18 October 2019

Table of Contents for REPORT





GST RATE CUT

 

GST rate cut: A welcome move by the real estate industry

 

 

In a big relief to home buyers, the GST Council slashed tax rates on under-construction housing properties to 5 per cent without input tax credit from the existing 12 per cent. Here is what some of the top realty players express about the drop in the rates.

 

 

The reported recommendation from GoM to reduce GST rates to 3% and 5% respectively in affordable and in other categories, will breathe a new life in to the sector. The existing GST regime has been a major deterrent for sales in under-construction projects. This could be a vital link in the recent chain of events, which include incentives of the interim budget and the rate cut by MPC. We await the decision of the GST council and hope that the recommendations are accepted. - Shishir Baijal, Chairman & MD, Knight Frank India

 

 

 

 

 

 

 

The GST council’s decision is a win-win for both home buyers as well as the Real Estate Industry. The Government of India’s initiative to provide affordable housing for all has got another shot in the arm. With GST rates being slashed from 8% to just 1% (without input tax credit), affordable housing will now be - even more affordable.  By reducing the 12% GST rate to 5% for under construction homes (which do not fall under the affordable segment category), there’s reason for the middle class to rejoice as well. From a developer’s point of view, this will translate into more people buying under-construction homes, thereby injecting some much needed liquidity when developers need it most. The only thing that could have been better is if this was applicable immediately, instead of from 1st April 2019. - Rajeev Piramal, Vice Chairman & MD, Peninsula Land Ltd.

 

 

 

 

 

This is a huge relief for home buyers and the developers alike. The reduction in GST on under construction residential projects will further give much-needed boost to the industry. Having a standard tax will surely help the developers to save cost and  achieve economies of scale at various levels and help them to pass benefit to the  consumers. - Anshuman Magazine, Chairman & CEO, India, South East Asia, Middle East & Africa, CBRE

 

 

 

 

 

 

 

The GST relief announced by the council is a welcome move. It will definitely help in removing the psychological barrier customers had while purchasing under construction apartments and boost the sale of such projects. However, with the removal of input tax credit, the landed cost to the customer may not change since developers will have to increase prices to offset the input tax credit. Also, it is important that the rules for transition to the new regime are drafted carefully so that the industry does not lose out on the tax credit.- Kamal Singal, MD & CEO, Arvind SmartSpaces

 

 

 

 

 

 

We welcome GST council’s timely decision to slash the rates on under-construction residential properties, making the effective tax rate 5 percent for the normal category and 1 percent for the affordable housing category. This will immensely help to boost demand on under-construction residential properties, and also simplify tax structure and compliance for builders. However, the industry was also hoping for clarity on the taxes to be paid on raw materials like cement and steel against the final tax liability on under-construction properties. Also, the cap of ` 45 lacs is not really encouraging for Mumbai as it cannot be compared to other regions. - Amit Ruparel, MD, Ruparel Realty on GST Council reducing the Goods and Services Tax (GST) rate on real estate, for under-construction homes.

 

 

 

 

 

“The reduction in GST for under-construction properties and affordable housing projects is a pragmatic move by the government which will help the real estate sector. The Real estate sector being the second-highest employer in the country after agriculture, any measures to help grow the sector will have multiple positive effects. We can expect demand coming back to the under construction segment and improvement in the sales throughput for the developers. This will be a huge psychological boost for the consumer as this will ease the cost burden on him/ her providing a direct impetus for the housing and housing finance industry.” - Amar Bahl, Chief Operating Officer, ART Housing Finance

 

 

 

 

 

 

The approved reduction in the levy on under-construction homes and the raised threshold for affordable housing by the GST Council is largely seen as a welcome move by the industry, especially for the home-buyers segment. As pointed out by our finance minister, the move will certainly make housing affordable for middle class, neo-middle class and aspirational class. However, in order to fulfill the government’s mission of ‘Housing for all by 2022’, the ITC (input tax credit) I opine should continue or else it is likely to put the entire tax burden on developers hitting the real estate down further.- Madhusudhan G, Chairman and MD, Sumadhura Group




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