GST Implications On Real Estate

– Anil Pharande, Chairman – Pharande Spaces

The Goods and Services Tax (GST), is a kind of a comprehensive indirect tax on sale, manufacture and consumption of different kinds of goods and services throughout India, with all other Central and State taxes intended to be subsumed under it. If this happens, it has far-reaching implications, including on real estate.

Taxation and real estate industry

If we take a look at the real estate industry in India today, we find that there have been major tax changes in the last few years. However, these taxes are not uniform all over the country – different practices and regulations are followed in different states in India. It was the 46th Amendment to the Constitution that brought massive changes towards taxation in the real estate sector. Later in the following years, special powers were given to the State Government for implementing Value-Added Tax (VAT) on some specific kinds of transactions.

Pharande Vaarivana Pune

For land, property and other kinds of work contracts, different kinds of taxes are levied by the State Government and the Central Government. The transactions are mainly categorized in three parts – value of services, value of goods and materials and value of land. VAT is applied by the State Government on the goods portion, while value of services is taxed by the Central Government. However, other than stamp duty, there is no clear tax on the transactions regarding value of land. This situation leads to confusion and can result in dual taxation. Compliance and implementation of such taxes also get difficult.

The real estate industry has justifiably been feeling jittery with such confusing tax implantations and calculations. For one real estate transaction, multiple taxes need to be paid and this has a negative effect on the industry. The industry’s demand to bring GST on board is primarily to get a clear and transparent taxation rule for the real estate sector in India.

Expected GST effects on the real estate industry in India

The implementation of GST can prove to be a significant step in reforming indirect taxation in India. Chances of double taxation would be diminished, as some of the Central and State Government taxes will be amalgamated into one tax. This will ease the process of taxation considerably, making its enforcement and administration easier and simpler.

Talking about the real estate industry in this context, there are many things which have to be known and understood. In the current situation, a builder or a real estate developer incurs various kinds of expenses during the construction phase of a project. Different kinds of taxes are involved with these expenses, such as VAT/CST, customs duties, service tax, excise duty and so on. Majority of these taxes are expenses that are included in the system. This is because they are not creditable to the developer or to the end-customer. These non-creditable expenses lead to tax inefficiency, which is not desirable.

One positive impact that might result from GST is doing away of restrictions on credit utilization. This will definitely help in strengthening the credit chain in the entire system. If property developers and builders can properly manage this aspect, they will see some profit.

It is expected that the proposed GST structure will have a progressive and streamlined approach. The tax compliance rules should not have any serious impact on real estate builders and developers. In present conditions, builders running projects in different states have to comply with State-specific VAT laws, as well as other kinds of service taxes. Bringing in GST will therefore not bring any additional compliance burden on real estate builders in the country.

Issues regarding GST which affect real estate builders

There are a few clarifications that might be sought for GST taxation by real estate developers. For instance, the definition of a real estate developer varies from one state to another in India. The composition scheme varies according to State, in which the VAT rates come between 1-5%. In some States, there are differences between the terms real estate contractors and real estate developers. It has to be understood what will the GST implications are if the terms have different meanings.

There might be some confusion regarding GST implementations on residential property, as well. In the present scenario, there is no service tax applicable on renting immovable property, particularly for residential purposes. But service tax and VAT is implemented on the construction work. The question that arises is if the proposed GST will offer differential tax for residential properties.

As of now, it does not look like completed residential projects will be affected by GST, as buyers into completed projects have already paid statutory charges such as stamp duty and registration charges on the transaction. The segments to watch on the GST front are under-construction flats and rental flats, which are expected to come under the ambit of GST. GST will apply to the materials that a developer procures for building a residential project, so there is a direct correlation to the overall cost of construction.

Much depends on what rate of GST will finally be confirmed. If it is more than the existing cumulative taxes currently in force, it means that the overall cost to consumers of buying an under-construction flat will increase along with the added cost of stamp duty and registration. At the same time, developers have to keep an eye on costing, as price competitiveness is very important in the current real estate market scenario.

About The Author:

Pharande Vaarivana PuneAnil Pharande is Chairman of Pharande Spaces, a leading construction and development firm that develops township properties in Western Pune. Pharande Promoters & Builders, the flagship company of Pharande Spaces and an ISO 9001-2000 certified company, is a pioneer in the PCMC area offering a diverse range of real estate products catering especially to the 42 sectors of Pradhikaran. The luxury township Puneville at Punavale in West Pune is among the company’s latest premium offerings. Woodsville in Moshi is another highly successful PCMC-based township by Pharande Spaces which is now in its 3rd phase.

