Union Budget 2024: Flexible Office Space Operators Pin Hopes on Tax Cuts, SEZ Integration
As India prepares for the Union Budget 2024, stakeholders from the co-working and co-living segments have submitted their wish lists, seeking tax cuts, integration with special economic zones, and more.
Union Budget 2024Co WorkingCo LivingFlexible Office SpaceGstTax CutsSez IntegrationIndia IncReal EstateJul 17, 2024
The co-working segment, which has gained significant traction in recent years, is seeking a reduction in the Goods and Services Tax (GST) rate for small-scale clients. According to Suvrat Jain, founder and CEO of Onward Workspaces, this reduction can act as a catalyst for the expansion of co-working spaces across tier II and tier III cities, fostering entrepreneurship and innovation in these regions.
Industry players are also seeking input credit on work contract and construction services supplied, which can be passed on to companies that lease out space for co-working, ultimately reducing their overall costs. Additionally, there is a demand to reduce the tax rates applicable for co-working spaces, with many expecting a reduction to the 2% TDS slab, similar to services.
Another key demand is the integration of co-working spaces with SEZs, which can create a win-win scenario, combining the co-working sector's agility and focus on innovation with the SEZs' beneficial regulations for businesses. This integration can attract domestic and international companies, fuelling economic growth and fostering dynamic business hubs in India's tier II cities.
The co-living segment, which is still in its nascent stage, is seeking greater formalization, bringing both organized and unorganized players under the ambit of GST, direct taxes, and comprehensive regulations. Nikhil Sikri, co-founder and CEO of Zolostays, emphasized the need for a level playing field, where all players are subject to the same laws and regulations.
Other demands from the co-working and co-living segments include single-window clearance for regulatory approvals, financial incentives and green credits for eco-friendly buildings, and easier access to funding.
With the Union Budget 2024 just around the corner, it remains to be seen which of these demands will be met, and how they will impact the growth of the co-working and co-living segments in India.
Frequently Asked Questions
What is the current GST rate applicable for co-working spaces?
The current GST rate applicable for co-working spaces is 18%.
What is the demand from the co-working segment regarding GST?
The co-working segment is seeking a reduction in the GST rate for small-scale clients to make the segment more accessible to startups and small businesses.
What is the expected impact of integrating co-working spaces with SEZs?
The integration is expected to create a win-win scenario, combining the co-working sector's agility and focus on innovation with the SEZs' beneficial regulations for businesses, attracting domestic and international companies and fuelling economic growth.
What is the demand from the co-living segment regarding regulations?
The co-living segment is seeking greater formalization, bringing both organized and unorganized players under the ambit of GST, direct taxes, and comprehensive regulations.
What is the expected growth of the flexible office space segment in India?
According to a report by property consultancy Colliers, India's flexible office space stock is expected to reach 80 million square feet (msf) by 2026, accounting for 9-10% of the total Grade A office stock of the country.
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