SUMMER TRAINING PROJECT REPORT

On

(THE IMPACT OF GST IN INDIA, FINAL

CONCLUSION OF ALL PREVIOUS TAXES)

Towards partial fulfillment of

Master of Business Administration (MBA)

School of Management, Babu Banarasi Das University, Lucknow

Submitted by

(ARPITA MANI TRIPATHI)

IIIrd Semester

Roll No-1220672089

Session 2023-24

School of Management
Babu Banarasi Das University
Sector I, Dr. Akhilesh Das Nagar, Faizabad Road, Lucknow (U.P.) India
COMPANY CERTIFICATE
 DECLARATION

I ARPITA MANI TRIPATHI hereby declare that the field work entitled of “THE IMPACT OF
GST IN INDIA, FINAL CONCLUSION OF ALL PREVIOUS TAXES”
submitted to
the BBDU, LUCKNOW is a record of an original work done by me under the guidance Of
MY MENTOR Dr. JYOTI SHUKLA and this Summer training project report is submitted in the partial
fulfillment of Master in Business Administration.

ARPITA MANI TRIPATHI

 ACKNOWLEDGEMENT

No project report ever reflects the efforts of a single individual. The report owes
its existence to the constant support and guidance of a number of people. I am
thankful to all of them.

I would like to thanks my MENTOR Dr. JYOTI SHUKLA for giving their
valuable time and providing useful insight into finer aspects of marketing.

I am grateful to my coordinator Dr. BHAVNA PANDEY who have guided

me to the completion of the summer training project report.

I am also grateful to all those who have either directly or indirectly contributed
towards the completion of the project, for their support and encouragement.

ARPITA MANI TRIPATHI

 TABLE OF CONTENTS

Company Certificate ................................................................................................................. i

Certificate ................................................................................................................................. ii
Declaration ............................................................................................................................... iii
Acknowledgement ................................................................................................................... iv

Sr. No. Topics Page

No.

1 Company Profile 1-2

2 Introduction 3

3 About GST 4-40

4 Impact of GST on different Sectors 41-44

5 Objectives of the study 45

6 Research Methodology 46-47

7 Limitations 48

8 Data Analysis & Interpretations 49-68

9 Findings 69

10 Recommendations 70

11 Conclusions 71

12 Bibliography 72-73
COMPANY PROFILE

6
 INTRODUCTION

In India there has always been a need to improvise the way of working to achieve better results,
saving in time, energy and cost. In doing so, there are lot of shortcuts taken, lots of time saving
activities are conducted which results in inadequate data regarding all aspects of the projects.
There are certain things which are completely absent when it comes to documentation of all the
project data on completion of project. In all these things, there exists a scope of improvement,
in order to regularize this, the finance ministry has put up Goods & Service Tax (GST) in order
to regularize the construction sector. Introduction of Goods & Service Tax (GST) by the
government of India has led to a lot of ambiguity in the Construction industry because it’s not
only a new thing to deal with but, it will also regularize the so called “Unorganized Sector”. To
arrive at a conclusion, detailed studies starting from the gestation phase to the handover phase
would depict in detail where are the area of concern where the cost of project has affected due
to GST implementation. These studies not only give a clearer picture of what all area of concern
are to be seen to eliminate the unnecessary cost but it will also help the project manager to
analyze and form such schedules that are met with as per the scheduled cost and time frame to
nullify the effects of cost variation in the building construction industry. So, to get a clear
picture of increase or decrease in cost due to GST, detailed study of a project before and after
GST is done for a check in cost variation.

A single tax structure is definitely a welcome move and the introduction of Goods and Services
Tax (GST) seeks to do just that by way of amalgamating a large number of Central and State
taxes into a single tax. GST will not only address the concerns of double taxation but will also
help in reducing the overall tax burden on goods and services. Furthermore, it will also help in
making Indian goods competitive internationally thus providing a much-needed boost to the
economy.

The Real Estate industry is one of the most pivotal sectors in India and has seen a phenomenal
growth, not just in cities, but even small towns. GST is another development that will have a
significant impact on this sector. Let’s take a look what is GST and its impact on the
construction industry and the real estate sector in Lucknow.

7
 ABOUT
Goods & Service Tax
(GST)

8
Goods and Services Tax (GST) is an indirect tax (or consumption tax) used in India on the
supply of goods and services. It is a comprehensive, multistage, destination-based tax:
comprehensive because it has subsumed almost all the indirect taxes except a few state taxes.
Multi-staged as it is, the GST is imposed at every step in the production process, but is meant
to be refunded to all parties in the various stages of production other than the final consumer
and as a destination-based tax, it is collected from point of consumption and not point of origin
like previous taxes.

The tax came into effect from 1 July 2017 through the implementation of the One Hundred and
First Amendment of the Constitution of India by the Indian government. The GST replaced
existing multiple taxes levied by the central and state governments.

India adopted a dual GST model, meaning that taxation is administered by both the Union and
state governments. Transactions made within a single state are levied with Central GST
(CGST) by the Central Government and State GST (SGST) by the State governments. For
inter-state transactions and imported goods or services, an Integrated GST (IGST) is levied by
the Central Government. GST is a consumption-based tax/destination-based tax, therefore,
taxes are paid to the state where the goods or services are consumed not the state in which they
were produced. IGST complicates tax collection for State Governments by disabling them from
collecting the tax owed to them directly from the Central Government. Under the previous
system, a state would only have to deal with a single government in order to collect tax revenue

9
 REVENUE DISTRIBUTION:

Revenue earned from GST (intra state transaction - seller and buyer both are located in same
state) is shared equally on 50-50 basis between central and respective state governments. For
distribution of IGST (inter state transaction - seller and buyer both are located in different
states) collection, revenue is collected by central government and shared with state where good
is imported. Example: 'A' is a seller located in state of Goa selling a product to 'B' a buyer of
that product located in state of Punjab, then IGST collected from this transaction will be shared
equally on 50-50 basis between central and Punjab state governments only.

GOOD & SERVICES TAX NETWORK:

The GSTN software is developed by Infosys Technologies and the Information Technology
network that provides the computing resources is maintained by the NIC. "Goods and Services
Tax Network" (GSTN) is a nonprofit organization formed for creating a sophisticated network,
accessible to stakeholders, government and taxpayers to access information from a single
source (portal). The portal is accessible to the Tax authorities for tracking down every
transaction, while taxpayers have the ability to connect for their tax returns.

Given below is how will GST works:

• Manufacturer: The manufacturer will have to pay GST on the raw material that is purchased
and the value that has been added to make the product.
• Service Provider: Here, the service provider will have to pay GST on the amount that is paid
for the product and the value that has been added to it. However, the tax that has been paid
by the manufacturer can be reduced from the overall GST that must be paid.
• Retailer: The retailer will need to pay GST on the product that has been purchased from the
distributor as well as the margin that has been added. However, the tax that has been paid by
the retailer can be reduced from the overall GST that must be paid.
• Consumer: GST must be paid on the product that has been purchased.

10
 TYPES OF GST:

The four different types of GST are given below:

1. Central Goods and Services Tax : CGST is charged on the intra state supply of products
and services.
2. State Goods and Services Tax : SGST, like CGST, is charged on the sale of products or
services within a state.
3. Integrated Goods and Services Tax : IGST is charged on inter-state transactions of
products and services.
4. Union Territory Goods and Services Tax : UTGST is levied on the supply of products and
services in any of the Union Territories in the country, viz. Andaman and Nicobar Islands,
Daman and Diu, Dadra and Nagar Haveli, Lakshadweep, and Chandigarh. UTGST is levied
along with CGST.

ELIGIBILITY:

The below mentioned entities and individuals must register for Goods and Services Tax:

• E-commerce aggregators
• Individuals who supply through e-commerce aggregators
• Individuals who pay tax as per the reverse change mechanism
• Agents of input service distributors and suppliers
• Non-Resident individuals who pay tax
• Businesses that have a turnover that is more than the threshold limit
• Individuals who have registered before the GST law was introduced

REGISTRATION OF GST:

Any company that is eligible under GST must register itself in the GST portal created by the
Government of India. The registered entities will get a unique registration number called
GSTIN.

It is mandatory for all Service providers, buyers, and sellers to register. A business that makes
a total income of Rs.20 lakhs and more in a financial year must be required to do GST
registration. It takes 2-6 working days to process.

