In the past couple of years India has seen a sea change in its economic reforms. There has been a substantial growth in GDP and a major reform in the form of demonetization has accentuated mainly on the existing tax systems. Under the current government GST has been introduced and established as the only tax to be paid by all citizens. The goods and services tax was a much waited tax reform that lead to a considerable change on the Indian economy especially in the real estate sector. Being the second largest sector after agriculture in India, real estate market has shown some promising effect after demonetization.
Impact on the NRIs investing in real estate
With its current economic condition and increased GDP, India is a potential place to attract foreign investment, especially in the real estate sector. The Non Resident Indians can now expect high returns, transparency, proper management and advanced techniques of constructions when they invest in real estate properties. Both in the residential and commercial segments, the real estate market will have better tax system and transparent paperwork which will enable them to secure their investment in the most legal way.
How can RERA put an impact on the real estate market for NRIs?
The Real Estate Regulation Act or RERA was introduced in 2016 by the government to maintain better transparency in the real estate sector. Along with it Goods and Service Ta or GST as well as the Benami Transaction Act has been introduced as a new reform that is actually helping the NRIs find better prospect and high returns in their real estate investments. Although initially the demonetization move by the government has affected the real estate badly causing the interest rate to go exorbitantly high, but now that the economy is showing positive result, the market is going to get better in the next six months.
The scarcity of cash has definitely caused many buyers to stop investments. But the real picture of real estate was not that bad as it was projected. It is because of the fact that properties those are of premium quality and cater to end users only can only be bought through banks and homes loans. Thus, home loans or any other forms of bank transactions were not at all affected by the demonetization move. Property agents and developers who have always used fair business practices have not been least affected by the currency ban. On the contrary they have seen a steady growth of NRI clients investing in real estate during this time.
After the currency ban and the implementation of RERA and GST it is quite clear that the real estate sector in India will be transparent enabling the investors to have a better and effective price and return. The 12% GST on buying any property is a healthy move and will see very little paperwork. This single tax structure will also help in consolidation of the transactions through transparent and legal way and cut cash transactions to a great extent.
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