Connect with us

GST Real Estate

RERA And GST Will Bing More Foreign Companies Into Indian Real Estate

Published

on

RERA And GST Will Bing More Foreign Companies Into Indian Real Estate

With introduction of Real Estate Regulation and Development Act (RERA) and Goods and Services Tax, the Indian real estate sector is going through a transformation phase bringing an end to the dis-organised label that the sector got tagged with over the years. The new reforms will bring much needed transparency in the sector, which could play a crucial role in attracting many foreign companies that might be interested to invest in the Indian real estate market.

According to Farooq Mahmood, world president of International Real Estate Federation considers these reforms will usher in changes and will restructure the Indian real estate sector, turning it into an attractive market for foreign investors.

He also added that it might take another 3-5 years for the real estate sector to witness the change post RERA. Even though builders and developers might face some initial challenges after RERA and GST, but in the long run they will certainly benefit from it. There is already a positive sign in terms of foreign investments.

As the sector is becoming more and more transparent, many foreign companies and investment firms are showing interest in investing in the Indian real estate market. Many foreign companies are already in talks with domestic players to invest in real estate projects in India. Countries like China, West Asian countries, Singapore and Malaysia are more interested in investing in Indian realty.

Real estate companies across other Asian countries view India as a potential real estate market, as the market is similar to their domestic market and with advent of realty reforms, they are more positive about the Indian real estate market. The plan is to partner with local players and gradually expanding their domain, which will infuse more investments in the sector.

GST Real Estate

The Year-In-Review: 2017 Kept The Realty Market On A Constant Lookout

Published

on

Realty Market On A Constant Lookout

The year 2017 was a game changer for the real estate sector. With challenging reforms like Demonetization, making their way into the market, impacting the realty sector on high levels. Then came the big regulations such as Real Estate (Regulation and Development) Act and GST, which brought transparency and accountability, hence organising the realty market. Coupling the Demonetization with the imminent implementation of RERA and GST resulted in a major slow-down in terms of real estate sales.

A constant turmoil went throughout the industry during this period, but gradually the trends began to change, as the buyers started to look for ready flats instead of under-construction flats. Such major factors changed the ways of business operation of the developers. A relief was felt among the home buyers as their rights were now protected by RERA, hence generating a wave of confidence to invest more in the real estate market.

With an unlimited possibility of investment, the real estate sector proved to be one of the best choices among the masses, as every investment guaranteed a sure shot return. But the real estate sector stumbled at the implementation of the Real Estate Regulation & Development Act (RERA) and generated a large number of unsold units, ultimately bringing down the prices. With deliveries on time and transactions going transparent, these excessive number of unsold units, brought customers a luxury of choosing the properties of their choice at their budgeted prices.

Till date, about 223 housing projects have registered under Tamil Nadu RERA. About 1100 projects and realtors have registered in Gujarat, with MahaRERA with more than 14000 registered projects. To curb down the complex cascading tax structure and cutting tax burden on consumers, the Goods and Services Tax (GST) was introduced on July 1, 2017, in line with ‘One Nation, One Tax’ model. This new tax was only applicable to under-construction projects and hence made the ready-to-move-in apartments, a more attractive option for the buyers.

Not satisfied with the current rate of GST, the National Real Estate Development Council (Naredco) has recently urged the government to halve the GST rate for the real estate sector to 6 per cent to help boost demand for new homes.

The tax authorities began cracking down on the Benami assets after the amendment of the Benami Transactions(Prohibition) Amendment Act. Till date, the income tax department has been able to seize 541 properties. Moreover, funds of about Rs 1,800 crore in various bank accounts are being frozen and more action is expected soon. In its next step, the government is planning to crack down on Benami properties by making it mandatory to link Aadhaar with property transactions.

The affordable housing sector might see a jump in sales, after the revision of the carpet area for the Middle Income Group (MIG) category under the Pradhan Mantri Awas Yojna (PMAY) scheme. An increment of about 90 sq m to 120 sq m in MIG-1 and 110 sq m to 150 sq m in MIG-2 were made in the carpet area. Providing the middle income home buyers with bigger and better houses.

These toughened laws are pushing the non-complying companies into a merger with the bigger players. Hence eliminating the delay and other setbacks, the consumers are being more protected, the increasing purchases in the real estate market are finally turning it into a global market.

Continue Reading

GST Real Estate

Mumbai Real Estate Sees NRI Homecoming After Two Years

Published

on

Mumbai Real Estate

When it comes to invest in real estate in India, Mumbai attracts the maximum interests from the Non-Resident Indian (NRI) community. Despite the highest property prices in the country, Mumbai continues to garner attention as the most sought after investment destination in India. In the current scenario, a stable government in the centre and a growing economy has ensured a sustained preference by the NRIs.