PCMC’s Integrated Townships: Redefining Traditional Luxury

– Anil Pharande, Chairman – Pharande Spaces

Indian luxury real estate is in rapid evolutionary mode, and few of the previously accepted definitions of a luxury home have stood the test of time. For luxury home developers, the challenge has shifted from offering a number of attractive add-ons to providing a well-rounded residential experience that transcends luxurious exteriors, interiors and amenities.

Luxury townships are the obvious answer to the questions today’s buyers are asking. They are not looking for mere glamour – because of the mounting challenges of urban life in cities like Pune, they are also looking for superior infrastructure, cutting-edge security and project management and a walk-to-work option. These are obviously not an option in standalone luxury buildings – nothing less than a fully integrated luxury township can provide such advantages.

Pharande Vaarivana Pune

A number of Indian developers who previously specialized in traditional luxury residential projects – one or two snazzy buildings in a tony part of town where ‘address value’ accounts for a massive price premium – have therefore shifted their focus to the township format. This is because luxury living in today’s context is a 360-degree lifestyle equation which cannot be limited to elegant superficialities.

The buyer profile for integrated luxury townshipspuneville is also different today. These are not HNIs hailing from families with protracted histories of wealth – they are young, self-made entrepreneurs, the corporate upper management cadre and high-placed Information Technology professionals.

This new breed of luxury home buyers is not swayed by impressive addresses and the other factors which dictated how luxury was interpreted in the past. They are looking for the aspects that spell genuine luxury today – convenience, safety, reliable water and electricity supply, modern recreational facilities, on-the-spot availability to essential services like hospitals, schools and shopping, and good internal and external connectivity.

Pharande Vaarivana PuneThey will not spend their hard-earned money on an expensive location but invest in a superior living experience for themselves and their families. Moreover, the traditional CBDs of cities like Pune are no longer the areas which yield the most lucrative jobs – the IT and manufacturing hubs in modern satellite cities like the Pimpri-Chinchwad Municipal Corporation (PCMC) are the next employment hotbeds which are driving both the demand and trend for high-end homes.

This luxury home buyer demographic is highly tech-savvy and environmentally conscious, and attributes a lot of value to ‘smart’ and ‘green’ features – not only at a residence level but at a project level. Again, this is only possible in integrated townships, and this is what has spurred the growth of PCMC’s ultra-modern townships over the last decade.

These townships offer their residents:

  • Broad, well-lit internal roads
  • 24×7 water and electricity supply
  • Multiple user parking per unit
  • Multi-level security
  • Green open spaces
  • Conveniences  such as shopping malls, banks, schools and hospitals within the project
  • Easy connectivity to other parts of the city
  • Modern recreational facilities

The best integrated townships also include high-grade commercial spaces and give residents the ultimate luxury – the walk-to-work option. Obviously, this new definition of luxury living provides a stark contrast to the traditional concepts of luxury homes, which was usually tied to a vanity address in an exorbitantly pricey location. Though older luxury buildings in the core areas of cities like Pune are invariably redeveloped into luxury skyscrapers, there is nothing that can be done about the fact that the locations themselves are cramped, polluted, devoid of support infrastructure and often hemmed in by slums and tenements.

While the window view from a luxury home in such a setting is usually one of chaos and urban decay, the corresponding view from a home in an integrated township is one of greenery, orderliness and unpolluted air. No wonder, then, that the younger and smarter generation of luxury home buyers today prefers the benefits of contemporary luxury far away from such areas. Integrated townships are their obvious choice.

About The Author:

Pharande Vaarivana PuneAnil Pharande is Chairman of Pharande Spaces, a leading construction and development firm that develops township properties in Western Pune. Pharande Promoters & Builders, the flagship company of Pharande Spaces and an ISO 9001-2000 certified company, is a pioneer in the PCMC area offering a diverse range of real estate products catering especially to the 42 sectors of Pradhikaran. The luxury township Puneville at Punavale in West Pune is among the company’s latest premium offerings. Woodsville  in Moshi is another highly successful PCMC-based township by Pharande Spaces which is now in its 3rd phase.