11
GST Rates in India

In India, almost 500+ services and over 1300 products fall under the 4 major GST slabs. These
comprise rates of 5%, 12%, 18%, and 28%. The GST Council periodically revises the items
under each slab rate to adjust them according to industry demands and market trends.

The updated structure ensures that the essential items fall under lower tax brackets, while luxury
products and services entail higher GST rates. Few examples are-

12
 Items OLD NEW
Rate Rate

Second-hand medium and large cars and SUVs 28% 18%

LPG supply for household domestic consumers by private LPG 18% 5%

distributers

Bio Fuels Powered buses 28% 18%

Sugar boiled confectionery 18% 12%

13
Objectives of GST

• To achieve the ideology of ‘One Nation, One Tax’

GST has replaced multiple indirect taxes, which were existing under the previous tax regime.
The advantage of having one single tax means every state follows the same rate for a particular
product or service. Tax administration is easier with the Central Government deciding the rates
and policies.

• To subsume a majority of the indirect taxes in India

India had several erstwhile indirect taxes such as service tax, Value Added Tax (VAT), Central
Excise, etc., which used to be levied at multiple supply chain stages. Some taxes were governed
by the states and some by the Centre. There was no unified and centralized tax on both goods
and services. Hence, GST was introduced. Under GST, all the major indirect taxes were
subsumed into one. It has greatly reduced the compliance burden on taxpayers and eased tax
administration for the government.

• To eliminate the cascading effect of taxes

One of the primary objectives of GST was to remove the cascading effect of taxes. Previously,
due to different indirect tax laws, taxpayers could not set off the tax credits of one tax against
the other. For example, the excise duties paid during manufacture could not be set off against
the VAT payable during the sale.

• To curb tax evasion

GST laws in India are far more stringent compared to any of the erstwhile indirect tax laws.
Under GST, taxpayers can claim an input tax credit only on invoices uploaded by their
respective suppliers.

• To increase the taxpayer base

GST has helped in widening the tax base in India. Previously, each of the tax laws had a
different threshold limit for registration based on turnover. As GST is a consolidated tax levied

14
on both goods and services both, it has increased tax-registered businesses. Besides, the stricter
laws surrounding input tax credits have helped bring certain unorganised sectors under the tax
net. For example, the construction industry in India.

• Online procedures for ease of doing business

Previously, taxpayers faced a lot of hardships dealing with different tax authorities under each
tax law. Besides, while return filing was online, most of the assessment and refund procedures
took place offline. Now, GST procedures are carried out almost entirely online. Everything is
done with a click of a button, from registration to return filing to refunds to e-way bill
generation. It has contributed to the overall ease of doing business in India and simplified
taxpayer compliance to a massive extent. The government also plans to introduce a centralised
portal soon for all indirect tax compliance such as e-invoicing, e-way bills and GST return
filing.

• An improved logistics and distribution system

A single indirect tax system reduces the need for multiple documentation for the supply of
goods. GST minimizes transportation cycle times, improves supply chain and turnaround time,
and leads to warehouse consolidation, among other benefits. Ultimately, it helps in cutting
down the high logistics and warehousing costs.

• To promote competitive pricing and increase consumption

Introducing GST has also led to an increase in consumption and indirect tax revenues. Due to
the cascading effect of taxes under the previous regime, the prices of goods in India were higher
than in global markets. Even between states, the lower VAT rates in certain states led to an
imbalance of purchases in these states.

15
TYPES OF FORMS:

GST registered businesses typically have to file three returns per month (GSTR-1, GSTR-2
and GSTR-3) in each state where they operate. An annual GST return is also required. This
means a business will have to complete various returns per annum in each state where they are
trading.

16
ANNUAL RETURN FORMS:

Before filing GSTR 9, the taxpayer must file all GSTR-1, GSTR-3B, or GSTR 4 returns. In
case of over dues, the GSTR registration holder will not be allowed to file an annual GST
annual return.

17
 GST Advantages:

• Transparency and Accountability: - GST will lend a whole lot of transparency in the
real estate sector while also playing a major role in minimizing unscrupulous (black money)
transactions. Currently, there is a huge percentage in every project where expenditure goes
unrecorded on the books. GST by curbing the practice of fake billing on purchase-side will help
cut down cash component in construction, which in turn, will help in boosting stakeholder’s
confidence.

• Input Tax Credit:- Although the GST rate of 18% on the supply of works contract in the
construction sector may be higher than the previous rates, the regime of local composition
schemes is over, though now they are eligible for full input tax credit. However, many of the
listed construction services such as constructions of dams, roads etc. which were previously
exempted are now under the GST purview. This basically means the average construction
contract in the previous regime which used to hover around the 11–18% range is now
chargeable at a flat rate of 18%.

• Technologically Driven :-
Being technologically driven, the entire process of registration and filing of returns is
accelerated. It also ensures that the process is clean and tax collection is done legitimately. The
online GST Portal supports the following activities:

• Registration
• Return filing
• Application for refund
• Response to notices
• Consumer grievances

18
 SALIENT FEATURES:

1. In the GST system, when all the taxes are integrated, it would make possible the taxation burden
to be split equitably between manufacturing and services.
2. GST will be levied only at the final destination of consumption based on VAT principle and
not at various points (from manufacturing to retail outlets). This will help in removing
economic distortions and bring about development of a common national market.
3. GST will also help to build a transparent and corruption free tax administration.
4. Presently, a tax is levied on when a finished product moves out from a factory, which is paid
by the manufacturer, and it is again levied at the retail outlet when sold.
5. GST is backed by the GSTN, which is a fully integrated tax platform to deal with all aspects
of GST.

Overall, GST is expected to help bring a lot of required transparency and accountability.
Moreover, owing to the expected free flow of credit, developers should be able to enjoy an
increase in overall margin. Whether these benefits trickle down to the consumers is yet to be
seen as the pricing in this sector tends to be dictated by market forces rather than costing policies.
Looking from the consumer point of view, the one primary advantage would be in terms of
decrease in the overall tax burden on goods and increased transparency in tax system. GST will
also help in eliminating unnecessary paperwork while eliminating time wastage spent by good
suppliers at various state borders.

19
 TIME OF SUPPLY OF SERVICE

PLACE OF SUPPLY IN GST

• The place of supply of the service is the location of the immovable property.
Example-If site is at New Delhi and office is at Gujarat. Immovable property is build up in
New Delhi, hence it will be the place of supply of services.

INPUT TAX CREDIT ON WORKS CONTRACT UNDER GST

• Input Tax Credit of GST paid on Works contract will be allowed

• The output supply is also Works Contract
• When the Contract is for construction of Plant and Machinery.

Apart from the above two, no Input Tax Credit will be available for works contracts for
construction of immovable property. For Example- Hotel.

20
 CONTINUOUS SUPPLY OF SERVICE

It means a supply of services which is provided or will be provided continuously or on recurrent

basis under a contract for a period exceeding three months with periodic payment obligations

Where the due date of payment is ascertainable from the contract Time of supply shall be the
due date of payment..

Where the due date of payment is not ascertainable from the contract Time of supply it will be
earliest of

1) date of receipt of payment or

2) the date of issue of invoice

Where payment is linked to the completion of an event Time of supply it will be earliest of

1) date of receipt of payment Or

2) completion of event where payment is linked to completion of event.

21
Impact of GST on real estate:

The construction of a complex building, civil structure, or a part thereof, intended for sale to a
buyer, wholly or partly, is subject to 12 per cent tax with full input tax credit (ITC), subject to
no refund in case of overflow of ITC. In other words, residential construction services, will
invite GST at the rate of 12 per cent, which will apply to developers selling residential units
before completion of construction to the home buyers.

According to the JM Financial report on GST, for states with non-composite VAT, the
transaction value changes marginally from 10-11% to 12% under the new regime. With input
cost credits available, developers in these regions may witness improvement in margins in case
no price revision takes place (subject to the anti-profiteering clause).

Abhishek Anand, Assistant vice-president (Equity Research), JM Financial Ltd, explains: “In
the current regime, states with composite VAT require developers to pay lower VAT rates on
the total property value without any input tax benefit (UP) or partial benefit (intra state offset-
Lucknow). Developers get offset for only the input service tax component. In the GST regime,
the transaction cost increases to 12%, with input credit available on both, services and material.
Property transaction costs will increase by 6%, in case no input credit is passed on by developers.
If developers pass on the input credit to buyers, the property price increase could be restricted
to 1-2%.” If the developers pass on the credits completely and bring down the base prices, then,
home buyers may marginally benefit under the GST regime.

