About four years ago in 2017 Central government introduced the Goods and Services Tax (GST) by combining existing indirect taxes. Undoubtedly,  GST paving a bump-free road for the Real Estate Sector. GST not only enabled a stable and transparent taxation system but also provided a strong ecosystem in the real estate sector to the investors and buyers. 

GST has streamlined an age-old taxation mechanism however the mixed response has been gathered in four years in Indian real estate. For investors and homebuyers, it has become compulsory for the government to permit definite changes. 

Commercial spaces renting or leasing come under the 18% GST tab. Even though an input tax credit for construction including renovation, repair, alteration is outlawed against the principle of GST to provide a seamless credit chain. Nevertheless, the current restrict credit flow and increases tax costs.  

There has been a continuous surge in prices of raw materials which are leading to exorbitant construction costs for developers, ultimately also borne by the homebuyers. The GST rate for cement is also 28% which is mostly applied for luxury goods. Other raw materials including steel attract a higher GST rate which are impacting the prices and leading to a more discouraging environment for homebuyers. 

Although, an input tax credit is a vital factor of GST to eliminate the descending effect of taxation which was witnessed in the previous rule.