Govt. Plans to Cut GST Rate to Boost Real Estate Sector Amid COVID-19

The real estate sector is one of the Indian economy's most important pillars and accounts for 6-8 percent of Indian Gross Domestic Product (GDP). With the introduction of GST, the country stands to witness some major changes in the real estate sector. Goods and Services Tax (GST) came into effect in July 2017 and has been a game-changer among all sectors of our economy, one of the larger sectors being Real Estate. In addition, it has helped the process of creating a more streamlined and robust tax structure to reduce the various taxes, such as VAT, service tax, and others.

The recent spread of COVID-19 has disturbed the world's economy. All countries are taking various measures to control the effect of the pandemic on businesses. The Indian government has announced relief in accordance with GST to relieve regulatory distress among businesses registered under GST in India amid the COVID-19 pandemic.

Government GST Relief Package for Real Estate 

As a breather to real estate, India's government is weighing up with the possibility of bringing out a Goods and Services Tax (GST) relief package for the real estate sector in terms of tax exemption and suspension. The plan could include either a six-month GST suspension or a reduced rate for the real estate industry. Unlike the current invoice-based method, it could also involve a cash-based tax levying concept. Furthermore, GST sales relief is also considered, where the payment was not made due to the lockdown.

The said measures would help to revive the ailing real estate sector to an extent. It will help businesses that are struggling under extreme liquidity crunch pressure. Liquidity is one of the industry's leading issues as per tax experts. The GST Council will take up the decision on all of the proposals. While demand is for the sector's complete GST exemption, officials believe that tax suspension would yield positive results.

The suspension of both GST and the cash-based tax levy scheme is expected to help businesses recover and improve liquidity. With this announcement, the real estate sector is expected to be put back on track and kickstart the economy.

 

BY: Shailaja K