22
Will GST help home buyers?

With the introduction of the Goods and Services Tax (GST), the total incidence of tax will
increase from 5.5 per cent to 12 per cent. However, developers will be able to avail of input
credit, on all the goods and services purchased and spent in the construction of the property.

Shrikant Paranjape, Former President of UP RERA, maintains that “The impact of the GST on
property prices, will be difficult to gauge at this stage because of the lack of clarity on abatement
for land value. In a product, where the major raw material is not covered by the GST and the
completed unit is also not covered by the GST, the tax input benefit will be hard to calculate or
justify. Only the market forces, the ready reckoner rates and time, will decide whether and how
much benefit will be passed on by the developers to the purchasers.”

Moreover, the prices of input materials can also be volatile. Cement and steel prices can soar,
without warning. Similarly, sand is always in short supply and not available in the monsoons.
Hence, it is likely that these industries may not pass on the entire benefit of tax credit.

Another important factor that needs to be examined, is the stage of construction. If the project
is at an advanced stage, where substantial cost has already been incurred before the application
of the GST, very little input credit will be available and very less benefit will be passed on. If
the project is at an early stage, more benefits can be passed on.

GST on under construction property – Affordable housing:

It is important to note that housing projects (affordable housing is currently exempted from
service tax and a clarification is expected from the government for exemption from GST), then,
affordable homes may become cheaper under the GST regime.

23
Government directs builders not to charge GST on affordable housing:

The government, on February 7, 2019, asked builders not to charge any Goods and Services
Tax (GST) from home buyers, as the effective GST rate on almost all affordable housing
projects is eight per cent, which can be adjusted against the input credit. It said builders can
levy GST on buyers of affordable housing projects, only if they reduce the apartment prices after
factoring in the credit claimed on inputs.

In its last meeting on January 18, 2019, the GST Council had extended the concessional rate of
12 per cent GST, for construction of houses under the Credit- Linked Subsidy Scheme (CLSS)
to promote affordable housing, which has been given infrastructure status in 2018-19
Budget. The effective GST rate, however, comes down to eight per cent, after deducting one-
third of the amount charged for the house/flat, towards land cost. This provision was effective
from January 25, 2019.

24
Impact of GST on property prices – Luxury segment:

In the case of premium properties, while the basic construction cost may come down a little,
but as the input tax credit is limited to 12 per cent, it will not be sufficient to bring down the
fresh tax liability to nil because of the taxes paid on other expenditures.

GST rates for real estate – Input materials

HSN Description of goods Rate

Chapter 72 Steel 18 per cent

2523 Cement 28 per cent

6802 Marble and granite 28 per cent

2515 Blocks of marble and granite 12 per cent

2505 & 2517 Natural sand, pebbles, gravel 5 per cent

8428 Lifts and elevators 28 per cent

Under the tax regime, many of the construction materials are under the 18 and 28 percent slab.
For example, steel and steel products, are mostly in the 18 per cent segment and cement and
prefabricated structural components for building or civil engineering, are in the 28 per cent
slab. However, as the input tax credit is available on products utilized for construction, the
overall tax incidence should be neutralized.

25
Reverse charge mechanism in GST and its impact on construction costs:

The mechanism, where the recipient of services pays the service tax, is called as ‘reverse charge
mechanism’ (RCM). The same concept, with wider application, has been borrowed from the
service tax laws in the Goods and Services Tax (GST) regime.

A developer has to pay GST on services availed, like those provided by a person who is located
in a non-taxable area, services provided by goods transporters, legal services provided by an
individual or firm, etc. The developer also has to pay GST under the reverse charge mechanism,
on the services provided by government or local authorities, like municipalities, etc.
Nevertheless, some of the services provided by the government, like renting of premises,
specific services provided by the postal authorities, transport of goods by railways or by state
transport undertakings, etc., are outside the scope of the GST, similar to the service tax regime.

A significant departure under the GST laws, compared to the erstwhile service tax provisions,
is that under the reverse charge mechanism in GST, a person who is registered under the GST
has to pay GST on all the services and goods that are procured from a person who is not
registered under GST.

So, under the GST, the builder sare worse off due to the dual effect of the levy of GST on the
services availed from unregistered person, as well as the requirement to discharge the reverse
tax on goods received from unregistered suppliers. This will certainly increase the costs for the
developer, especially the small developers who were availing goods and services from
unregistered suppliers earlier and were not bearing the cost of taxes to that extent.

GST on ready properties:

26
If the Occupation Certificate for the project has been received, then, no GST will be applicable.
A report points out that at present, a developer pays excise tax and VAT, on inputs like cement
and steel, at 27.7 per cent and 18.1 per cent, respectively, which vary from state to state. Now,
under the GST regime, cement and steel will be taxed at 28 per cent and 18 per cent,
respectively, while other inputs like paint and white goods, will be taxed at 28 per cent. The
final product – the housing unit – will be taxed at 12 per cent, with credit for taxes paid on
inputs. As the tax levied on the entire cost including the land will be 12 per cent, the amount
would be sufficient to provide for the input credit for developers. Hence, a buyer opting for a
ready-to- move-in apartment, is saved from the tax burden.

However, the tax calculations under the GST regime, for the real estate market, are not so
simple. For example, the GST on under-construction projects will be charged to home buyers
on the sale price but the credit can be availed by the developers, only on the cost of construction.
As the builder will have to pay the GST on the full projectand the input availed is only on the
construction cost, there may be a gap that is no less than 30 per cent. Consequently, construction
property the developer will hike the prices in that proportion, to make sure this gap is bridged.

GST on property rentals:

“Credit/set-off of input GST is available to a developer, if the sale is executed prior to obtaining
the completion certificate or prior to first occupancy. However, this credit is not allowed if the
developer chooses to rent out the property. Hence, we might see spike in commercial rentals,”
explains Amit Sarkar, partner and head – indirect taxes, BDO India.

GST has also been levied on the renting of residential property, for use as an accommodation.
Consequently, tenants may witness a hike in rent payment under the GST system, as there is
no service tax applicable on residential properties, in the existing system.

27
Here’s how the GST will impact the tax computation on rental income:

With the clubbing of taxes on goods and services, under the GST regime, the confusion about
levy of separate tax on service and goods is done away with.

Unlike under the service tax regime, the threshold limit for applicability of GST has been
increased from Rs 10 lakhs to Rs 20 lakhs. So, many of the landlords who were covered under
the service tax regime, will go out of the indirect tax net, under the GST. It may be interesting
to note that for the purpose of computing the aggregate limit of Rs 20 lakhs under the GST, all
the taxable, as well as exempt goods and services supplied, shall be taken into account. So,
unlike the service tax regime, where it is only the taxable services, which are taken into account
for determining whether you have crossed the basic threshold, under the GST, the value of all
the service and goods supplied in India, as well as exported, whether taxable or exempt, are
taken into consideration for the Rs 20-lakh limit. The GST is proposed to be levied at 18 per
cent, on the letting-out of commercial properties.

There is one more major tax implication under the GST, with respect to rent on commercial
properties. The parliament has borrowed the concept of ‘reverse charge mechanism’ from the
service tax regime, under the GST. However, unlike in the service tax regime, where the reverse
charge mechanism is applicable in case of services and is not extended to the sale or
manufacturing of goods, the same is made applicable for goods as well as services, under the
GST regime. A person who is registered under GST, who gets supplies of goods or services
from a person who is not registered under GST, will have to pay the GST under the reverse
charge mechanism. Under the service tax regime, there is no provision of reverse mechanism,
with respect to the rent paid by the lessee. The proposed GST provisions, due to the increased
rate and the levy under the reverse mechanism, will eventually make it costlier to take any
commercial premises on rent.

28
Will GST make home loans expensive?

Before evaluating the likely impact of the GST on home loan costs, it is important to understand
the components that will be impacted by the increased rates under the GST. The main cost of
taking a home loan, is the interest payment on the money. This cost will not change, as there is
no service tax or GST on it. Similarly, any stamp duty charged in connection with the
documentation of the home loan, will not change with the GST, as stamp duty is not subsumed
under the GST.

