Pinning hopes on lower tax slab of 12 per cent, the country's real estate industry is awaiting clarity on other aspects of the GST regime, according to real estate consultancy firm JLL India.

Following recent statements by the Union Finance Minister Arun jaitley in GST slabs, Anuj Puri, Chairman and Country Head, JLL (Jones Lang Lasalle)-India, feels that the highest and lowest tax structure of 30 and 5 per cent, respectively are unlikely, the chances are it could either be 12 or 18 per cent. However, 12 per cent would be ideal for the sector.

A lower tax rate (of 12 per cent) would help reduce the cost of apartments and increase the affordability for end-users. Developers may resultantly see an uptick in sales in a slow market, he observed.

A higher rate of 18 per cent, however, could end up increasing the cost of homes.

The industry also needs clarity on whether credit for input tax would be allowed by the Government if the composition scheme has been availed by developers.

Only after these clarifications, the real estate industry will be able to understand the implications of the upcoming GST regime.

On the positive side, while reduction in tax management expenses incurred by developers thanks to the single unified tax is likely, the compliance costs would also go down.

Union Budget 2016 had announced a zero service tax policy for developers constructing flats of less than 30 sqm in tier-I cities and less than 60 sqm in tier-II cities, with the intention of incentivising developers to create affordable housing.

Whether similar benefits will continue to be given for the real estate sector under the GST regime remains to be seen.

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