One Year of the Landmark GST – Impact on the RE Market

The passage of GST

Nearly a year ago, on 1 July 2017, the government of India implemented the most landmark taxation reform in the country till date, Goods and Services Tax (GST). The destination-based tax was designed to turn India into a unified common market by subsuming various indirect taxes, such as excise duty, service tax and value added tax (VAT), levied by the central and state governments. The removal of various federal tax barriers and creation of a common market was done with the intention to improve supply chain efficiencies, thereby attracting more investment through better tax conformity and removal of the cascading effects of the erstwhile tax regime.

Tightening Inflation, Easing Regulation

While the repo rate was hiked for the first time since Jan 2014, various developmental and regulatory policies were eased

The Ten Commandments of 2017 and their Impact on India's RE Market in 2018

For India’s real estate sector, 2017 will go down as a year in which government-mandated measures resulted in imperative structural changes. Many long-deliberated policies came to fruition and existing legislations saw much-awaited updates.

Q1 GDP touches a 2 year high; translates into strong growth for the RE sector

Jan – March GDP growth indicates a strong economic recovery

India’s growth story hit a high note last week as the government reported GDP growth of 7.7% for the quarter ending March 2018. This two-year high was mostly led by the construction (11.5%), manufacturing (9.1%) and agriculture (4.5%) sectors. Not only have the manufacturing PMIs remained upbeat, capacity utilization rates have also been high. Private consumption has also remained positive as reiterated by growth in consumption indicators such as vehicle sales, consumer durable sales, amongst others. Government consumption on the other hand also remained strong due to various state elections held during and post the review period.

While this strong growth has brought cheer to the economy, it needs to be put in perspective that the growth has happened in the backdrop of a downward revision in the GDP figures for the past three quarters. The government revised the GDP growth figures for Q1, Q2 and Q3 2017-18 to 5.6%, 6.3% and 7.0%, respectively; thereby bringing the overall growth for 2017-18 to 6.7% as compared to 7.1% in 2016-17. The silver lining however is that a quarterly analysis of the GDP figures reveals a growth trajectory in the economy, a trend which is expected to gain momentum in the coming quarters.

India's Budget 2018-19 - Government's focus is on the 'Ease of Living'

The Indian government presented its annual budget for 2018-19 earlier today. The budget struck a populist note and largely focused on agriculture, rural infrastructure, medium and small-scale enterprises. The government displayed its intention to focus on ease of living, by strengthening agriculture and rural economy, provision of good healthcare to economically less privileged, taking care of senior citizens, infrastructure creation and working with the states to provide more resources for improving the quality of education in the country.

2017 The Year of RERA - What is the present STATE?

The Real Estate Regulatory Act (RERA) which came into effect from 1^st May 2017 was aimed at ensuring accountability, infusing transparency and bringing uniformity in practices in the real estate sector. The Central Act which was notified during 2016 covered both on-going and new projects under its purview. However, while notifying the rules, select states have diluted this regulation by exempting majority of the under-construction projects, along with other dilutions. As the year comes to a close, we review the implementation status of this landmark Act. The table below highlights the status of RERA implementation across states as of December 2017:

Towards A Unified India: GST Becomes Operational Today

The Goods and Services Tax (GST) has finally become a reality, close to one and a half decades after it was first proposed. The journey of moving towards a single-tax system has not been particularly smooth as the GST has faced innumerable challenges due to issues regarding its structure, tax bracket and subventions for states that may face revenue losses. However, despite the challenges and resistance, the determination of the government to implement a single-tax system has shown results, as the tax comes into force from today. While a landmark tax like this is expected to have far-reaching implications for all sectors in the economy, through this market flash we are trying to highlight the impact that GST will have on the real estate sector.