Positive Impact of GST and RERA on Real Estate Industry

Over the years, a lot of things have changed for us at Sancheti Builders and in the midst of these changes, we have, as builders, learned a lot. 

Each new challenge strengthened our brand in a unique way and when it was overcome, the emotions felt after that was indeed admirable. Such aspects both taught and astonished us as to how much more there is to this business of creating homes for people and has only made sure we give it our very best or nothing at all.

With so many changes seen over all this time, when laws like Real Estate (Regulation and Development) Act, 2016 or RERA and Goods and Service Tax (GST) were introduced, it took us all by surprise! The very fact that these two laws, especially the latter one would change and question everything we have been doing so far was really something!

With their introduction, the first thing on our hands was to understand the basics of these. The good thing with both of these was that they were directed towards making the real estate industry better and more secure for buyers. Because, even we as builders, constantly look out for ways to make life more comfortable and secure, since satisfaction is always our top priority.

Positive Impact of GST

Here are some positive impacts of GST on real estate:

1. Better Transparency:

With GST in place, I feel that both we and customers benefit greatly because of the transparency it gets to the entire system. Due to this, it also becomes easier for the customer to trust our judgement and have more faith in the system. This also strengthens their belief in us and is very essential to maintain a good buyer-seller relationship.

2. Accumulation of Tax Slabs with One Easy Replacement:

Instead of a number of different taxes that are difficult for our customers to understand, with GST all of these, including customs duty, central excise duty, VAT, entry taxes, etc. get replaced with one single and easy to understand tax bracket. Along with this, we were also liable to pay a few additional taxes, all of which have now been taken care of under a single header.

3. Reduction of Taxes on Raw Materials:

With a uniform tax system in place, I personally feel that it has also made a huge difference in the amounts spent on raw materials. Since these form the very base of every construction we do, it is so important to ensure we purchase them from proper vendors to ensure quality. However, the overload of taxes on it really leaves a very small profit margin for us and equally affects our workers as well. However, with GST, this is now taken care of and we couldn’t be happier!

4. Simplified Process of Buying Homes:

In a way, GST has opened the eyes of the public and now more and more people have taken an interest in how tax systems were and how they have changed. This in a way has made them more confident in the process of buying homes and we as builders couldn’t have asked for more! With well-informed customers, we now feel we can connect much better with and have better discussions about buying homes. 

Positive Impact of RERA

Post this, RERA too has impacted the industry positively, here’s how:

1. Minimization of Fraudulent Activities:

We at Sancheti Builders really go out of our way to ensure all our agreements and contracts with our customers are clear and just. However, there are many persons even today who take undue advantage of those who are not well-versed with the real estate scenario. With the introduction of RERA, this is reduced to a great extent since every dealer now needs to be registered and a RERA number needs to be displayed before the deal is initiated.

2. Maintaining a Reserve Account:

With many builders re-directing funds supposed for one project to another, buyers would suffer under the false promises of getting their homes at the mentioned date. However, RERA has changed this. Under the act, we builders need to reserve 70% of the project amount into a special reserve account that needs to be used only towards the land and construction expenses of the specified project.

3. A Standard Sale Agreement:

One of the most thoughtful additions that RERA has made to the industry of Real Estate is giving equal power to both buyers and sellers. Earlier, many builders would include several punitive clauses against home buyers and they were also penalized if there occurred an issue. However, when the same happened to the buyer, there was minimum or no penalty clause. With RERA in place, a standard model needs to be made and entered into by both parties equally.

4. Return of the Investor’s Confidence:

In the long run, it is possible that the establishment of the regulator will help the sector in a big way. Due to the return of the investor’s confidence, long-term institutional capital inflow will also be seen and various segments will come back in a revival mode. This is very beneficial to the real estate domain as a whole.

Thus, with these helpful acts now in place, it is only a bigger journey for the real estate industry and its contributors. I really hope that both GST and RERA manage to bring about an appreciable change in the industry and help the buyer in a bigger way that they would imagine. After personally having spent time understanding the thoughts behind both these acts, I’m indeed happy to say that if applied right, both have the power to make commendable differences to the industry and the buyer

My last advice would be to all my buyers, past and future. It is very important as buyers to be aware of the happenings in the real estate industry because this segment has flourished so much in the last decade and thankfully most of the differences I have noticed have only been positive. So make sure you dig deep, educate yourself and make the best of the opportunityas a buyer. Buying a house should be a happy process and we as builders can only hope for the best when creating now a house but a home for our customers.