The Indian real estate industry welcomes the GST rate cut on affordable and under-construction properties.
Industry lauds the GST rate cut on real estate: Dr. Niranjan Hiranandani- MD & Founder-Hiranandani Group & National President – NAREDCO
Industry lauds the GST rate cut on real estate to 5% on Non-affordable and 1% on affordable housing without Input tax credit as a welcomed and positive move which brings a big relief to the home buyers and help to narrow down the demand mismatch gap. This announcement gives an impetus to the affordable housing and enthuse home buyers to close the sale deals. The GST rate on cement has not been reduced as was expected, at 28 per cent it remains among the highest taxed inputs for construction – and there will be no input tax credit, so developers will face a challenging time. Also, if the announcement was ‘with immediate effect’, we would have seen sales of residential real estate units in the current financial year; the w.e.f. 01 April aspect means we will see rise in sales figures only in the next financial year.
Government is focused on their agenda of creating affordable homes: Shishir Baijal, Knight Frank India
The reduction in the GST rates for under-construction projects is the most decisive move by the GST council with a clear focus on demand stimulation. This move will give the necessary fillip to the demand in under -construction segment, which has been suffering from low sales levels for last many quarters. The elimination of input credit tax benefit may hit profitability for the supply side; however, the potential demand generation as a result of this move will far outweigh any negative aspects leading to greater sales numbers and revenues. We estimate that the reduction in GST can potentially reduce the buyers payout by 6% – 7% on the overall purchase, depending on the category. The consequent accelerating sales will bring down the unsold inventory which has been afflicting the real estate sector.