More than four months passed after the historic decision of demonetization in our country. The turmoil and agitation got settled, and today the situation is back to normal.
The goodness or badness of the decision will come to light with time. However, the initial indications are quite positive.
As far as the real estate sector in India is concerned, there is a major transformation happened after demonetization. There is a reduction in the black money involved in the business. As the market will undergo a correction in the coming times, property availability to the common people will increase for sure.
GST, the next major reform in the queue
After demonetization which was a sudden and unexpected move, India waits for another transformational change in the coming months. The bill has cleared all the obstacles, and it is on the verge of implementation.
Experts say that it is one of the longest awaited tax reforms which will change the way our economy functions today. The bill has been ratified by several states so far, and others will also follow it quickly. Since it talks about the removal of a bouquet of taxes that are applicable today and the introduction of a common, unified tax known as GST; it looks pretty exciting.
Real estate scenario in the recent past
It has been quite a pessimistic time for the property market in India. There was a slowdown in the market, but the rates are disproportionately high. As a result, the demand was less, and the supply was in excess; but there were no buyers.
Demonetization further made a dent in the demand, and it didn’t work well in the last quarter of the year. Experts say that usually, it is a good quarter every year.
This year, people restricted or postponed their buying decision due to two reasons.
- They are eager to know the scenario after GST. Since there will be a consolidation of taxes, everybody wants to do the dealings after the new tax structure is derived.
- They do not want to get into trouble by making big financial transactions post demonetization. It is anticipated that the 30 percent money in the real estate transactions flows in the form of cash. It is needless to say that all this is black money. In the light of demonetization, it becomes quite difficult to continue the practice.
As the things will become more visible and clear after a few months, there will be again a boom in the real estate market.
Role of automation and new-age technology
Since it is a time-being halt in the real estate market, it is the best opportunity for experimenting modern technology. According to experts, there will be complete transparency in the real estate business post implementation of GST.
Use of Real Estate CRM will not only stabilize business processes but also enhance the efficiency of people. It will consolidate the business processes and regularize the transactions.
Defining taxes and surcharges becomes easy in CRM system. Buyers, business partners, and all other stakeholders get updated about the transaction at all levels.
The market anticipates an initial correction and then an upward rally post-GST scenario. Since there will be a great surge, it is better implementing smart systems to manage the rush. Prices are expected to go up, and it will cover up the additional expenses incurred in implementing the CRM system.
Tax scenario today
Let’s look at the current tax scenario in the real estate market today. There is a long list of taxes that need to be managed.
Developers charge service tax and deposit with the Government of India if you buy a property that is under construction. Since the construction contract gets signed between the buyer and the builder, it goes with the value of land as well.
Value Added Tax
In some states (Maharashtra, Haryana, and Karnataka for example) you are supposed to pay additional VAT which will be charged by the developer and submitted t the government. It is a bone of contention from quite some time. However, it has to be calculated and mentioned in the books of accounts wherever it is applicable.
Developers need to be alert while calculating VAT as the calculation is a bit tricky. A CRM system makes it easy and manageable.
With the proposed implementation of GST, all these taxes will get consolidated. VAT and service tax will be replaced by GST.
Both GST and demonetization will change the market dynamics in India
Everybody has understood the ill-effects of malpractices in the property sector. As there is an excessive flow of the black money in the business, property rates will keep on increasing. They will go beyond the reach of buyers, and the market will lose its charm.
Hence, it is very much important that regulations are imposed to keep it attractive. As further clarity will come in the next few months, everyone will have a fair idea about how the market will move further.
However, it is sure that things like CRM implementation are necessary to keep pace with the changing times. It will aid marketers and brokers to establish stringent control on the procedures and processes.
No business can remain aloof from the changes happening around. Real estate business has seen many ups and downs in the past, and the future trends show the same thing. Steps like demonetization and GST implementation will take it to another plane. Consolidation of taxes and reduction of black money will give a fair opportunity to everyone to participate.
Property business will not remain confined to the upper crust of the society. As more buyers will be there, real estate business owners will need smart tools to manage the operations. CRM is an ideal choice for all.