GST has been introduced in India to equalize the tax deductions throughout the country. In this context, the builders are advised to buy construction materials only from the registered suppliers so that things could be kept transparent viz. the input credit taxation, etc.
The implementation of GST in India has been proved to be a boon to the real estate industry as it has a great impact on the cost of the Raw material and also it has smoothened the import taxes and the inter-state taxes thus giving a boost to the real estate industry. The latest report by CBRE South Asia reflects that Real estate in India’s top urban centers would reach 8.2 billion sq ft by 2025 and would provide employment to approximately 17 million people across the country. Chairman of CBRE said that the rising demand for real estate and infrastructure development could help in a rapid growth in the construction industry.
CBRE has been a great admirer of the GST taxation rule as it has witnessed a rapid increase and growth in the real estate industry and is quite positive in this context. It has also admired the clarity GST has brought to the whole system and a supportive push by the Government to speed up the infrastructure development throughout the country is also witnessed.
It is evident that apart from all the efforts made by the GST taxation department and the Government, there are differences in the construction costs in different regions of India. A report relevant to the same, states that among the six leading cities in India Chennai, Bengaluru, Hyderabad, Pune, Mumbai and Delhi, Mumbai has been found to be the most expensive in terms of construction cost. Now there are certain factors which impact the cost of construction e.g. the Demand level, nearness to the supply centers and efficiency of logistics networks across these cities.
Comparing the rates of construction in different cities : For a residential apartment in a mid-rise building the construction in Mumbai was INR 3,125 per sq ft, in Delhi and Pune it was INR 2,750 per sq ft, Chennai and Bengaluru, INR 2,500 per sq ft, whereas in Hyderabad the apartment would cost INR 2,375 per sq ft.
Read Also: Impact of GST on Real Estate Sector in India
In order to find the complete impact and effect of the GST taxation on the construction cost, CBRE has compared the pre-GST taxation rates with the current rates. Different work components show different variations due to the new taxation rule. But overall, GST has managed to bring down the construction cost to an extent. This scarcity is opening the entry for the International players to get the requirement fulfilled.
