Being pegged as a revolutionary tax reform since Independence, the Goods and Services Tax (GST) is likely to eliminate the complex and ambiguous tax structure plaguing the country currently. To bridge the gap between the government, developers and consumers, Magicbricks brought industry leaders under one roof for a discussion.
The panel was attended by taxation experts, leading developers and consumers including KPMG Partner (Indirect Tax) Priyajit Ghosh, Gulshan Homez Director Deepak Kapoor, Tina Rawla, director (Finance), Hines India and Gaurav Rakyan, Managing Director, Rising Straits Capital, amongst others. The panel questioned and argued if the states, developers and consumers were ready for this change.
Speaking at the event, KPMG Partner (Indirect Tax) Priyajit Ghosh said: “The government has agreed to take a lenient view for the first couple of months. The government has said that a detailed return need not be filed by traders/businessmen only a summary return would suffice. Post-GST, some tax issues will become easier to handle as there would be no overlapping jurisdiction between the Centre and states with regards to levies. Therefore, seeking redressal of a taxation issue would be far easier because in the new regime the same rule would apply to everyone.”
Deepak Kapoor, Director, Gulshan Homez said: “GST is a reality. We must try to lean it, enjoy it, and implement it in the right perspective. Multiplicity of rates in the previous regime had created a lot of confusion. Test marketing should have been carried out by the government in select cities or states to ascertain the good and the bad side of it. Making real estate transactions in the transition period will lead to ambiguity on how will ITC be calculated when the new law kicks in? Post July 1, 2017, if an invoice for a unit has to be made, how will calculations be arrived at? If a customer wants to buy a real estate product on July 1, what should I tell him? Should I tell him that I am selling you my real estate but the actual price will be revealed after 3 to 6 months, when I get my ITC details? Clarity in communication from the government is important but eventually we will come out victorious.”
“GST has sent a strong positive message about ease of doing business. Whether or not it will influence investment decision and foreign investment remains to be seen. Teething issues such as self-invoicing and unregistered vendors, inflationary pressures and certain short-term adverse impact will make compliance difficult in the first 12-15 months. But global precedence says that GST has been beneficial,” adds Tina Rawla, director (Finance), Hines India.
Gaurav Rakyan, Managing Director, Rising Straits Capital: “GST is a game-changer. It is the right thing to do but developers are not ready. On the top of it, the timing it coincides with another big regulatory change i.e. RERA. Short-term teething issues and inflationary pressures will make compliance difficult. What will happen in the next 12-15 months is difficult to predict. In such a scenario, handholding by consultants is required.”
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