However, there are various charges that are levied by lenders on home loans. First and foremost
is the processing fee that is paid at the time of taking the home loan. At present, it is 15 per cent
but it will go up by 3 per cent under the GST, to 18 per cent. This is generally a one-time cost
and its overall impact on your home loan tenure, will be insignificant. The banks may also
recover other charges like advocate fees, valuation charges, etc., in connection with the home
loan, which will go up proportionately.

Like the processing fee paid at the time of application, you may have to pay prepayment charges,
in case you decide to prepay the home loan before the completion of its tenure or shift the home
loan to another lender. This is generally payable; in case the home loan is taken under a fixed
rate of interest. For floating rate home loans, banks cannot levy any prepayment charges.
Housing finance companies can, however, levy the prepayment charges, if you decide to shift
the home loan to another lender. However, for payment of the home loan from your own
resources, the housing finance companies cannot levy any prepayment charges.

The lenders can also charge you for any EMI default, either due to return of the cheque or ECS
return, on which the GST rates will go up. So, it is practically on all the charges that are
recovered by the lenders that the GST rates will go up by 3 per cent.

29
Effects of GST:-

Construction Industry has two major game change one in form of RERA and now GST impact.
The old litigation in work contract and many landmark decision on service tax and vat laws
now no more valid. The construction entity to rework on cost structure by doing post and pre
GST impact analysis.

They say ‘Change is the only constant’ but in order to succeed, change is not only constant but
it is also inevitable. After many reforming initiations like “Housing for all” and RERA, the
next thing that Real Estate along with all other sector is looking forward to is the Goods and
Services Tax. GST is set to get implemented on 1st July 2017. There are various goods and
services which will have different rates prescribed by GST, which may impact their cost. A
homebuyer henceforth will have to pay 12% GST to purchase a under construction house. If
we look at the current scenario, real estate sector was heavily taxed, therefore 12% single tax
structure is definitely a welcome move. We believe that existing multiple indirect taxes on the
sector is higher and tax impact under GST would be neutral. While the impact of GST on
various sectors and goods is now known, industry experts are still divided over how GST will
impact real estate going ahead as clarity on the tax slabs for services is still awaited.

Together with RERA, GST will go a long way in ensuring transparency in the realty sector and
growing buyer confidence. The existing channels include issues of multiple taxation,
amounting to indirect taxes and no uniformity. GST coupled with Real Estate Regulatory Act
that has come into effect on May 1, 2017, would ensure efficiency in the realty sector. GST
will free homebuyers and investors from the hassle of paying several state taxes at different
levels, therefore removing the double taxation impact. Therefore 12% tax rate under GST
regime looks favorable to the industry.

If we talk about nitty-gritty’s of the GST for real estate sector, in some cases, even input credit
will be more than the GST levied on the finished product, but a developer can claim a maximum
credit to the extent of the GST he would be paying on the finished product. As per the
provisions of GST, it can be expected that GST may lead to input cost deflation for construction
industry as credit of taxes paid on various inputs used in the construction activities will be
available which is not available in current tax regime.

30
GST is also likely to boost foreign investment and benefit the community for investment in
real estate because of a seamless all-inclusive channel available. The simplification of taxation
is probably the most positive aspect of GST and it will promise well for foreign investments.
It will also raise the confidence of the market to invest in Indian real estate.

From the consumer point of view, the major advantage would be in terms of decrease in the
overall tax burden on goods. Currently it is estimated about 25%-30%. GST will help in free
transport of goods without stopping at the state borders for long hours for payments of state tax
or entry tax from one state to another state. This will reduce in paperwork to a great extent as
well.

The implementation of the GST, will bring some tax savings for the lenders, as the input credit
with respect to the services availed, as well as goods purchased, will be available for set off,
against the GST output taxes liability. However, the reverse charge mechanism, which is
borrowed from the service tax regime and which is expanded under the GST, will adversely
affect the profitability of banks. Moreover, lenders are now required to register in all the state
under the GST, whereas, under the service tax regime, they could have obtained one centralized
registration. This will significantly increase the compliance costs of the lenders and affect their
profitability.

31
Grey areas in the GST that could determine the final price of properties:

It is still not clear what would be the abatement available for the land cost, for calculating
service tax on under-construction projects. The abatement rules, as applicable under the service
tax regime and the input tax credit facility for developers, will determine if the effective tax
incidence on real estate, is lower or higher under GST.

Effectively, the composition scheme allowing for abatement against cost of land to the extent of
75 per cent of the house cost, for residential units priced under Rs 1 crore and less than 2,000
sqft, makes the effective rate at 3.75 per cent. In other cases, the abatement goes down to 70
per cent, making the effective rate at 4 per cent. This will go a long way, in determining whether
GST is tax neutral or tax adverse for real estate.

In addition, as states have different state-level taxes, the implication of GST may not be
uniform, across all states.

Strong case for bringing real estate under GST: Finance minister Arun Jaitley

Former minister Arun Jaitley, while delivering a lecture at Harvard University on October 12,
2017, has said that the real estate sector should, ideally, be brought under the ambit of the
Goods and Services Tax (GST). “The one sector in India, where maximum amount of tax
evasion and cash generation takes place and which is still outside the GST, is real estate. Some
of the states have been pressing for it. Impact of GST may vary according to the type of project
and construction methods as only under construction flats are taxable under GST and input
credits on sales of under construction flats are available to set off. At this stage, it is difficult
to comment exactly on which type of projects will have more impact and which type of project
will have more benefits. Therefore to analyze the type of project beneficial under new tax
regime, it is advisable for developers to conduct GST impact analysis programmed before
implementing GST Systems.”

32
As per the provisions of GST ITC Rules, input taxes paid on various elements used for the
business (in our case construction activities) will available to offset against the tax liability i.e.
GST collected from the buyers against the sale of under construction flats subject to certain
restriction.

It can be said that developer or promoter needs to pay only differential tax liability to the
Government Body. Developer or Promoter has to collect taxes from customers from time to
time and he is eligible to take input tax credit on goods as well as services used for construction
activities. GST will help cut cash component in construction as products have to be sourced
from registered vendors to get input tax credits.

Though under GST tax rate on under construction flats will increase to 12% from tax under
current regime i.e. 5.5% (Service tax and vat rate under UP State) but input tax credit made
available to promoters/ developers will reduce the impact of tax liability on cost of the projects.
Also GST will subsume various taxes like vat, service tax, excise duty, entry tax, octroi Duty
in Lucknow will also help to reduce administrative cost of developers. Under GST regime also
Stamp Duty will be applicable on sale of flats and units.

Since the tax incidence on various monuments stones, aluminum, glass, ceramic, lamps and
fittings are in the bracket of 18-28%, it can be expected that cost of luxury projects and
commercial projects may rise if input set off not utilized properly. Most of the construction
material falling is under the 18% and 28% slab.

Currently under VAT system in UP, tax exemption is not available to affordable housing
scheme. As per the announcement from Finance Ministry in media it has been expected that
there will be no tax under GST for housing projects which comes under Affordable Housing
scheme. Also for avoiding extra burden of tax liability on inputs and input services used for
projects covered under Affordable Housing scheme should be allowed to be exempt. This will
ensure cost inflation impact is not passed by promoters/developers to customers who purchase
residential units under the Affordable Housing scheme personally believe that there is a strong
case to bring real estate into the GST,” Jaitley said. The finance minister said the move would
benefit consumers, as they will only have to pay one final tax on the whole product. “As a
result, the final tax paid on the whole product under the GST, would almost be negligible,” he
said.

33
Will GST on real estate benefit home buyers and the sector?

There are many issues and grey zones that need to be ironed out, before becomes. Niranjan
Hiranandani, President of NAREDCO, maintains that bringing real estate under GST’s ambit,
will benefit the consumers who will only have to pay one final tax on the whole product.

However, if the GST slab for real estate is finalized above 12 per cent, then, home buyers and
developers may take a hit, at a time when property prices are already. Moreover, the finance
minister will also have to convince states to come on board, to create a consensus. This maybe
particularly tough, in states where real estate transactions are major source of revenue for the
state, through stamp duty and property registrations.

Situation of Real Estate: Gains and losses

Home buyers in the affordable housing segment, specifically, homes of up to 60 sq meters

carpet area in size, have benefited significantly from the reduction of GST by four per cent
(from 12 per cent to eight per cent).

