NEW DELHI: The real estate industry is keeping its fingers crossed and hoping that the Goods and Services Tax (GST) Bill would be passed in the current Monsoon Session of Parliament so that rationalisation of taxes on purchase of materials does not get pushed to 2017.
Describing the possibility of postponement of the GST Bill to 2017 as "unfortunate", Vineet Relia, managing director, SARE Homes says "I believe all hope isn't lost for the GST Bill to meet the 1 April 2016 deadline". He is hopeful that since the Parliament has not been prorogued but only adjourned sine die, the government will call a special session at short notice and clear the long pending GST Bill.
The GST Bill is one of the many key legislations that were to be taken up and cleared in the Monsoon Session but could not be passed because of the prolonged logjam in Parliament.
The realty players currently pay tax on tax on purchase of raw materials. "The benefit of rationalisation or the lowering of these taxes would have been passed onto the buyers by the builders. This would get pushed by another year if the GST Bill is not cleared now" said Kolte Patil Developers chief executive officer Sujay Kalele. He too expressed hope that the Bill would be cleared in the coming week.
However, Ravi Ahuja, executive director at property consultant Cushman & Wakefield believes there will be no major direct impact on the industry if the GST Bill gets pushed by a year.
"The Bill will definitely make it easy for the real estate companies to do business as there will be one uniform tax across all states but there will be no major direct impact if the Bill is not passed in this session of Parliament," he says.
The real estate industry currently has two main types of taxes-Service Tax and VAT. There is high degree of overlap of tax base and ambiguity on the rate of tax because of the multiple options available for the companies for discharge of taxes across States. The GST Bill will smoothen out these processes for the companies.