Dharavi Redevelopment Project Pvt Ltd (DRPPL), a joint venture between the Government of Maharashtra and the Adani Group, today said that eligible industrial and commercial units in redeveloped Dharavi will enjoy benefits, such as a refund of State Goods and Services Tax (SGST), to boost and help formalise local businesses. This is as per the tender conditions.

“Redevelopment will transform the informal nature of businesses in Dharavi and enable them to be a part of the India growth story. To support this transition, the state government has offered tax benefits, like the reimbursement of SGST. This will provide existing and new businesses in Dharavi a robust footing and boost their profitability. It will make the businesses more competitive and give them manifold growth opportunities,” said a DRPPL spokesperson.

The tax rebate will come into effect after the newly constructed buildings receive the occupation certificate (OC).

As per the tender conditions, SGST for industrial and commercial units will be reimbursed by the state government’s Finance Department through the DRP/SRA for five years from the date of issuance of the OC. Eligible industrial and commercial units will have to provide SGST payment details as proof while claiming the refund.

Dharavi encompasses several thousand industrial and commercial units manufacturing garment and leather items. Many are vendors for large national and international brands sold across the world, with turnover estimated to be in millions of dollars. They are keen to formalise their businesses to expand and get a fillip, both locally and globally.

t is DRPPL’s endeavour to transform Dharavi into a globally connected city with commercial and industrial premises, keeping its vibrant and unique entrepreneurial culture intact. Upgrading the lives of Dharavikars, providing economic opportunities, a futuristic education and vocational training, advanced healthcare facilities and a quality lifestyle: all this will be enabled at Dharavi and Nav Dharavi. They will also have community halls, recreational areas, public gardens, dispensaries, and daycare centres for children.

The aim is to not only redevelop Dharavi into a better space but also to ensure a quality lifestyle for residents while maintaining the integrity of its diversity. This transformational project will bring in a major shift that will help set an extraordinary example for similar redevelopment initiatives in any part of the world.

Also Read: Dharavikars to get highest carpet area than any
SRA project in Mumbai

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The effects of GST (Goods and Services Tax) and RERA (Real Estate Regulation and Development) on the home-buying process are two significant government policies that have revolutionized the real estate industry in India. GST aims to establish a standardized and neutral taxation system, while RERA addresses issues such as delays and fraudulent practices in the industry to bring about transparency and better management.

The implementation of GST has had transformative effects on property transactions. Previously, developers used to transfer tax costs to homebuyers, leading to potentially fraudulent activities. However, with GST, all applicable taxes have been replaced by a unified tax system, ensuring clarity and eliminating fraud. The introduction of an Input Tax Credit (ITC) allows for the refund of excess taxes paid and must be passed on to homebuyers.

The current regulations for GST in property transactions depend on factors such as the type of property and its approval under GST/RERA. Affordable housing options attract a GST rate of 1% without ITC, while non-affordable housing has a GST rate of 5% without ITC. There are additional charges based on the construction status, with ready-to-move houses having no additional fees and properties under construction attracting a GST rate of 12% with full ITC.

RERA has had significant implications for property transactions by ensuring transparency and safeguarding the interests of homebuyers. Real estate agents and developers are required to register under RERA, reducing the chances of fraud and delays. Home loans for RERA-approved projects can result in faster approval and lower interest rates. The state RERA’s web portal provides real-time updates on registered projects, enhancing convenience and transparency for property buyers.

Benefits of GST and RERA

Under the GST regime, the tax rate on under-construction projects has been reduced to 12%, resulting in tax equality and improved tax compliance. RERA has established regulations and regulatory authority, enhancing transparency and buyer confidence. The simplified process and reduced logistics costs have benefited both developers and buyers.

For developers, the implementation of GST and RERA has eliminated various taxes and improved the overall situation, although they are subject to a 15% tax on services. For buyers, the introduction of GST and RERA has improved transparency and simplicity in real estate investments.

GST has played a significant role in reducing federal tax barriers, leading to tax neutrality in the real estate sector. Previously, different states had complex tax structures, but GST has standardized taxation across all states, simplifying property registration.

