Government Should Reduce GST On Property Sales To 6% From 12%

This year's Union Budget will be a game changer for the realty sector. We look forward to a positive impact especially in the co-working and shared office space segment, within the realty industry, and it will boost the business for both the landlords and the leasers.
 
The infrastructure and real estate industry would lend a cutting edge to this realm of business as it will allow incentives to flow freely. The expected launch of real estate investment trusts (REITs) in 2018 - 2019 will be a great initiative for co-working spaces and shared working space.

The real estate industry is pinning its hopes on Finance Minister Arun Jaitley to rationalize the GST rate applicable to it. The rate is expected to be cut to bring in parity with the erstwhile service tax. The current rate of GST is 12 per cent on sale proceeds of a property; this is expected to come down substantially.

The net impact of the erstwhile service tax regime on property (land and building) sale value was only 5.5 per cent. The real estate industry expects a reduction of GST rate to 6 per cent, if not 5 per cent.

If the industry is subjected to a significantly lower and stable rate than now, then the co- working space within the realty industry would get a major relief in terms of cost of leasing / buying in property as well as lease rentals and income from additional services.

The finance minister is also expected to accord the 'infrastructure' status to the realty industry.

 Further, it is expected that he would remove the artificial division within the industry so that all the players enjoy free-flowing existing incentives, currently allowed only to a few. This would make the real estate industry one of the key growth drivers of the economy to boost investment and employment.

(Neetish Sarda is the founder of Smartworks)

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