However, even almost a year after GST’s implementation, the only real clarity that exists for
property buyers is on the prevailing GST rate of 12 per cent, on under- construction projects.
There is still confusion about the amount of rebate that a prospective home buyer is entitled to,
on the back of the pass-over of ITC. The confusion is not only about the percentage of ITC but
also on the mode and tranche of the rebate. On their part, developers are stating that they have
to do multiple calculations, to arrive at ITC and will pass it on, only during the final tranches.

34
 Refund to customer on cancellation

Previous regime:

• Rule 6(3) of Service tax Rules, 1994 permits Builder to adjust service tax refunded to customer
on cancellation of flats/ units against his tax liability of the month in which refund is made
• No time limit for such adjustment

Taxability on works contract under previous regime:

• Various provisions were in place to separately determine the value of taxable goods and taxable
services in the total consideration of a works contract.
• VAT was charged on the value of sale of goods component and Service Tax was charged on
the value of service component
• Cascading effect of different taxes.
• Confusions and legal disputes

IMMOVABLE PROPERTY

b) Land
c) Building (other than under construction sale of flats/unit)

GST regime:

35
• Whether builder is entitled to issue credit note u/s 34 and claim the tax adjustment. Provision
speaks of deficiency of service and not “non-provision of service”
• Does this mean that adjustment of GST refunded on advance against GST liability is not
permissible.
• Section 54 permits refund of tax paid on supply which is not provided either wholly or partially

Debit note and Credit note in Works Contract- DN and CN should be issued by supplier only
U/s 34 of GST Act

Sale of Completed flats – Reversal of ITC

• Section 17(2) provides that where goods or services are used partly for effecting taxable
supplies and partly for exempt supplies, ITC credit attributable to taxable supplies can only be
taken.
• Exempt Supply is defined u/s 2(47)] to include non-taxable supply
• Non-taxable supply is defined u/s 2(78) of the Act to mean.
o Supply of goods or services or both
o Which is not liable to tax under CGST or IGST Act
• Section 17(3) specifically includes sale of building and sale of land as exempt supply
• Sale of completed flat will be exempt supply for the purpose of reversal of ITC u/s 17(2) of the
Act from start of the project.
• Also builder may liable to pay interest on such reversal of credit for the period starting from
the date of completion certificate till date of actual reversal.

36
 Free Supplies by the Builder to the contractor

• A supply without consideration to non-related persons is not “supply” as defined u/s 7 of CGST
Act
• As such activity is not a supply, same will not be liable to GST
• It is not an exempted supply as defined u/s 2(47) of CGST Act
• It is not wholly exempt u/s 11 of CGST Act
• It is not a Nil rated supply
• It is not a non-taxable supply as defined u/s 2(78) of CGST Act ITC reversal may not be
required

ITC Overflow- Refund

Not allowed in capacity of builder. Builder can use overflow credit:

• In other project as set of for

• Get Income tax deduction as write off to Profit and Loss account.

ABATEMENT AND COMPOSITION SCHEME

• No abatement is till now available for works contracts under GST.

• Works Contractor cannot opt for composition scheme as a works contract is treated as a supply
of services.
• For supply of services, only restaurant business are allowed to be registeredunder Composition
Scheme.
• Sale Of Flats And Units- Under Construction4.50%, 1%, 5.50.%, 18% (1/3 Reduction Of Land)
Joints Development- Owner Area4.50% To 6%NIL4.50% To 6%, 18% (1/3 Reduction Of
• Land)Rehabilitation Of Flats6%NIL6%18%

37
GST is definitely reducing developers’ construction costs, by negating double or triple taxation
to a more moderate level, through input tax credit. While there are no significant variations in
the overall taxes, GST has certainly eliminated the tax-on-tax system. Also, shady transactions
are being minimized considerably, bringing in transparency and accountability into the sector.

However, end-users have not received a consummate benefit because of the inherent
ineffectiveness of the anti-profiteering provisions. They will only benefit, if the base property
prices are reduced and the developers pass on the tax credits to their customers. While the tax-
on-tax has been eliminated with the advent of GST, the overall outgo from home buyers’
pockets seems to have increased, considering that even after passing on of ITC, they may have
to pay three to four per cent more than in the earlier service tax + VAT regime.

GST on maintenance charges of housing societies

Under the earlier service tax regime, housing societies were required to register themselves
under the law of service tax, if the aggregate of maintenance charges levied by the housing
society exceeded Rs 10 lakhs in a financial year. However, under the Goods and Services Tax
(GST) regime, this limit has been doubled to Rs 20 lakhs. So, if the aggregate of maintenance
charges levied by the housing society exceeds the threshold of Rs 20 lakhs in a financial year,
it has to register itself under the GST laws and obtain a registration number.

While computing the limit of Rs 20 lakhs, even the exempt items like recovery of property tax
and electricity charges from the member, are to be taken into account. So, a housing society
has to collect GST from its members ,if the aggregate of the charges during a financial (whether
subject to GST or not) exceeds Rs 20 lakhs. Even though the threshold limit for registration is
Rs 20 lakhs for a housing society, it is not required to levy GST, if the amount of maintenance
charge for each of the flat or office does not exceed Rs 7,500 for month.

38
GST not applicable on sale of flats after issue of completion certificate,
Finance Ministry clarifies:

The Finance Ministry, on December 8, 2018, said the GST will not be leviedon buyers of real
estate properties, for which the completion certificate is issued at the time of sale. However,
the Goods and Services Tax (GST) will be applicable on sale of under- construction property
or ready-to-move-in flats, where the completion certificate is not issued at the time of sale, it
said.

“It is brought to the notice of buyers of constructed property that there is no GST on sale of
complex/ building and ready-to-move-in flats, where the after the by the competent authority,”
the ministry said in a statement.

For buyers, this means that either their purchase cost will increase, if they decide to purchase
such a property, or the overall spread of options will reduce. After all, not all unsold ready-to-
move-in properties may possess a completion certificate.

Developers, on the other hand, may be left with no choice but to absorb the GST charges in ready-
to-move projects that have not been given completion certificates. If they attempt to pass this
additional burden on to their buyers, their ready-to-move-in units that do not have completion
certificates will be at par with under-construction projects, in terms of the cost to buyers. The
burden of unsold inventory in the primary market is likely to increase, as more home buyers
may now consider buying resale units, which are exempt from GST.

However, this announcement may be a blessing in disguise for the secondary market, as buyers
eyeing ready-to-move-in units will now certainly evaluate this option, rather than paying 12
per cent GST on first purchase units.

39
 How to Calculate GST on Under Construction Flat 2021?

We have almost skimmed every possible and necessary information on the latest updates on
real estate current GST rates. Therefore now we can somehow scrutinize well and will be able
to figure out how to calculate the GST on a flat purchase. Let us make it easier for you to know
the GST rate on under construction property by breaking the calculation process into steps:

1. The ones who are about to purchase residential flats for them, the government has offered relief.
You are subjected to pay 18% of GST on the under construction property.
2. Out of this 18%, deduct 1/3 and rest is the payable GST rate i.e., 12%. The deduction made is
of land value which is tax-free in GST.
3. Now the 33rd GST amendment comes into the picture. It slashed the 12% GST to 5% on the
under construction property and ready to move in flats with no issuance.
4. This 5% of GST on under construction property will be there only in the absence of ITC (Input
Tax Credit).
5. During the calculation of GST for under construction property, the whole amount is being
considered i.e., the value of building and land too.
6. The GST will always be applicable for under construction properties.

A single tax structure is definitely a welcome move and the introduction of Goods and Services
Tax (GST) seeks to do just that by way of amalgamating a large number of Central and State
taxes into a single tax. GST will not only address the concerns of double taxation but will also
help in reducing the overall tax burden on goods and services.
Furthermore, it will also help in making Indian goods competitive internationally thus
providing a much-needed boost to the economy.

40
Unfinished home GST hurts:

The goods and services tax (GST) on real estate projects under construction is squeezing the cash
flow of realtors as many buyers are waiting for finished homes or opting for old ones to escape
the tax, multiple stakeholders have told The Telegraph.

Buyers of under-construction properties, including flats, across the country are being asked to
pay as GST 12 per cent of the agreement value. But no GST is levied after the project obtains
the completion certificate.