Pune Property: The Power of Location

What are the factors that make a residential project popular? Speaking in contemporary real estate terms, there are some fundamentals:
1. The builder’s brand equity
2. Attractive elevation, with tempting amenities
3. Competitive property rates
4. Location
One could argue that a builder’s brand, driven by reputation and prestige, shouldn’t be a major consideration. However, the fact is that a well-known developer’s banner sells project simply because it is a trusted name on the market. Such a builder is known for quality construction, clean titles, decent property rates and overall transparency.
Of course, elevation and amenities count for a lot, too. After all, a property is basically defined by its physical characteristics. Attractive rates certainly matter, but one should not have to forgo basic quality, aesthetics and proper amenities just for lower rates. However, since Pune is a city of passionate bargain-hunters, this is what often happened in the past – buyers overlooked the fact that a cheaply-priced property does not really appeal.
Fortunately, these days Pune property buyers have become aware that neighbouring Pimpri-Chinchwad offers residential projects that are vastly superior to anything that Pune has to offer – at much lower rates, and in far more pleasant surroundings.
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Which brings me to location – the last but certainly not the least consideration in my list above, and the primary topic I want to address here. Location is a vitally important factor to consider while buying a home in Pune. In fact, location should be a priority consideration.
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What gives location such power on the Pune property market? Take the area near the Pune International Convention Center in Pimpri Chinchwad, for instance. Obviously, a location that is now so popular with property buyers from both Pune and the PCMC area does not win its reputation in a lottery. There are qualifying aspects involved. It is home to the integrated residential project called Woodsville, and is very favourably connected in terms of public transport. The roads are wide and spacious, ensuring that traffic bottlenecks cannot happen. There is ready and limitless availability of water, the scenery is a homebuyer’s dream come true and the development in this area is carefully regulated.
The last point is very significant – regulated town planning ensures a sufficient amount of
open spaces and prevents cluttering. In other words, homeowners in Woodsville are assured that what they see from their windows and terraces today is exactly what they will see ten years down the line. Another developer cannot buy up the plot in front of their unit and build some kind of monstrosity there. The massive green cover is being maintained for ecological reasons, so the generations to come will breathe the same unpolluted air.
The fact that this area is within easy reach of a number of crucial points within Pune as well as from important cities like Mumbai and Nasik has contributed to its popularity. In other words, location – especially from the point of view of a Pune property buyer – should be seen both from both a present and future perspective.
Anil Pharande is President of CREDAI PCMC and Chairman of Pharande Spaces, a leading construction and development firm that develops integrated residential projects in the PCMC area of Pune, India.
On the Pune Property Blog he discusses the market fundamentals that drive one of Pune’s most dynamically emerging real estate investment destination.
You may reprint or quote this article with full credit to the author and a link back to PunePropertyBlog.com

A Home In Pimpri-Chinchwad – The Best Choice For Your Children

While buying property in Pune, most home seekers tend to put their children’s needs high on the priority list. This is because in a typical Indian setting, everything that happens within a family revolves around the requirements of its children. It therefore stands to reason that the purchase of a home is – and should – factor this in.
Pune Property
For us Indians, our kids are our most important consideration. This is why we strive to provide them with every possible good thing – good clothes, the latest and largest toys, a good school, and so on. Providing them with the best possible home is a natural yearning.
It boils down to a simple fact – whether a married couple has children or not while purchasing a home, or the children are still in the ‘planning’ stage, they are a major point of reference. Here are some of the considerations we should therefore take into account while choosing a residence:
Are There Good Schools In The Vicinity?
Pune being the Oxford of the East, it stands to reason that access to the good schools is of primary importance for Pune property buyers. A housing project may offer every desirable facility – but if it does not have a reputable school within easy reach, it does not serve its purpose. The more progressive townships and integrated residential projects have schools within the campus. Even otherwise, there is no shortage of good schools in Pimpri Chinchwad.
Does The Project Feature Children-Oriented Facilities?
Ideally, builders must offer fully equipped children’s parks and playgrounds in their projects. These areas should be free of pollution, since children do a lot of heavy breathing while at play.
While the space constraints and the pollution levels of the central areas in cities like Pune do not permit such facilities, the larger integrated residential projects in areas like Pimpri-Chinchwad do. Remember that children can only thrive when they have enough airy space to play in. Similarly, you should ask about garden areas for family-oriented activities while choosing a home.
Is The Clubhouse Children-Friendly?
If you thought that a residential project’s clubhouse is only for adult entertainment and relaxation, think again. A clubhouse is – and should be – a boon to children. Look for facilities like table tennis and badminton courts, a library and indoor games.
Is There Ready Access To Shopping?
From toddler to teenage years, children have myriad recurring requirements. Fully integrated residential projects such as Culture Crest and Woodsville in  Pune’s PCMC area offer shopping facilities within the project’s perimeter. If this is not the case in your chosen project, at least ensure that you have easy access to shopping centres in the vicinity.
Is There A Hospital With Emergency Room/Pediatric Unit Nearby?
Accidents do happen – poisoning, choking, drowning, fractures and bruises, electrocution… children can get into a lot of trouble while exploring the world around them. There are many medical emergencies than can only be handled at a well-equipped hospital. If the project does not have its own hospital, at least make sure that it is within easy travelling distance from the nearest hospital. This is not an issue in progressive, well-planned areas such as the Pimpri Chinchwad Municipal Corporation, but many of Pune’s newer areas still lack such facilities.
How Safe And Supportive Is The Neighbourhood?
One should definitely keep one’s children’s social needs in mind while selecting a residence. By their very nature, the integrated residential projects and townships now coming up in the PCMC area offer social environments suitable to our children (good neighbours) and are also crime-free zones. If you cannot, for some reason, choose such an ideal neighbourhood, at least find out if there is a police station nearby.
Posted by: Avinash Gokhale is Director – Marketing & Corporate Planning, Pharande Spaces – a leading construction and development firm specializing integrated residential projects in the PCMC area of Pune, India.

