One of the vital policy announcement from Budget 2019 would be the inclusion of real estate sector in its entirety under the GST ambit, which should help the sector deal with all the uncertainties caused by various notifications and rulings that have come in the recent past.

While GST should ultimately subsume stamp duty payable on land sale agreements ideally, at least on an immediate basis the Budget should address the issue created by notification in January 2018, which brought the transfer of development rights under the expanse of GST. This notification, which seeks to tax transfer of land development rights (effectively taxing conveyance of land), has cause a lot of hardship to developers of real estate held for sale and should be withdrawn.

Staying with GST, the Central GST Act currently imposes a restriction on availment of input tax credit pertaining to construction services. Given that there exists a direct nexus between construction services received by a commercial real estate developer and his subsequent activity of renting/lease the space, a real estate service provider1 engaged in renting/ lease of space should also be allowed to take credit of the taxes paid on construction costs, as allowed to a works contractor.

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• 1. Though the concept of REIT and the regulations around the same have been around for a few years now, it is only recently that we have seen the first listing of REIT. If some open issues in the tax regime governing REITs in the form of exemption from dividend distribution tax (DDT) in a multi-level property holding structure, capital gains exemption on the transfer of assets by sponsors to the REIT, etc are plugged, then more potentially more developers could start looking at REITs as a means to achieve the requisite liquidity.