The real estate market of independent India has grown by manifolds and now we take you through the reforms that gave a makeover to the Indian property market. So, to begin with, let us reopen pages from history.
Reforms between 1960-2000
The announcement of two new capitals that were Chandigarh and Gandhinagar in 1960 laid to the foundation of planning to develop new cities. After this various initiatives like the formulation of National Housing Bank [NHB], incorporation of the town planning and development plans under the Maharashtra Regional and Town Planning Act, 1966, liberalization of India economy and investments by NRIs in the Indian property market made the sector move in the upward direction.
The biggest positive change came in 1991 when the doors to job creation were opened in the Real estate market with the emergence of various multi-national companies [MNCs] here in India.
Reforms Post 2000
Since then, the Governments made efforts to take the boom of Indian real estate further but various constraints bought down the growing market. The increasing job opportunities, Foreign Direct Investment [FDI] migration of families from small cities to urban localities and the freedom to learn, grow and excel given by the Indian constitution increased the demand for housing needs in the urban cities.
All this led to infrastructural development and the smooth connectivity, better workplaces and the designing of residential projects/units according to the modern age and boosted the Indian real estate sector at large.
However, the urbanization and the introduction of concept-based markets maintained the investors’ interest but the best was yet to come for the Indian real estate sector.
Reforms Post 2014
RERA Act – The Real Estate Regulatory Act was introduced by the Narendra Modi in 2016 to benefit the Indian real estate sector. This act allows the developers, agents and promoters to register under the RERA Act as any professional working in a non-ethical manner can be bought to notice of the RERA authority.
This act not only makes the working of Indian real estate transparent but it protects the interest of consumers/homebuyers. Apart from this, the prospects can ask for a refund of invested money in case the developer fails to deliver the project in the promised time.
Goods and Services Tax
The Goods and Services Tax are also applicable to the Real estate market and the revised GST rates have come into effect from 1st April 2019. The GST council also abolished ITC i.e. the Input Tax Credit benefit and brought in a Transition plan under which the developers get the option to avail revised GST rate minus the advantages of ITC or old GST rates along with the benefits of GST.
The GST on under-construction properties is 5 percent without ITC benefits and the GST rate is 1 percent on affordable housing units or the units fall in the bracket of Rs. 45 lakh. However, this can be availed without the benefit of ITC.
The Goods and Services rate is different for both the residential and commercial properties. The GST rate stands at 12 percent on the commercial properties.