Here’s what RERA, GST mean for new home buyers

Fed up with delayed projects, ambiguous deadlines, zero accountability and lopsided transactions, buyers in the Indian real estate market were becoming quite sceptical before investing in any property.

However, home buyers heaved a sigh of relief after the Real Estate (Regulation and Development) Act, 2016 (RERA) and Goods and Services Tax (GST) were enacted.

RERA is an important step for the revival of the real estate sector. It was necessary to revive confidence of the key stakeholders in the realty space. Meanwhile, GST, too, is an unprecedented step, as it will ensure transparency in the real estate sector, lowering down unscrupulous transactions. It will bridge the gap between supply chain management processes.

Home-buyers have benefitted from both the legislations and will reap the benefits. Here’s how RERA and GST will now give power in the hands of home buyers


Developers, property brokerage houses, brokers and agents have to register under RERA now.

Under RERA, a developer will have to transfer 70% of the money received from the home buyer to an escrow account. This money can only be withdrawn as per the stages of construction, approved by engineers and CAs of builders.

One of the important aspects of the RERA is the legal framework. RERA provides unified legal framework for buying flats and in case of any complaints, the applications have to get disposed within 60 days.

Also, a builder now cannot charge you for anything other than the carpet area and will give a warranty of five years in case of any structural defect.

Coming to transparency, developers have to make timely disclosures on the progress of the projects and declare right title and interest on the land.

If any developer fails to comply with the RERA norms, they will have to face penalty up to 10% of the project cost.


GST has removed a slew of hidden taxes, helping home-buyers. Although the tax slab is 12% for real estate, developers cannot levy any other tax.

Initially, VAT and sales tax were added to the cost but were never reflected in the transactions.

Meanwhile, the government came out with anti-profiteering clauses to ensure the input tax credits that builders claim will be passed on to buyers of houses who get possession after May 1. This means, home buyers will only bear the GST.