Five Years of GST: Sectoral impact

Manufacturing has benefited from GST as lifting of embargo on ITC has reduced costs, says EY India. If real estate developers are allowed to consider land value at actuals, it would reduce burden on homebuyers. It is high time, real estate was fully brought under GST.

gst impact on manufacturing
Post-GST, contribution of the sector to the GDP has, however, been constant from 15%-17%.

Manufacturing: GST has had a positive impact on the manufacturing sector by removing the cascading effect of taxes. Further, with the embargo on input tax credit being removed, there has been a reduction in manufacturing costs, says Achal Chawla, tax partner, EY India. Post-GST, contribution of the sector to the GDP has, however, been constant from 15%-17%. The Aatmanirbhar Bharat programme and the PLI schemes are going to be pivotal in the post-pandemic era, when companies will reconfigure their sourcing, manufacturing, and distribution patterns.

Real estate: GST rates since FY20 is 5%/1% sans ITC. This added to the cost of developers, as ITC gets passed on to the homebuyers. An option to choose between GST rates with ITC and without ITC in the hands of developers is worth considering, says Sagar Shah, tax partner at EY India. He adds developers should have option to consider land value at actuals or adopt deemed valuation. Actual land valuation could have a positive impact and may reduce the GST burden on buyers. “It’s high time that the real estate sector is fully brought under GST and stamp duty is also subsumed under GST law at the earliest,” he says.

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