Real Estate

Housing: GST cut will make premium properties affordable

Our Bureau New Delhi | Updated on February 24, 2019 Published on February 24, 2019

Calling it a positive move, the real estate industry welcomed the decision of the GST Council on Sunday in its 33rd meeting to slash the GST rates to 5 per cent without the Input Tax Credit (ITC) for premium homes from 12 per cent earlier with ITC for premium homes.

The decision of the Goods and Service Tax (GST) Council to fix the rates for the real estate sector will bring more properties in the premium segment into the affordable category according to sector watchers.

According to Anarock, there are as many as 5.88 lakh under-construction homes lying unsold in the top seven cities. Of these, 34 per cent are priced below ₹40 lakh. With affordable housing now being defined as those within ₹45 lakh budget, more properties qualify for this ‘sweet spot’ category.

The GST cut, coupled with this critical change in definition, will induce more sales in homes in this segment.

Fillip to buyers

“Cash-strapped builders have been hoping for all and any government intervention which can help boost their sales volumes. This GST cut will provide such a boost, at least in the short-term as more fence-sitters, who had been postponing their purchase decisions, now have an additional incentive to take the plunge,” Anuj Puri, Chairman, Anarock, said.

Calling it a positive move, the real estate industry welcomed the decision of the GST Council on Sunday in its 33rd meeting to slash the GST rates to 5 per cent without the Input Tax Credit (ITC) for premium homes from 12 per cent earlier with ITC for premium homes.

“Industry lauds the GST rate cut on real estate to 5 per cent on non-affordable and 1 per cent on affordable housing without ITC as a positive move which brings a big relief to the home buyers and help to narrow down the demand mismatch gap,” Niranjan Hiranandani, President, Naredco, said.

If the announcement was ‘with immediate effect’, the sales of residential real estate units would have been visible in the current financial year, but since it is effective from April 1, the rise in sales figures will be visible only in the next financial year.

Meanwhile, Parth Mehta, Managing Director of Paradigm Realty, called it a buyer-centric move by the government. “Developers will be burdened with GST payments to vendors, suppliers, agencies and contractors and this will land up increasing cost further amidst the already shrinking margin in business due to dynamic policies implemented by government,” he said.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on February 24, 2019
This article is closed for comments.
Please Email the Editor