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The lockdown which resulted from the global outbreak of COVID-19 has already caused huge losses in most business and industrial sectors. As commercial activities have ceased, economies around the world are expecting to crash. In light of the ill-effects that the lockdown is causing, the government is considering provide a GST relief. The sectors that have been impacted the worst might be exempted from paying GST for the next 6 months. These include restaurants, hospitality, airways, etc. As a relief measure, the real estate sector might have to pay GST at a lower rate.
The realty sector has been affected quite severely in a number of ways. While the most direct impact has been the pause in construction activities, several other problems like difficulty to acquire raw materials and low workforce have also arisen. A bulk of the construction materials used to be imported from China. Although the government has now allowed the resumption of construction activities, these issues would still pose a hindrance for the sector. At a time like this, such tax reliefs are much needed.
Till now, GST used to be imposed as soon as the invoice was generated. In several sectors, the actual payment is delayed to some extent, which means the GST has to be paid before the payment in that case. The government is considering a cash-based system where one can pay GST after receiving the cash. This would ensure that the real estate developers do not have to pay GST from their own capital. Liquidity is something the realty sector really needs now and the cash-based principle would allow more liquidity.This is a much needed reform that will bring relief to the real estate sector.
While there is a high demand for complete exemption from GST, the government might suspend the tax instead, as that would work better in the long run. The sparing of GST dues for certain sectors has also been suggested. All these measures would help to keep the real estate sector running and help to improve the overall condition of the economy. However, the final decision would be made by the GST council. It is expected that such reliefs would be approved keeping in mind the current condition as well as that of the future.
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