The real estate is the major contributors to the national Gross domestic product (GDP) in India. There have been some several new proposals over years to transform it. However 2016 saw some critical moves by the government create a long-term impact keeping for the investors. Some major actions taken were Demonetization, GST Bill, Benami transactions act and Real Estate Regulator Bill (RERA). These moves focus on creating transparency in real estate transactions by filtering out various illegal activities. These initiatives will also bring confidence in the market.
Below are 4 developments that will have a long-term impact on the Indian realty sector:.
- Demonetization: The biggest proposal by far in the recent times was the demonetization move by the Indian government where the 500 and 1000 rupee notes were banned. This move was mainly implemented to trace and remove the black money in the country. However this move received a extensive criticism as it affected several sectors including the realty. While some are against this, many believe that this move will have long term benefits like making the property prices reasonable, creating transparency in cash transactions and eliminating the unaccounted transactions.
- GST: Goods and service tax bill (GST) was passed by the Rajya Sabha earlier this year and is considered to be commendable move by the government as this bill is expected to have a significant impact on several indirect taxations which have been imposed while buying a property. The GST bill in overall will reduce the taxation level by bringing all real estate activities under a single tax. The GST will vary between states and will not have any impact on the properties which have already been completed. Real estate experts have predicted that the rate on property transactions will either be 12 or 18% slabs.
- Benami Transactions Act: The Benami Transactions Act which was approved earlier this year was a critical move by the government to protect the realty market. This act has strict policies which would grab properties purchased under the name of a second person who could be anyone for tax avoidance. This act will help in easily tracing the wrong active persons and their unaccounted wealth invested in properties. Those who are found responsible would be punished as well. This act will have positive impact in the affordable housing sector for end users as it helps create transparency.
- Real Estate Regulator Bill (RERA): The Regulation and Development act 2016 was passed earlier this March to bring in maximum transparency in the real estate industry with a set of regulations. This act has made it mandatory for all the builders to share necessary information to the regulation authority and also specifies that the builder should deposit at least 70% of the project funds in a dedicated bank account to prevent any shortage of funds. The developer also cannot make any changes to a plan which has been sold without the consent of a buyer. While these measures have been receiving constant criticism, in the long run these acts will act beneficial as it builds transparency and gives an opportunity for every investor and will help developers with a good track record.
As we go into 2017, there is a lot to look forward to in the real estate sector and these developments will probably help bring back good life to the real estate market in India. This might also be the ideal time for investment, so contact best real estate advisory in the city – Homemantra.
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