Showing posts with label GST. Show all posts
Showing posts with label GST. Show all posts

Tuesday, August 4, 2020

How to Increasing demand for commercial property in India...?

The real estate sector has been a major contributor to the growth of the entire economy and is expected to contribute in approximately 13% of the country's GDP over the next 5 years. If we talk about improving the business environment, then the commercial real estate sector can be considered a major beneficiary. The sector has been promoted with government initiatives such as RERA and GST, which allowed large institutional investors to make large investments in commercial property in India, thereby improving the overall business conditions of the country.

The continued expansion of the service sector has led to the increasing demand for office spaces and thus can be considered as one of the major growth factors of the commercial real estate segment. It is estimated that the average demand for office space across India will increase to 46 million square feet by 2021.

Policy reforms such as REITs (Real Estate Investment Trusts) will further promote the development of the commercial real estate sector by reducing the burden of capital costs of projects financed on real estate developers.

Increasing FDI in the e-commerce markets has fueled the growth of the warehousing and logistics sector and further increased the demand for commercial space benefiting the commercial property sector in India.

The retail space is also expected to witness strong growth in the coming years and is expected to grow at a rate of 25% to 30% in the next financial year. Finance Minister Sitharaman's Budget 2020 has also brought some good news for the commercial real estate sector. Establishment of new smart cities, development of around 100 new airports across the country, formulation of national logistics policy, announcement of National Infrastructure Pipeline will likely increase the demand for commercial real estate sector especially office segment.

Monday, July 27, 2020

How GST Impact on Real Estate?

Under GST, the treatment of rent is very clear. Landlords who are earning rental income by giving their properties for residential use will not be taxed under GST - thus there will be no GST on rent for houses. However, the GST rate on commercial property rent will be 18%, and it will be levied only by those who are earning more than Rs 20 lakh annually. If the landlord is unregistered due to the threshold limit, the taxable person has to pay GST on rent under reverse charge - at standard GST rate on commercial rent.


Goods and Service Tax impact on home loans


GST impact on the loan taker


Before evaluating the potential impact of GST on home loan EMI and costs, let us understand the components that are bound to be affected under GST. The main cost of taking a home loan is the interest payment on the principal amount. Similarly, any stamp duty levied in respect of documentation of home loan will also not change with GST, as stamp duty is not levied under GST.


GST impact on lender


Lender - In other words, banks and financial institutions that extend loans for real estate will receive ITC in relation to the services received. Also, purchased goods, which they can use against their GST output tax liability, which is good news.


Reduction in black money in the era of GST


GST will help cut down on the cash component in construction, as input will now have to be obtained from registered vendors to get the input tax credit. This would go a long way to reduce the black money component in real estate. In addition, the GST return process will ensure that both the supplier and the recipient of the goods and / or services are liable to disclose transaction details. Price, amount, GST rate etc.


FDI increase under GST


Investments coming from foreign shores are likely to have a positive GST effect - benefiting the NRI community, mainly due to a seamless-inclusive channel. Simplification of taxation is possibly the most positive GST effect on investment, which will also increase the confidence of the NRI market to invest in Indian real estate.


GST applicability on FSI / TDR


Floor Space Index (FSI) / Transfer of Development Rights (TDR) - Used by developers, are rights in land. As per GST law, not all immovable properties are excluded from the purview of GST, such as sale of land. There is a lack of clarity on whether FSI / TDR sales are to be considered "part of the land" - if they are, they too will stand out from the GST; If not, GST will be applicable.


GST on intellectual property rights


The GST law provides for the taxing of the supply of goods or services, or between both the concerned persons or different persons, without consideration. Typically in the real estate sector, multiple entities in the same group use single logos / trademarks without consideration, which can take advantage of GST, while no tax was previously applicable.


GST on barter Transactions


Many barter transactions are seen in the real estate industry. For example, giving free flats in exchange for 'development rights'. In the previous regime, barter transactions were mostly exempted from VAT, as a 'price' was not included. However, under GST law, all types of supplies such as barter, exchange, and so on, and the value of supplies will be taxed according to GST rules.

Saturday, May 23, 2020

Increasing interest from house-buyers as families stay at house

Although the residential real estate sector was expecting zero sales from the first quarter of the new fiscal year, the lockdown has surprisingly brought people closer to the desire to buy a house.

The current epidemic has had an unprecedented impact on the residential real estate market. With families spending more time in the home, organized real estate players have seen increasing interest among buyers. Potential buyers also include NRIs, who are demanding digital presentations from developers in metro cities. Weak rupee depreciation and low interest rates are also factors contributing to the decision.

With work-from-house being the new normal, even existing buyers are changing their existing bookings as they look for larger apartments. While the numbers are still not comparable to March quarter sales, large developers say there is latent demand but for this to translate into sales, the job market and economy will have to respond better.

Many developers feel that there will be not only a recovery, but also a rebound in residential. The decision to favor decision-making has accelerated due to houses being closed for two months. Noteworthy recovery may take 6-12 months as real estate is a highly suppressed category, but expect first-time house buyers and mid-segment buyers to take advantage given the experience in the last two months will be encouraged.

According to research, demand was seen in the top two cities in India in the last two years, with unsold inventory levels falling 7% in 2018 and 4% in 2019.

In the first 40 days of the lockdown, the Maharashtra government has reportedly seen the sale of only 3,806 properties, which earned the state a nominal amount in registration fees. Typically, the state government earns Rs 25,000 crore per year from the real estate sector. While many state governments have allowed online registration, developers say they expect not only a return but a demand for rebound.

As far as demand is concerned, there are some very interesting patterns. Developers and real estate companies are questioning people who have never visited the site and are responding to digital advertisements. It can be said that consumers are realizing the importance of owning a house. People have started research and are ready for minimal transactions. A strong demand revival is expected once the lockdown is lifted, provided people have a fixed job.

