Budget 2018: Will the price of property rise or fall?

With the announcement of the Union Budget 2018, the developers are keen to know the fate of the real estate industries. As the sector continues to grow, several regulatory mechanisms have come into play, including the RERA. Apart from this, the GST has been implemented in the real estate industry. All these developments have increased the expectations of the developers from the Union Budget 2018. The real estate companies are looking forward to growing the business, overcoming the slow growth of the industries.

The most prominent expectation of the developers from the Budget is the inclusion of the real estate sector entirely under GST. At present, the GST-regime includes the under-construction properties and not the ones that are fully constructed. This partial exclusion has resulted in tax input credits being denied. Besides, other duties have been imposed in the industry, like registration fees, stamp duty, and so on. A Committee has been formed by the government to examine the inclusion of the sector under GST. This is likely to be discussed at the next meeting of the GST Council.

Well, it is common for contractors to build offices at construction sites for more convenience in administration and management. Under GST, these contractors need to obtain a registration for these temporary offices. This increases the burden of compliance for the developers. Apart from this, the expensive machinery, including boring, excavation and drilling equipment are transferred by the contractors from one state to another, across different sites. These trade movements have been taxed, apart from registration requirements being imposed on the sector. These have added to the problems of the developers.

 The ‘first occupation’ concept in the service category has been introduced by the government, under the GST. Well, service tax was not charged under the Service Tax regime on the construction of buildings, complexes and so on. Under GST, the ‘first occupation’ concept indicates the extension of the benefit even when the certificate is absent. Although it is good news for the developers, it may lead to a case of litigation. The Union Budget 2018 is expected to address these areas and come up with effective measures.

The developers want the Budget to take necessary measures to ease up the business conditions for them.