The GST is actually paid to the government by the builder who gets a refund on his inputs.
Under normal circumstances, the builder need not have passed on the entire GST to the buyer
because of the refunds.

But the problem has arisen because of the way the project cost has been broken up. Land cost
is fixed at one-third or 33 per cent of the project cost and is kept out of the GST rate. But in
cities and on their peripheries, land accounts for a bigger share of the cost. In a project where
land cost is more than 33 per cent, the deduction continues to stay at one third of the cost. This
means that builder gets taxed for a portion of the cost for which he does not get a refund, and
he passes that on to the buyer.

The real estate market condition has ensured that the buyer can now afford to wait. A
perceptible stagnation in the property market has convinced buyers that there is little risk in
waiting for a project to be completed. In a rising market, consumers close deals as early as
possible for fear that the prices will rise by the time a project is finished.

Along with the stamp duty and the registration fee of 7.1-8.1 per cent and the 12 per cent GST,
the cumulative incidence of tax goes above 19 per cent for an under- construction project.
Before the GST was launched, a service tax was levied in addition to the stamp duty and the
registration fee. But the service tax rate was only 4.5 per cent.

41
A Lucknow resident said he liked two under-construction projects in the neighborhood but
balked at the prospect of paying the GST. He ended up buying a 15-year-old flat.

“My family members were against buying an old property. But I went ahead. Although I have
to spend on refurbishing the flat, the cost is still lower since I didn’t have to pay the GST,” he
said.

Real estate players described it as a “challenging environment”. “It is quite a challenging

environment. Buyers are in the wait-and-watch mode, especially for projects that may be
delivered within a year. Since property prices are not showing runaway increases, the buyers
are ready to play the waiting game,” said Harsh Patodia, chairman and managing director of
Unmark Group, a partner in the Palace Tower project in Lucknow.

The postponement of the closure of deals is having an adverse effect on the cash flow. The
finishing work before the handover constitutes close to 40 to 60 per cent of the cost developers
bear. The restricted cash flow is forcing builders to dig into their reserves to complete projects.

Banks, wary of non-performing assets in construction, are unwilling to lend readily. Non-
banking finance companies, which played savior for realtors in the absence of banks, too are
facing a liquidity crunch and have become thrifty.

A well-known project Shalimar in Gomti Nagar, found its sales tripling after it received the
completion certificate from municipal authorities earlier this year. But till then, it had to
contend with a cash flow problem.

The same rule applied to the service tax also but since the tax was not so steep as the GST, it
did not have as high an impact as the new levy.

42
Besides, new regulation has closed a loophole some builders and buyers were exploiting. They
were flirting with the tactic of leaving the sale agreement unregistered while construction was
going on to avoid paying the service tax and, after June 30 last year, the GST.

However, the Real Estate Regulatory Authority (RERA), introduced earlier this year in UP,
made registration of the sale agreement mandatory.

Nandu Belani, president of the developers’ association , is not complaining about prices. “In a
mature market, prices should not go up fast. But sales should happen, which has been hit badly
because of the GST. The cash flow has to be there,” he said.

In order to speed up sales, some builders are absorbing the GST and offsetting the loss with the
input tax credit received on the materials (cement, bricks, etc) consumed or contracts given.
Some builders are lowering the prices to cushion the buyer from the tax.

Sushil Mohta, Past President owner of Merlin Projects, underscored the problem that limits
builders’ ability to pass on the benefit without squeezing the profit margin.

Mohta said: “In Lucknow proper land component in the total project cost is much higher than
one-third. The higher the land cost, the lower our ability to pass on the benefit of the abatement
to the consumers. This is why high-end projects are suffering the most and new launches have
come down.”

Basant Parekh, managing director of Orbit, which deals in premium and luxury projects, said that
investors had disappeared. “Investors come in during the under- construction phase. But they
are wary of paying the 12 per cent GST, which is not recoverable after completion,” he said.

Parekh flagged a fundamental issue: the government should consider why the stamp duty and
GST are both being imposed on property transactions.

43
“The stamp duty is charged under the transfer of property act. The GST is charged treating it
as goods. There should be a single tax,” he said.

Some sources said the policymakers’ inability to decide when a project becomes an asset could
be at the root of the perceived anomaly. Stamp duty is levied on an asset and the GST on goods
and services. Since goods and services are at play while a building is being constructed, the
GST is levied at that stage.

UPRERA has made representations to the Union finance ministry to reconsider the decision
but no result has come of them yet, Mohta said.

44
 IMPACT ON CONSTRUCTION AND REAL ESTATE SECTOR

• Positive Impact
• Easy Compliance
• Availability of Input Tax Credit
• Possible reduction in prices
• Excise Duty, VAT, Service tax get replaced by GST

Current Scenario

Overall, GST is expected to help bring a lot of required transparency and accountability.
Moreover, owing to the expected free flow of credit, developers should be able to enjoy an
increase in overall margin. Whether these benefits trickle down to the consumers is yet to be
seen as the pricing in this sector tends to be dictated by market forces rather than costing
policies. Looking from the consumer point of view, the one primary advantage would be in
terms of decrease in the overall tax burden on goods and increased transparency in tax system.
GST will also help in eliminating unnecessary paperwork while eliminating time wastage spent
by good suppliers at various state borders. One thing for sure is, the impact of GST will be felt
albeit after a while.

45
Impact on ongoing projects

1. The provisions relating to treatment of ongoing contracts on appointed day are

contained in of the CGST Act 2017-

2. If the goods or services are being supplied on or after the appointed date in pursuance
of the contract entered prior to the appointed date, then tax would be levied under GST.

3. If the goods or services are supplied before the appointed date and VAT was livable on
such transaction on account of Sale of goods or Service Tax was livable on account of
provision of services, no tax will be required to be paid under GST.

4. If the consideration has been received prior to appointed date in respect of such supply
and tax has already been paid under current regime, no tax would be required to
discharged/ paid under GST.

5. If any VAT and Service Tax has been paid on any supply under the existing laws, but
the supply of goods and/or services is to be received under GST scheme, then the tax
already paid shall be allowed as credit under GST and the supplies when made shall be
taxed under GST as well. This clause covers specifically works contract transactions.
For example: If an invoice is raised on 30th June 2017 and the supply is for the month
of June 2017 and July 2017 and VAT and Service Tax have been paid, then such VAT
and Service Tax paid shall be allowed as credit in GST proportionate to the month of
July 2017; and when supplies are made in July 2017, they shall be put to tax under GST.

46
Impact on Developers

Prior to GST, a developer had to pay multiple duties and taxes for materials procurement such
as customs duty, entry tax, sales tax etc. Therefore, the value of multiple taxations became
liable to the seller, which lead to an increase in the prices of the housing units. But after the
implementation of GST, the prices may come down, leading to decreased value in the housing
units because the GST compresses all the tax into one tax with less paperwork.

This would boost home sales by bringing in more liquidity in the market. Developers would
also be able to enjoy higher margins on their sales.

Moreover, the increase in tax is not substantial for major inputs like steel and cement. The
indirect taxes taxed steel around 17 per cent and 18 per cent under GST. Similarly for cement,
the taxes totalled to nearly 24 per cent, which now ruled at 28 per cent under GST.
Reinforcements and iron bars will be taxed at a rate of 18%, which is marginally lesser than
the current rate of over 19%. However, the tax rate on bricks used for construction will be 28%
whereas currently, a rate of around 25% is levied inclusive of all indirect charges.

Transportation and logistics of raw materials like steel, iron and cement are going to cost much
lesser due to the streamlining of existing taxes. Currently, logistics companies try to avoid
multi-tax scenario by creating a stock transfer between inventory stocking points within states.
The overall cost of logistics goes up due to the presence of many small warehouses at different
locations. This reduces efficiency while increasing the cost. This need to have multi-point
warehouses will reduce due to a single point of taxation and thus, the overall tax burden would
decrease. Moreover, input tax credit on raw materials would immensely help the developers.
The GST rate for work contracts has also been fixed at 12 per cent. The current GST rates
mentioned above indicate that the overall gross cost of construction would remain the same
across the sector.

