During the end of 2016, on 8th November government of India announced demonetization of 500 and 1000 INR notes in India from 9th of November. This announcement took the people of the country in shock and created turmoil throughout. The impact of this was large, as it was majorly done to pull out the black money into the market and seize the Swiss accounts of many reputed personalities.
The nation was still in the demonetization trauma when the Indian government implemented RERA at full force. RERA stands for Real Estate Regulatory Act. This act was implemented in India at full force in the financial year of 2016-2017. Basically this act was established long back in the year 2013 but couldn’t be implemented since then. This act promised the home buyers to provide them the transparency in the real estate and protect all their interests. This act which was enacted on 26th march 2016 and all the provisions that it held came into effect on May 1st 2017. All the stakeholders in the real estate got shaken with this act be it a buyer, developer, builder, or broker.
The third major implementation in India was of the GST (Goods and Services Taxes). It was implemented in India on July 1st 2017. Pre-GST the taxes were very fragile and untraceable. But the government converted all the taxes in 2 SGST (State Goods and Service Taxes) and GST.
These 3 implementations were highly liked as well as disliked in the Indian society. All of them somehow had a good impact on the society. To examine this let’s take a deeper look in facts and figures so that we could decide what course they fall into. Have they been beneficial or not.
Let’s take a closer look on all these three implementation as to how did it affect the real estate business? Was it positive or negative? Will it have a long lasting positive affect or not. Let us start with demonetization.
Impact of Demonetization on Real Estate Business of India
The road to development is never that easy, we have been told about this thing. But is demonetization helping in that? Do we really know that it will bear fruits in favour of the Indian Society? There are many questions that are to be asked. And most of them are by the real estate people. This is the most affected side and they have had many impacts on them. Do you remember the American elections that happened recently? Most of the Americans voted Hillary Clinton out which made Donald Trump victorious. This was because the citizens thought that Clinton would raise the taxes. Even if she doesn’t do this, she might extract the money through another means. In the beginning, all what demonetization caused were chaos, confusion, and fear. Due to the discontinuation of 500 and 1000 rupees notes the stocks fell immensely. The prices in the market fell by approx. 4% which gave a major blow to the investors as well as all the segments holding stakes in the real estate market.
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How Impactful was RERA on Real Estate
RERA was established and implemented on the Indian Society to give and the home buyers the transparency they needed which was hidden from them by the stockholders. It was for the benefit of the buyers but adversely affected the real estate business. It gave the buyer all the rights to know if there are any additions or alteration in the property. Like if the price is down or something. The buyer had the right to give consent of the 2/3 allotment for transferring the majority shares to the 3rd party or not. There was an increase in the quality of construction as the builders didn’t want to waste any useful resource. All this together helped the buyer but had a negative impact on the Real Estate business. We can say that RERA was useful in providing the people all the right that was theirs. This act was a success from the point of view of a common man. But not the same can be said by the point of view of a real estate businessman.
Was At Last GST of any help?
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GST was implemented in India in July 2017 to reduce all the other taxes into one name and it did help in giving a blow to the real estate market in India which was positive and not negative. According to a survey there are many commodities that have been affected and will be the same for a long time now. One thing that GST has done well is the elimination of various taxes. Previously it used to happen that the shopkeepers or the vendors used to put into a lot of different taxes which was not even traced as to why was it taken. But now due to the GST we just have to pay the SGST and GST which varies from commodity to commodity. So, we can conclude that the impact of GST on Indian Society is positive but on the same time when it comes to the real estate business the impact remains neutral. Although the investors and builders are going to get some like substantial benefits but it would be like nothing to bother for the buyers. Moreover, the estate business has its own ways to tackle this so at last they would be happy as there is nothing for them to bother as if the rates are even higher than what they are now, it would hardly affect their business.