In conclusion, understanding the impacts of GST and RERA empowers individuals to make property purchases with confidence. GST streamlines the taxation system, while RERA ensures transparency and buyer protection, ultimately shaping the home-buying process in India.

Note: The views expressed in this article are that of the author, and do not represent the views of SquareFeatIndia

Also Read: Highest home sales recorded in MMR amongst the top 7 cities in Q3 2022

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Commenting on the impact on rental business, Dr. Sachin Chopda, Managing Director, Pushpam Group said, “The decision by the Government to implement the new GST rules will curb the rising demand for rental business across the real estate industry. In recent years, the rent has been an important source of income for many, therefore the current regime is going to impact the sentiments of the homebuyers for the period to come. The Government should soon intervene and provide a few measures that shall encourage the end-users to continue their investments.”

Reiterating the same, Jitesh Lalwani – President, Homesync Real Estate Advisory said, “The introduction of 18% GST on residential rentals will have a major impact on the homebuyers sentiments. The decision will also have a severe effect hampering the demand for rental real estate.”

“Rental businesses have become one of the major sources of income for people and with the new rule in GST, the residential rental market is expected to get impacted. Earlier the GST was only levied on the commercial properties that were open for rent, now focus has shifted to the current soaring residential rental market which might experience a little downside,” said Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory.

Also Read: Slash GST Rates, New Demand After Stamp Duty Cut

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By Varun Singh

Slash GST rates, is the new demand that the developer community has in pipeline after the stamp duty rate cut was announced on Wednesday.

Developers of Mumbai had been petitioning the state government for a very long time, to reduce stamp duty rates.

Finally the state government announced that for the period between September 1, to December 31, the stamp duty shall be reduced by 3%. The same will be reduced by 2% between January 1, 2021 to March 31, 2021.

This means, if one buys a flat in Mumbai worth Rs 1 crore, he will pay stamp duty at current rate of 5% which would be Rs 5 lakh. But now till December 31 from September 1, the stamp duty will be Rs 2 lakh and the same would be Rs 3 lakh between January 1, 2021 to March 31, 2021.

Now with the state government fulfilling the demands of the developer community, the new demand is already up and it’s related to GST.

GST is with the central government, and the developers feel a cut in GST rates would mean a great relief for the real estate sector.

Lauding the stamp duty cut, Dr Niranjan Hiranandani, National President, NAREDCO said, “If central government can slash GST rates in an upcoming council meeting (it) would act as a shot in the arm”

Builders believe that, the amalgamation of both GST rate cut with stamp duty cut will act as a catalyst for home developers to come ahead and buy homes.

Meanwhile, the home loan interest being at its lowest, builders say that this is the right time to invest in a home.

Rajan Bandelkar, President, NAREDCO West said, “It is a convenient time (to buy a house) considering that stamp duty has been reduced, also, property prices and bank loan rates are at a low.”

Even Kamal Khetan, Chairman and Managing Director, Sunteck Realty Ltd believes that the announcement by state government will accelerate the residential real estate demand and further improve the sales momentum.

Shishir Baijal, Chairman & Managing Director, Knight Frank India, hopes that this move (stamp duty cut) will help the residential real estate segment to gain the ground lost during the pandemic and stimulate demand.

It is also expected that, the stamp duty cut will push festive season sales

Anuj Puri, Chairman – ANAROCK Property Consultants, says, “To ease inventory pile-up and cost overruns, many players have already topped off discounts with added incentives such as booking amount refunds, statutory fees waivers, cashback schemes, easy payment structuring and assorted freebies. This stamp duty rate cut can push sales further into the green during the festive season.”

Even Bhushan NemlekarDirector, Sumit Woods Limited, calls the decision on stamp duty reduction as a festive gift for homebuyers, which will improve the sentiments and instill confidence in homebuyers. 

This is the second time this year the state government has taken such a step to provide relief for homebuyers. Manju Yagnik, Vice Chairperson Nahar Group and Vice President NAREDCO Maharashtra, said, “The 3% cut combined with the 1% stamp duty cut announced earlier in the year will help attract investment in the housing sector.”

Meanwhile the stamp duty cut will not only benefit homebuyers, but also will help the state government get some revenue as the sales are expected to go up with the new announcement.

Also Read: Stamp Duty Reduced Read How Much You Will Save

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