Real Estate Sector Expected To Contribute 13% To India's GDP By 2025

According to a latest update from the FICCI, since 2016, the Indian real estate sector has been going through a tumultuous time. The triple effect of the Real Estate (Regulation and Development) Act (RERA), demonetization and the Goods and Services Tax (GST) hit the industry one after the other, bringing it to a complete standstill for a while. Today, a recovery is being witnessed in the industry, with sales gradually picking up and prices stabilizing, the study titled Indian real estate: Demystifying the new tax and regulatory environment noted.

Reports have suggested that the Indian real estate sector is expected to reach US$ 1 trillion by 2030. It is also estimated that by 2025 this sector will contribute 13% to the country's GDP. The fast urbanization and rising household income have been key drivers of the sectors growth. The industry today is more transparent and systemized than earlier, making it a win-win for home buyers as well as organized real estate developers. Even smaller developers are encouraged to join forces with bigger players to maintain future business viability. This, in turn, has caused a consolidation of the entire real estate market.

Additionally, in the mid to long term the radical changes in the regulatory policies and taxation system introduced by the government is sure to accelerate the sectors growth further. Regulatory reforms such as the ease in the foreign direct investment regime across sectors, introduction of Goods and Services Tax (GST), Insolvency and Bankruptcy Code (IBC) and Indian Accounting Standards (Ind AS) have been introduced that have immensely helped to increase transparency and enhance credibility of the real estate sector. In terms of GST, there has been certain ambiguity in the industry. Bringing the entire industry under the ambit of GST while also reducing the rates would lead to high incentive and thereby streamline tax structure across the country, noted the FICCI study.

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