The suggested GST rate cut on the under-construction houses from 12% to 5% without availing the input tax credit has been appreciated by the developers who think it will boost the demand of the real estate industry.
Nandu Belani, Credai Bengal president said in a press statement, “We are looking forward to 5 percent GST without ITC though it will hurt the builders in the short run. We expect the demand for under construction housing will revive and will offset the impact in the long run.”
Initially, it is a serious matter for the developers but will have a positive impact in the long run, said one of the property consultants. By adding that, in spite of having provision to get the ITC benefit, the buyers don’t know how to avail it and when they will get the benefit. Although, 5% GST rate on the under- construction houses for which completion certificate has not been issued is one of the best options for buyers
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“Even a small increase in sales on the back of reduced GST will give some relief to developers funding issues by catalyzing sales to some degree. To that extent, developers will see some improvement in their balance sheets”, said property consultant.
With a great step, the government would also be benefiting from this. Currently, the 12 percent GST rate is being levied on under- construction houses so the buyers prefer to purchase ready-to-move-in properties/ building which is outside the GST purview.
The proposed 5% GST rate on the under- construction houses/properties is a great move which would encourage more buyers to purchase the under- construction property but seems that the stamp duty and registration amount can be charged differently as per the states.
The suggested 5% GST rate cut on the under- construction properties and 3 % for premium and affordable housing has been postponed to February 24 to the upcoming 33rd GST council meeting.
