At the eleventh hour of GST implementation realtors have cited their confusion on post GST price correction of residential properties across the country, when Real estate apex bodies NAREDCO and CREDAI came up with conflicting assessments of the impact of GST on housing prices on last Wednesday May, 24.
NAREDCO report refers that there will be no remarkable accession in residential property price in India for GST roll out. CREDAI stated that cost to end consumers will surge if not government provides abatement on land.
NAREDCO said tax regime under GST would either even or lower than the existing, indirect, multiple taxation. Thus, housing sector won’t feel any inflationary pressure from both the buyers’ and the builders’ side. Real estate has been kept under 12% tax slab in the new GST regime by the GST Council. This tax is to be paid on the construction of a housing complex or civil structure for sale to a buyer. Tax experts are seen asking for clarity of GST for construction of commercial properties on lease. Currently, including the VAT and service tax, the indirect tax rate on realty sector is in range between 9-11 per cent.
Stamp duty is the only tax levied by the state governments, which will be operative even after GST implementation. Though, CREDAI has appealed to the state governments to abolish stamp duties on landed properties to set out multipoint taxation after the GST arrival. As additional 5-8 per cent stamp duty on the total value of the immovable property would levy extra burden on end user consumers. Naturally, the cost to the end consumer will escalate.
Asking about his thoughts on GST implementation Bengal RERA expert Mr. Mahesh Somani said, “Real estate constructions (ready-to-move) will fall under 12% tax slab of GST, which would hardly bring any big change in property prices. Again maintenance of the properties which used to be under 15.55% tax slab has been replaced with whooping 18% under the new regime. People who are eagerly waiting to buy property in Kolkata or anywhere else in the country should be aware of this changed regime.”
On a concluding note there is again some good news for affordable housing sector. Service tax on construction of low budget flats will not be measured under GST. In lieu of this relief a marginal price hike in this sector is forecasted.
- Somani Realtors News Network