONS.

The implementation of GST (Goods and Services Tax) has had varying effects on the demand and
supply dynamics of the real estate Demand Factors: market in different regions of the country. Here are
some general observations:

 Demand Factors:
Reduction in Cash Transactions: GST aims to increase transparency and reduce cash transactions in
the real estate sector. This can lead to a more organized market and attract more genuine buyers,
boosting demand.

Potential Impact on Buying Power: Changes in property prices due to GST, including the impact on input
tax credit and tax rates, can affect the buying power of potential homebuyers. This may influence demand in
different regions based on affordability.

Affordable Housing Boost: GST provides benefits and concessions for affordable housing. This has helped
increase demand for affordable housing projects, especially in regions with a significant demand-supply
gap in this segment.

 Supply Factors:

Increased Compliance Requirements: GST requires businesses to maintain proper records and
comply with tax regulations. This has led to a more organized and compliant real estate market,
potentially impacting the supply of properties in different regions.

Impact on Construction Costs: GST can influence the overall cost of construction materials and services
due to changes in tax rates and input tax credit availability. This may impact the supply of properties,
especially in regions where developers face cost pressures.

Impact on Developer Margins: Changes in tax structures and input tax credit availability under GST can
affect the profit margins of developers. This may indirectly impact the supply of properties in different
regions, with developers adapting their strategies based on their profitability.

It's important to note that the impact of GST on demand and supply dynamics is influenced by numerous
factors, including local market conditions, economic factors, and regional dynamics. Detailed analysis
and research specific to each region can provide a more accurate understanding of the impact of GST on
the real estate market's demand and supply dynamics in different parts of the country.

46
5.9 CASE STUDIES DEMONSTRATING THE EFFECTS OF GST ON THE
DEMAND AND SUPPLY DYNAMICS OF THE REAL ESTATE MARKET IN
SPECIFIC REGIONS

 Mumbai:
High-end luxury projects in Mumbai were relatively unaffected by the implementation of GST, as
buyers in this segment can afford the increased tax rates. However, there was a temporary slowdown
in demand for mid-range and affordable housing projects due to the confusion around GST
regulationsand their impact on property prices.

However, in the long run, the demand for affordable housing projects picked up as GST provided
certain concessions and lower tax rates for this segment, making it more accessible to buyers.

 Bangalore:
Bangalore experienced a drop in demand for residential properties after the implementation of GST
due to confusion around the tax rates and the impact on input tax credits. However, the demand picked
up after developers adjusted the prices to align with the changed tax structure.

The developers also passed on the benefits of input tax credits to the customers, making the properties
moreaffordable to them.

 Delhi-NCR:
The real estate market in Delhi-NCR experienced a mixed impact of GST. While high-end projects
saw minimal change in demand, there was a slowdown in demand for affordable housing due to the
confusion around GST regulations and their impact.

The introduction of input tax credit, however, helped improve the affordability of properties in Delhi-
NCR.Since the cost of construction materials reduced, developers passed on the benefits of these
savings to the customers.

 Pune:
The implementation of GST had a positive impact on Pune's real estate market due to the city's
significant presence in the affordable housing segment. Developers in Pune's affordable housing
segment passed on the lower tax rates and input tax credit benefits to customers, leading to increased
demand.

The city also saw an increase in demand for leased commercial properties due to GST's input tax credit
provisions. The developers passed on these savings to the tenants in the form of lower rents, which
resultedin an increase in demand for commercial real estate.

It's important to note that the impact of GST on the real estate market in each specific region is
influenced by various factors, including local market conditions, regional dynamics, and economic
factors. Thus, detailed analysis and research specific to each region are necessary to determine GST's
impact on the real estate market accurately.

47
Key Findings

48
6.1 KEY FINDINGS:

 According to research the availability of Input Tax Credit has been a significant benefit for real
estate developers. Developers can claim ITC on taxes paid for inputs like raw materials and
services, reducing their overall tax liability.

 GST has helped in eliminating tax cascading or the "tax on tax" effect that existed under the
previoustax regime.