Woodsville — The Perfect Integrated Residential Complex In PCMC

Woodsville, the ultra-modern integrated residential complex in Pune’s burgeoning twin city of PCMC, is a home-owner’s most cherished fantasy transformed into larger-0than-life reality. At Woodsville, you and your family can finally live life to the fullest. An exclusive, fully facilitated and self-sufficient 50-acre community, Woodsville is actually your very own town within a city.
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Rising twelve, eighteen and twenty two storeys high against a vista of green gardens, Woodsville consists of stately buildings housing 1, 2 & 3 BHK apartments. The striking façade is an arresting combination of elegance & individuality in communion with nature.
The Great Outdoors At Your Doorstep
The large podium garden is the centerpiece, where children can make merry in complete safety, and senior citizens can enjoy leisurely walks or get together with their neighbours, savouring the peaceful ambience. A clubhouse with indoor games, a swimming pool and cool water bodies afford healthy recreation options. The towers form a classic backdrop to this pastoral mosaic.
Spaces To Luxuriate In
The apartments, which reflect the magnitude of Woodsville, are generously sized, ranging from spacious 1 BHKs admeasuring 665 sq.ft. , large 2BHKs of 913 to 1033 sq.ft. up to enormous 1,601 sq.ft. 3 BHKs. Living spaces are laid out to receive plenty of natural light and fresh air making every homecoming a welcome experience.
Click here to learn more about Woodsville

The Real Estate Magic of Integrated Residential Projects

When you are setting out to purchase the home you always dreamed of and saved for, you obviously wanted something more than just an orphaned, anonymous set of walls in some congested city center. The problem is, that’s all that most residential projects in India offer these days. There is a lot more to the perfect home than good construction, layout and fittings – a residential property needs supporting social and physical infrastructure to become a suitable home. Moreover, the beleaguered city dweller’s heart yearns for the sight of greenery, open spaces and fresh air.
After all, we want our children to grow up in better conditions than we possibly experienced at their age…
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In Pune, integrated townships have been seen as the answer to these requirements. However, land constraints, zoning laws and the budgetary considerations that govern property buyers in many areas often do not make the integrated township model feasible.
A more practical and feasible alternative is Integrated Residential Projects. Like integrated townships, this more compact and serviceable model offers home buyers everything they need for a comfortable and healthy lifestyle. Children have enough room to play in, and both they and their parents are free from the stress, noise and pollution of central urban life. Such projects have schools, shopping and entertainment facilities, healthcare and easy access to public transport.
Also (very importantly) they are a boon to people who wish to live in a non-urban environment while attending to their jobs in the workplace catchments of the city. They get a dream location, excellent infrastructure and a lot more.
Residential real estate investors, on their part, can capitalize on the higher demand – and therefore the higher ROI (returns on investment) that such properties offer. The higher investment potential of homes in integrated residential projects stems from the fact that they are self-sufficient and self-sustaining. A direct outcome of this is that the resale value of such properties is as good as immune to market volatility. Because of the diversified nature of such projects, they represent a very low risk to property investors, even while they benefit from the larger upside potential despite low entry costs.
Builders who cater to the demand for integrated residential projects face quite few challenges. After all, they have to provide the advantages of integrated townships while having to forgo the considerable incentives that the Indian Government offers for the development of larger townships. Therefore, the initial capital required is extremely steep – right from land acquisition to the providing of physical and social infrastructure.
The integrated residential project concept is just beginning to emerge on the Indian real estate landscape. One of the areas where it has been successfully implemented is Pune’s sister city – the Pimpri Chinchwad Municipal Corporation. One of the primary reasons for the success of the integrated residential projects in the PCMC areas of Pradhikaran and Ravet is the fact that these are located very close to vital workplace hubs such as the MIDC and Hinjewadi, Pune’s software hub. This, coupled with the advantages of having ‘everything inside’, has contributed to the demand for homes in such projects.
Anil Pharande is President of CREDAI PCMC and Chairman of Pharande Spaces, a leading construction and development firm that develops ultra-modern integrated residential projects in the PCMC area of Pune, India.

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