47
Impact on Home Buyers

As per GST Model Law, all the multiple taxes shall compress under GST, and all the home
buyers shall now pay the uniform tax of 12 per cent on acquiring real estate apart from stamp
duty. However, the taxes vary from 11 per cent of indirect taxes including value-added tax,
service tax and excise duty. However, this is applicable only for properties under construction
and not on existing/ completed projects. Ready possession properties will be exempt from
paying GST to avoid double taxation. Input credit will also be provided unlike earlier. Hence,
the overall tax liability on the buyers will largely remain unaffected by the new taxation system.
The composite supply of work contracts related to construction will be charged 18% with a full
input tax credit (ITC).

Ideally, the GST collected from the home buyers would be offset against the GST paid by the
developer during construction and this benefit would be passed on to the buyers by means of
reduced sale prices. However, only time will tell if the benefit that developers will enjoy from
streamlining of the taxes would be passed on to the home buyers as that would depend on the
real estate market forces.

On the whole, the framework of GST shall lower the taxation for the real estate sector as
compared to multiple indirect taxes. This shall result in an easier taxation and documentation
process for developers, retailers and manufacturers. Inflated property prices due to double
taxation leading to a cascading effect would be reined in due to the presence of a single point
of taxation. It would also reduce instances of unprincipled transactions which has plagued the
sector since long.

48
 OBJECTIVES OF THE STUDY

1. To study the concept of Goods and Services Tax (GST).

2. To understand how GST will work in India overall.

3. To know the advantages and challenges of GST in Indian context.

49
 RESEARCH METHODOLOGY

Research is a logical and systematic search for new and useful information on a particular topic.
Research methodology is a systematic way to solve a problem. It is a science of studying how
research is to be carried out. Essentially, the procedures by which researchers go about their
work of describing, explaining and predicting phenomenon are called research methodology.

About my Research Problem and Data Collection:

The present research is exploratory in nature. Since GST is an ongoing phenomenon in India,
there are ongoing studies in this area. Specially there is a huge gap of empirical and behavior
studies on GST in India. The study tries to find the significance of popular perception regarding
GST and its impact on real estate sector. In this study, both primary and secondary data is
collected.

RESEARCH DESIGN

A good research design has characteristics viz, problem definition, time required for research
project and estimate of expenses to be incurred the function of research design is to ensure that
the required data are collected and they are collected accurately and economically. A research
design is purely and simply the framework for a study that guide the collection and analysis
data. In this project the two basic types of research design aroused.

Exploratory Research:

All research projects must start with exploratory research. This is essential in order to obtain a
proper definition of problem in hand. The major emphasis on the discovery if ideas and in
sights. The exploratory study is particularly helpful in breaking broad and vague problems in
to smaller, more precise sub problem statements. Exploratory research is also used to increase
the familiarity with the problem under investigation.

50
 DATA COLLECTION SOURCES

Primary Data:

Primary data is basically the live data which I collected on field while doing cold calls with the
customers and I shown them list of question for which I had required their responses.

Secondary Data:

Secondary data for the base of the project I collected from internet, magazines, newspapers etc.

STATISTICAL TOOLS

As no study could be successfully completed without proper tools and techniques, same with
my project. For the better presentation and right explanation I used tools of statistics and
computer very frequently. And I am very thankful to all those tools for helping me a lot. Basic
tools which I used for project from statistics are-

-Bar Charts
-Pie charts
-Tables

Following MS Office tools are being availed while preparing the project:

• MS Excel: Pictorial & graphical representation of data

• MS Word: Preparation of project & other reports

METHODS FOR PRESENTATION OF DATA

• Traditional method of data representation i.e. Pie chart, Bar chart etc.

51
 LIMITATIONS OF STUDY

Every scientific study has certain limitations and the present study is no more exception.

These are:

• The sample size was small and cannot be applied to the entire population.

• GST was launched nearly before 4 years back but some complications yet are faced by the
people.

• The sample size is very small compared to the total population of the region.

• The study was conducted with the basic assumption that the information given by the
respondent is factual and represents their true feelings and behavior.

• It is very difficult to check the accuracy of the information provided.

• Since all the products and services are not widely used by all the customers it is difficult to
draw realistic conclusions based on the survey.

52
 DATA ANALYSIS & INTERPRETATION

Q1. How do you get know about GST?

From Table 1:

Particulars No. of Respondent Percentage

Friend/Family 15 30%
Mass Media 50 50%
Online source 20 20%
Other 15
TOTAL 100 100%

4
Family/Famil
3 Mass Media
Online

2 Othe

0
Friend/Famil Mass Online Othe

Interpretation: Most of the Client knows about GST From Mass Media.

53
Q2. Gender

From Table 2:

Particulars No. of Respondent Percentage

Male 70 70%
Female 30 30%
TOTAL 100 100%

Gender

Male
Femle

Interpretation: 70% of them are male. 30% of them are female.

54
Q3. Education ?

From Table 3:

Category No. of Respondents Percentage

SSC 10 10%

HSC 20 20%
Graduate 30 30%
Post-graduate 40 40%
Totals 100 100%

Category 4

Category 3
Series 3
Series 2
Category 2 Series 1

Category 1

0 2 4 6

Interpretation: From the above diagram it is stated that most of the dealer are literate.

55
Q4 . Professional status ?

Table 4

Option No. of Respondents Percentage

Student 35 35%
Working Professionals 64 64%
Unemployed 1 1%
Total 100 100%

7
0
6
0
Student
50
Working
40
Professional
30
Unemployed
20
Working
10 Professional

Interpretation: From the above diagram it is stated that most of the persons who have
answered were the constructor.

56
Q5. Years of experience ?

From Table 5:

Option No. of Respondents Percentage

Less than 5 40 40%
5-10 18 18%
10-15 25 25%
More than 15 17 17%
Totals 100 100%

40

35

30

25
More than
20 15
15 10_15
1 5_10

5
0
Less than
5_1
10_1
More
than

Interpretation: From the above diagram it is stated that most of the constructor where having
less than 5 year of experience and only 17 are been having more than 15 year of experience.

57
Q6. Monthly Income ?

From Table 6:

Option No. of Respondents Percentage

Less than 10,000 10 10%
10,000-30,000 61 61%
30,000-50,000 15 15%
50,000 & above 14 14%
Totals 100 100%

70

60

50

40
30 50,000 &
20 above
30,000-50,000
10
10,000-30,000
0

Interpretation: From the above diagram it is stated that most of the persons who have
answered were the constructor and the most of the constructor were earning 10k-30k per
month.

58
Q7. Do you agree with the implementation of GST in India?

From Table 7:

Particulars No. of Respondent Percentage

Yes 70 70%
No 30 30%
TOTAL 100 100%

Interpretation: Most of the Client agree about the implementation of GST in India.

59
Q8. Does the land acquisition cost get affected ?

From Table 8:

Option No. of Respondents Percentage

Strongly Agree 40 40%

Agree 20 20%

Neutral 25 25%

Disagree 10 10%

Strongly Disagree 15 15%

Totals 100 100%

40

35

30
25
Strongly
20 Disagree
15 Disagre

10 e
Nuetral
5

0
Strongly Agree
Agree
Disagre
Strongl
y

Interpretation: From the above diagram it is stated that most of the persons are agreed that
the land acquisition cost has been increased strongly.

60
Q9. Do you think implementing GST will cause higher price of goods &services?

From Table 9:

Particulars No. of Respondent Percentage

Yes 80 80%
No 20 20%
TOTAL 100 100%

Interpretation: Most of the Client think that implementing GST will cause higher price of
goods & services.

61
Q10. Do you think all businesses need to be registered under GST?

From Table 10:

Particulars No. of Respondent Percentage

Yes 80 80%
No 20 20%
TOTAL 100 100%

Ye
s

Interpretation: 80% user think that all businesses need to be registered under GST.

62
Q11. Whether there is increase in bank loan interest rate ?

From Table 11:

Option No. of Respondents Percentage

Strongly Agree 50 50%

Agree 20 20%

Neutral 15 15%

Disagree 10 10%

Strongly Disagree 5 5%

Totals 100 100%

4
Strongly

3 Agree
Nuetra

2 Disagree
Strongly
1

0
Strongly Agree Nuetra Disagre Strongl
y

Interpretation: Most of the builders were agreed that there is increase in bank loan interest.