Earlier NRIs constituted 20% to 25% of sales in the Greater Mumbai real-estate market but during the last two years, the market has seen a dip of about 7% in this sector. This has happened due to various factors such as frequent changes in rules and regulations and delayed possession, a lack of transparency and the exorbitant pricing. The real estate sector went under the big change with the Demonetization, which effectively pointed it away from cash transactions. Then followed a series of new regulations such as RERA, GST, which had a tremendous effect on the market, taking it down a slow path as the potential buyers and investors opted to wait for a better opportunity.

As most of the states started to fall in line at the initiation of the implementation of the Real Estate Regulation & Development Act (RERA). The landmark law finally brought the long awaited transparency and accountability requirements for developers into the system. The Goods and Services Tax (GST) impacted the business operations of the developers. Affecting the older ways of working, Demonetisation did not affect self-governing developers with the right products targeted at the working masses. Therefore, the rest realised the importance of reforming of the business models, in order to improve the potential of the market.

Hence after the dearth of two years, NRIs have slowly started to purchase property in the Mumbai region. All owing to the Real Estate Regulatory Authority (RERA) and a liberal home loan regime, which are together acting as great confidence-boosters. According to the latest figures by the Confederation of Real Estate Developers’ Associations of India (CREDAI), the number of attendees at the property exhibition in Dubai was a huge figure of 13,500 NRI visitors, where 210 builders showcased their projects. Also the choice of the NRIs have shifted from luxury apartments to the smaller houses, which are proving to be the better options for investment.

The encouraging reforms by the central and the state government has given a new momentum to the real estate sector. The introduction of the real estate investment trust (REITS) Act, relaxed Foreign Direct Investment (FDI) regulations and the decrement in the rate of interest has helped in replenishing the real estate sector.

Trying to boost the sales, the developers are running overseas campaign, to promote the changing face of the real estate sector. The job insecurity abroad has propelled the NRIs to buy houses, back in the country, where they can live in case if they decide to return home. There are subvention schemes that are being offered by the developers. Where NRIs has to just pay 5% to 10 % on booking and the rest after possession making it an attractive option.

“USA, UAE, Hong Kong, Singapore and Australia are seeing our seminars, roadshows and events. That are being conducted to spread the awareness about features such as the fixed deadline for getting possession, hence generating a good response. Our Andheri project has seen a 25% sales of inventory towards the NRIs,” said Rahul Maroo, senior vice-president and head of international sales at Omkar.

Continue Reading

GST Real Estate

Karnatka RERA, GST: Co-operative Housing Societies Sees A Price Hike

Published

on

Karnatka RERA, GST

After a new ruling by the court, the co-operative housing societies in Karnataka are seeing more transparent and expensive sites for purchases. The housing societies are now supposed to register under the Karnataka Real Estate Regulatory Authority and Goods and Services Tax (GST).

Earlier this year, the Karnataka State Government Employees House Building Cooperative Society and others have approached the high court, to challenge the restrictions imposed by the Real Estate (Regulation and Development) Act, 2016 (RERA Act). The retrospective operation of RERA was brought under question, as it has taken away the rights provided to the societies under the Karnataka Cooperative Societies Act, claimed the petitioners. Specifically, the restrictions imposed on their activities under the Sections 3, 4 and 13, claiming to be affecting their businesses.  

RERA being an Act implemented by the Central Government. Accepted by the State Government, and formulating into its own rules and regulations. Also they have brought the cooperative societies under its purview. However, the cooperative societies have been functioning according to the regulations of Cooperative Act 1959. Hence this conflict has become the basis of the application, calling for negating the RERA.

The application argues further by claiming the status of Cooperative Societies as that of a non-profit based outfits. Where they develop layouts and distribute sites at lower rates, with the members paying amounts in small instalments. Therefore, terming this act of bringing them under the ruling of RERA as unconstitutional.

The latest ruling will affect the 50,000 cooperative housing societies in Karnataka, with the majority in the region of Bengaluru and Mysore. Till now, only one society seems to get registered under RERA. Among these thousands, the number of cooperative societies which are currently in the process of developing layouts are 10,000. These societies are now supposed to be registered under RERA.

Another part of the ruling says that GST will also be applied to all the CHSs and they need to register under the new taxation regime as their turnover collections are likely to exceed the limit of Rs 20 lakh. An 18% GST will now be applicable to any transfer fee that has been paid to the society by the new owner on exchange of ownership of flat.

As soon as the society gets registered under GST, there are various filing obligations, which had to be met. Complying with the provisions of the reverse charge mechanism, the societies have to bear an 18% GST on the payments to the unregistered service providers, such as cleaners, electricians and plumbers.

“The effect created by the Cooperative housing societies, making profit during the property boom in the Bengaluru and the other major cities of Karnataka, has come to an end. RERA and GST have finally brought a transparency to the system”, says K Chandrakanth, a member of the Karnataka Homebuyers’ Association.

Continue Reading

Trending