Lease GST, Tax Credit Norms And More, What The Commercial Real Estate Sector Wants
In terms of employment and GDP contribution, the commercial real estate market in India is one of the most significant industries in the country. Despite this significance, the sector is still challenged with several factors that can impact its ease of doing business nurturing its growth, and one such example is the complicated framework of the Goods and Services Tax. As the Union Budget 2025 is set to be revealed, the stakeholders in Indian commercial real estate expect some reforms in the GST framework which can ease the tax burden on transactions made for properties.
Challenges Faced By Commercial Real Estate Sector
Currently, there is a cumbersome monetary policy that has been put in place under the GST regime. Rental commercial properties are taxed with an 18 per cent GST while commercial properties that are still under construction are charged a 12 per cent GST. Otherwise, there are also provisions for Tax Inputs which are available but they are subject to high restrictions.
As a result, ITC makes matters worse because these can lead to disputes surrounding compliance with the guidelines and rules. This also makes it more difficult for the developers since they have to spend more money on compliance making the final price of the properties higher.
On the other hand, there remains a void that makes it even more unclear how GST would be applicable in some scenarios. For instance, joint development agreements and leasing models tend to confuse a lot of people in the industry.