63
Q12. Whether there is improved access to bank loans ?

From Table 12:

Option No. of Respondents Percentage

Strongly Agree 50 50%

Agree 10 10%

Neutral 25 25%

Disagree 10 10%

Strongly Disagree 5 5%

Totals 100 100%

5
0
45
40
35
30 Strongly Agree
25 Agree
20
Nuetral
15
Disagre
10
e
5
0
Strongly
Agree
Agre Nuetra
Disagre
Strongl
y

Interpretation: Most of the constructor were agreed that there is improved in the access of
bank loan interest.

64
Q13. Which system do you think is more beneficial to both Government and people?

From Table 13:

Particulars No. of Respondent Percentage

Goods & Service Tax 65 65%
OTHER 35 35%
TOTAL 100 100%

3 Series 1

2 Series 2
Series 3
1
Series 3
0 Series 2

Category 1 Series 1
Category 2
Category 3
Category 4

Interpretation: 65% user think that Goods & Service Tax is more beneficial to both
Government and people.

65
Q14. Whether there is increase in construction cost of new residential buildings ?

From Table 14:

Option No. of Respondents Percentage

Strongly Agree 40 40%

Agree 20 20%

Neutral 25 25%

Disagree 10 10%

Strongly Disagree 15 15%

Totals 100 100%

INCREASE
4
5
4
0
3
5 Strongly
Disagree
3 Disagre
0
e
2
5 Nuetral
2
0

Strongl Agre Nuetra Disagre Strongl

y y

Interpretation: 40% of the builders are strongly agreed that there is increase in construction
cost due to GST.

66
Q15. Do you think INIDA is ready for implementing GST system?

From Table 15:

Particulars No. of Respondent Percentage

Yes 75 75%
No 25 25%
TOTAL 100 100%

Ready for Implmentation

YES
NO

Interpretation: 75% user think INIDA is ready for implementing GST system.

67
Q16. How was your experience using GST?

From Table 16:

Option No. of Respondents Percentage

Poor 10 10%

Satisfactory 20 20%
Good 30 30%
Excellent 40 40%
Totals 100 100%

Interpretation: From the above graph shows that Most of customer says excellent for Using
GST.

68
Q17. GST is a very good tax reforms for India?

From Table 17:

Option No. of Respondents Percentage

Strongly Agree 10 10%

Agree 15 15%

Neutral 40 40%

Disagree 25 25%

Strongly Disagree 20 20%

Totals 100 100%

Stongly agree
Agree
Nuetral
Disagre
e

Interpretation: From the above graph shows that Most of customer says excellent for Using
GST.

69
Q18. Whether there is increase in duplicate billing ?

Table 18:

Option No. of Respondents Percentage

Strongly Agree 40 40%

Agree 15 15%

Neutral 30 30%

Disagree 10 10%

Strongly Disagree 5 05%

Totals 100 100%

4
5

4
0

3
5 Strongly Agree
3 Agree
0
Neutral
2 Disagre
5
e
2
5

0
Strongly Agree Nuetra Disagre Strongl
y

Interpretation: From the above graph shows that most of builders are agreed that the customer
are mostly asking for a duplicate bill for using GST.

70
Q19. GST has increased the various Legal Formalities ?

From Table 19:

Option No. of Respondents Percentage

Strongly Agree 25 25%

Agree 10 10%

Neutral 35 35%

Disagree 20 20%

Strongly Disagree 10 10%

Totals 100 100%

4
agree
3
disagree

2 neutral

0
Category 1 Category 2 Category 3 Category 4

Interpretation: From the above graph shows that most of customers are Neutral about that
GST has increased the various Legal Formalities. 25 % Customer are Strongly Agree about
that GST has increased the various Legal Formalities. And rest customer are Agree.

71
Q20. GST has increased the tax burden on common man ?

From Table 20:

Option No. of Respondents Percentage

Strongly Agree 45 45%

Agree 20 20%

Neutral 10 10%

Disagree 15 15%

Strongly Disagree 10 10%

Totals 100 100%

GRAPH : 10

Interpretation: 45% Customers are Strongly Agree about GST has increased the tax burden
on common man. 20% Customer are Agree about GST has increased the tax burden on common
man. And rest are 45% are not Agree.

72
 FINDINGS

• Most of the clients know about GST From Mass Media.

• Most of the clients agree about the implementation of GST in Lucknow.

• Most of the clients think that implementing GST will cause higher price of goods & services.

• 80% user think that all businesses need to be registered under GST.

• 65% user think that Goods & Service Tax is more beneficial to both Government and people.

• Most of the users think that GST will burden the people/consumer.

• 75% user think India is ready for implementing GST system.

• From these graph it shows that most of customer says excellent for using GST.

• From the above graph it shows that most of customer are neutral about that GST is very good
tax reforms for India.

73
 RECOMMENDATIONS

The following are the suggestion made based on the results of the study.

Some suggestions for better administrative machinery to handle the implementation of Goods
and Services Tax Act in India are:

Standardization of systems and procedures.

Tax relief in case of branch transfer

Well defined procedures in case of Job works

Uniform dispute settlement machinery.

Adequate training for both tax payers and tax enforcers.

Re-organization of administrative machinery for GST implementation.

Building information technology backbone – the single most important initiative for GST
implementation.

There is lack of understanding of GST implementation, hence real estate sector suffered a lot.
So, providing information and real affects of GST on real estate should be promoted.

74
 CONCLUSION

While RERA and GST will slowly change the way the real estate industry operates in India,
they have also thrown open a few aspects that need extensive deliberation. One such issue is the
liability of developers to provide for workmanship for structural defects for a period of five
years. Unlike in the past, developers will now have to create a back- to-back warranty with
suppliers in case a challenge comes up. Starting from the contract to execution and finally
handing over, documentation has to be clearly spelled out. If a developer wants to save himself
from the pain of poor construction, he will have to keep tabs on agencies he conducts business
with and the quality of materials he procures. The end user would, of course, benefit from this
improved diligence.

GST swifted government focus on depending direct tax (income) to indirect tax. Definitely due
to small income in tax collection base, GST has a strong boost to government revenues.
Hopefully with these amount of revenue challenges that the government face in term of deficit
budget and debt can be clear by 2021.

As it is a consumption tax, it appears that Malaysian GST will also act as an effective dragnet
for tax evaders and illegal immigrants who pay no income tax. The payment made to recipient
will offset most of the GST’s impact on the poor.

GST will give some impact on consumer expenditure due to rise in goods and services price,
however with increase of revenue government spending aspect to be more and firm will
continue to invest as export goods will exempted from tax. GDP will increase when government
spending and investment increase. Hopefully the implementation of GST can provide good
platform for the country to become develop country with high- income.

75
 BIBLIOGRAPHY

Books:

• D. K. Adhana (2017). Goods and services tax (GST): A panacea for Indian economy.
International Journal of Engineering & Management Research, 5 (4), 332 -338.

• Agogo (2019): “Goods and Service Tax- An Appraisal” Paper presented at the PNG Taxation
Research and Review Symposium, Holiday Inn,PortMoresby,29-30.

• Shailesh (2018) “Goods and Service Tax --- An appraisal Paper presented at the PNG Taxation
Research and Review Symposium. Holiday by, Pg No.29-30, April2014

• P. K. Rao (2018, January 2). Goods and services tax in India: An assessment of the base.
Economic and Political Weekly, 45 (1), 49 - 54.

• Dr. R. Vasanthagopal (2019), “GST in India: A Big Leap in the Indirect Taxation System”,
International Journal of Trade, Economics and Finance, Vol. 2, No. 2, April2011.

• S. Dani (2016). A Research Paper on an Impact of Goods and Service Tax (GST) on Indian.
Business and Economics Journal, 1-2.

76
 Web Links:

• https://www.gstindia.com/about/

• https://www.thequint.com/news/business/india-gst-most-complex-28-percent- slab-second-
highest-rate-in-world-world-bank

• https://www.bankbazaar.com/tax/gst.html

• https://economictimes.indiatimes.com/gst

• https://en.wikipedia.org/wiki/Goods_and_Services_Tax_(India)

• https://gst.caknowledge.in/impact-gst-automobile-sector/

• http://www.ey.com/in/en/newsroom/news-releases/ey-gstimpact- on-the-auto- industry

• https://www.legalraasta.com/gst/impact-of-gst-on-automobilesector/

• http://auto.economictimes.indiatimes.com/news/policy/benefitschallenges- for-auto-sector-in-
gst-bill/53541153

• http://www.abplive.in/auto/gst-bill-how-it-affects-the-autosector-391864

77