Clarity on taxation issues amid evolving GST landscape is key to boost real estate sector
infrastructure development, including significant investments in airways, railways, roads, and housing, the role of the real estate and infrastructure industry becomes even more pivotal. Also, with expanding business operations in India, commercial real estate developers provide necessary infrastructure support as businesses require specialised office spaces that accommodate their unique operational needs, including advanced infrastructure, connectivity, and scalability.
Crucial to the above development is the taxation framework, the Goods and Services Tax (GST) regime.
Major Overhaul for Construction Sector in the year 2019
The rollout of GST saw developers grappling with issues such as increased prices and complexities surrounding anti-profiteering provisions. There was widespread concern that developers were passing on the burden of increased taxes to consumers, leading to disputes and litigations. To address these concerns and provide clarity, the government introduced significant amendments and reforms for the real estate sector starting from April 1, 2019.
In terms of the said changes, a concessional rate of tax on construction for residential apartments without ITC was introduced. This move aimed to simplify taxation and reduce disputes by eliminating the complexities associated with ITC. The amendments also brought clarity on several fronts, including the taxation of transfer of development rights in the residential sector, necessary transition, time of supply etc, thereby enhancing certainty in taxation