 This has aimed to make housing more accessible to a broader section of the population, aligning
withthe government's goal of "Housing for All”.

 GST introduced a more stringent compliance and documentation framework.

 The implementation of GST has prompted real estate businesses to adopt technology solutions,
such as Enterprise Resource Planning (ERP) systems, to streamline processes related to
accounting, compliance, and record-keeping.

 According to study developers have been encouraged to pass on the benefits of reduced
constructioncosts and input tax credit to homebuyers.

 The real estate sector has closely monitored changes in GST rates and classifications.

 The impact of GST on the overall competitiveness of the Indian real estate market, including its
attractiveness to global investors, was a topic of analysis and discussion.

 Some discussions focused on how changes in the real estate sector, influenced by GST, could contribute
to broader economic growth and employment generation.

49
6.2 LIMITATION:
Every scientific study has certain limitations and the present study is no more exception.These
are:

 Access to accurate and comprehensive data on the real estate industry was barely
available.

 Various factors, such as changes in interest rates, economic growth, and policy initiatives,
are interconnected with the real estate market. Isolating the specific impact of GST from
these interrelated factors can be challenging.

 A lack of historical data under the GST regime makes it challenging to establish clear
cause-and-effect relationships.

 These external factors may overshadow the direct impact of GST on the sector during the
study period.

 GST regulations and policies may evolve over time with amendments and refinements. A
study conducted during a specific period may not capture the full range of changes and
their subsequent impact on the real estate industry.

50
6.3 CONCLUSION:

The reduction of GST rates on real estate has led to a huge impact. Although the new GST regime
has a few flaws, it has benefited the real estate market, developers, and homeowners in the long run.
There have been many positive impacts of GST on Real Estate Sector.

In Pre GST regime the Builder or Developer had to deposit several Indirect Taxes collected from
customer.

GST has reduced the cascading effect. GST has significant impact on real estate as it has increased
the cost of real estates.

Construction for the builders after its implementation. There was slowdown in the real estate sector
after demonetization and implementation of GST. RERA (Real Estate Regulatory Authority) Act has
also brought new challenges for the Developers. The government is taking positive steps in order to
boost this sector. The CBIC (Central Board of Indirect Taxes & Custom) has notified Rules &
Procedures for builders intended to take benefits of reduced rates (1 to 5 % on sale of under
construction flats commencing on or after 1st April, 2019. Government is giving relief on affordable
housings.

51
6.4 REFERENCE:

 Research papers

 Impact of GST on real estate sector: by TARUNIKA JAIN AGRAWAL &

C.A. AASIINA GOYAL.

 CGST Act.2017 and GST Act.2017

Books

 Taxman’s GST (2018 addition) by CA Raj K

Agrawal, Taxman’s GST on Works Contract and

Real Estate Transactions.

 Taxman’s GST on Builders and Real Estate Transactions. The Real

Estate(Regulation& Development) Act, 2016, Ameya Publications.

 A Practical Guide to GST on Real Estate Industry by CA Madhukar N Hiregange.

 GST India (2015) “Economy and Policy”. Jaiprakash (2014), “Indirect Tax Reform
inIndia and a way ahead for GST”, International Journal of Computing and Corporate
Research, Vol 4, Issue 1.

 Gupta Nishita (2014), Goods and Service Tax: Its implementations on Indian
economy volume 5 Issue 3 (year 2014 – Pg No.126—133.

 Kumar, N. 2014. Goods and Service Tax in India-A Way Forward. Global Journal
ofMultidisciplinary Studies .3(6).

 Jain, A. (2013). An empirical analysis on goods and service tax in India: Possible impacts,
implications and policies. International Journal of Reviews, Surveys and Research
(IJRSR),2 (1). Retrieved fromhttps://www.ijrsr.com/January2013/5.pdf

 Kothari C.R. 2nd Edition (2004) Research Methodology … Topic “Concept &
Meaning Of Research, Sampling, Methods and Techniques Of Data collection
and Tools '' B com, BBA and MBA and M.com Textbook.

52