Although the outlook is more promising for the residential sector than retail and commercial, a visual recovery is at least two years away. Developers believe that the digital sales trend will also grow in the coming years as innovative sales and marketing solutions are being worked on and drone shoots and virtual tours are becoming more and more common.

Friday, May 22, 2020

Trends those are likely to shape the real estate market in 2020

2019 was a relatively challenging year for Indian real estate, which faced a slowdown in the sector. Nevertheless, the recession made Indian developers aware of where they stand and the drawbacks are to blame. As a result, industry experts expected, in 2020, to adapt to several changes in terms of preference, demographics, technology and policies, in a bid to boost buyer sentiment and promote affordable housing sales.

Even with the slowdown in the sector, sales showed some signs of improvement in Q3 and Q4 of FY19, due to redemptions made by developers in their product offering, based on an understanding of consumer demand. New age developments are more suitable for millennial, which are actually the target group of many affordable housing developers,” says Dinesh Doshi, Managing Committee Member, CREDAI MCHI, Raigad.

Real estate to operate the end user


The market is becoming increasingly end user driven. “While the number of real estate investors is already small, this segment is shrinking further. In the coming year, it seems that almost all of the demand will come from end users, with the supply of products targeted primarily to them, says Mayur Shah, Managing Director, Marathon Realty.

Demand to increase compact housing, co-working and commercial space


The demand for 'compact housing' is likely to increase a great deal across the country. In different regions, homes whose price is right have the potential to elicit good feedback from consumers. Developers will address this challenge, going further,” says Shah. The healthy demand for co-working spaces seen in 2019 is likely to continue until 2020. The growth of the commercial real estate segment, which is attracting foreign investments, will also help in improving the economy.


Heavy Dependence Technology


New-age customers rely heavily on technology and social media as they enter the housing market. Thus, it will become imperative for developers to adopt and leverage technology, to engage with customers, to enhance the experience at every point of view and to create positive perceptions about the field. Adoption of technology will also increase efficiency, quality and transparency, which will lead to change in the sector, ” he explains.

Challenges facing real estate in 2020


The industry is seeking support from the government, to overcome some challenges and to emerge from the recession. While the government has taken several steps so far, continuous reforms are necessary in many key areas.
·     Industry status and single-window clearances
·     Funding from banks
·     Financial bailout
·     GST burden and input tax credits
·     High stamp duty charges


Wednesday, May 20, 2020

If your property deal is cancelled How to get refund your amount???


Remediation of Token Money under Income Tax laws if property deal is cancelled

 

In the case of deals for the purchase of any real estate, the buyer usually pays some amount in the form of token money, when other terms and conditions are agreed for the transfer of the property. The amount of token money can vary from a substantial percentage of the value of the asset to being just a token. If the seller withdraws from his commitment to sell his property, there are no immediate financial implications, except that the buyer has the right to sue for specific performance in courts of law. However, it is not usually recourse.
 
If the buyer exits the deal, the seller has the right to forfeit the token money paid. In relation to such alleged token money, the buyer cannot claim any income tax benefit, as it is treated as a capital loss under the tax laws. However, the advance money that is seized becomes the seller's income in the year in which the deal is closed. Such confiscated funds are taxed on income from other sources and not under the 'main capital gains', even if the income is received in respect of a capital asset. Prior to the amendment of the law in 2014, the amount of the acquisition of the property must be deducted from the cost of the acquisition of the property in relation to which it was obtained, the year in which the property, which is the subject of the deal, was sold.


Stamp duty refund

 


Generally, for all property transactions, the buyer has to pay some amount as stamp duty. It is either a fixed amount or a percentage of the market value of the property. You will also have to pay a registration fee to register the agreement. The stamp duty and registration fee payable are determined by the respective state governments. Therefore, the rules for refund of stamp duty to be paid for property transactions will vary from state to state. You must pay the stamp fee before the execution of the document.


In Maharashtra, you are entitled, under certain circumstances, to claim a refund of the stamp duty within six months from your payment. You can claim a refund of stamp duty paid on such an instrument if it has not been executed. The government deducts 1% of the stamp duty, a minimum of Rs 200 and a maximum of Rs 1,000 of the stamp duty paid.


In case of cancellation of a transaction for the purchase of property and for which the agreement has already been registered, the Government of Maharashtra permits a longer period of two years from the date of agreement to claim the return of stamp duty. This refund is allowed only if the developer fails to hand over possession of the booked property and this fact is mentioned in the cancellation deed as a reason for the cancellation of the deal. The rules also provide that the cancellation agreement must be registered.


The buyer of the property can get a 98% refund of the stamp duty, if the stamp duty refund is applied. With the refund application, you are required to attach the original agreement, as well as the original cancellation deed, with both documents registered. However, you will not get a refund of the registration fee.



GST (Goods andServices Tax) refund

 


When you book an under-construction property as per the existing laws, the developer charges GST on the value of the agreement at a fixed rate. The rate will depend on whether the property falls in the 'affordable housing' category and also whether the developer is taking advantage of GST. For any reason, if you wish to cancel the booking and thus, surrender your rights to the property under construction, the builder may agree to refund the paid booking amount and installments, or even that you may agree to pay a higher amount. The although the developer may charge GST from you, he may or may not agree to refund this amount, as he would have already deposited the amount in the credit of the government. The builder will not be entitled to claim any refund in respect of GST, as he has already provided services to you.


When calculating capital gains, the GST you have already paid will be part of the cost of acquisition. Capital gains will be taxable as long-term, if your holding period is three years, or else, profit, if any, will be taxed as short-term capital gains.