Real Estate Regulatory Act (RERA) and Goods & Services Tax (GST) are the two most significant regulations for the real estate sector. While RERA aims to bring in a regulation system for developers, the GST aims at easing overall business and making it hassle-free, be it for developers or contractors, or for consumers.
RERA will impact the façade industry positively in terms of accountability, credibility and trust between developers and consumers. RERA brings transparency in sales of land or building or project by protecting the interest of consumers. Now developers are required to register all new projects with the regulating authority. They must adhere to the sanctioned plan and specifications of the project. Developers are also responsible for repair of defects found within five years. All of this means that there will be clear plan sanction and specifications laid down for façade and fenestration works of any project, which brings a lot of clarity for budgeting, planning and execution. RERA also brings accountability for not only developers but also for material suppliers and contractors, to deliver high quality work as per the sanctioned plan and specifications.
As a manufacturer of cladding material, prima facie, we are convinced that the implementation shall influence the façade industry positively, especially the organised players. Importantly, a level playing field would be created as the industry is dominated largely by the unorganised sector.
With respect to GST the issues of differential taxes across different states, and the complexity of interstate movement of goods resulting in cascading costs due to delays will be over since there will only be one tax across the nation. All the manufacturers, distributors, retailers, etc in the supply chain, except for non- industrial consumers, can now avail input tax credit.
Further, talking from the point of view of HPL manufacturers, the rates decided by the GST Council are fair and should benefit the whole industry, and importantly the customers.For the organised players and suppliers of HPL panels, there seems to be a marginal reduction in the pricing that gets passed to the consumers. HPL panels fall under the GST rate of 18%, which has increased from the current VAT rate ranging from 5.5% to 14.5%, as tax rates vary from state to state.
With one tax across the nation, the different statutory forms required for interstate supplies will be abolished. The paper work will get reduced under GST, since all compliances are now online. Also, we foresee that the payment structure in the industry will get simplified with the implementation of GST. There are bound to be initial hiccups during transition in short term, but in the long term it’s beneficial to all.