Buying a house after 1 July of the Goods and Service Tax (GST) can be cheaper up to 5%. The Finance Ministry has also told Real Estate Developers that they pass-on benefit to people from GST. But now developers said that without clarity coming into the input credit, it can not be said now whether or not they are going to get any benefit, which can be turned on to the buyers. Experts are still avoiding saying clearly on this.
The government said in a statement issued on Thursday that it is expected that the developers, the buyers will get the benefit of the GST after the its implemented. A statement issued by the Finance Ministry said that the buyers have received complaints that the developers should pay the outstanding tax before July 1 of the under construction projects, otherwise they will have to pay more taxes. The ministry clarified that real estate has been kept within 12 per cent and if the tax is levied over the buyers, then the developers can be prosecuted.
National Association of Real Estate Development Council (NAREDCO) Vice President Gaurav Jain told that it is true that after the implementation of GST, the benefits of tax rebate of 3 to 5 percent can be passed on to the buyers. And some developers are not ready for this, but this advantage can only be passed on when the government thinks about land-abatement (discount on land prices). Because land prices in the big cities are so high that project cost for developers is very expensive. And the advantage of GST can be given to buyers of low-cost apartments, but buyers of expensive projects can not be availed of this, but it will be costly to take them home after GST is implemented. Developers say that apart from land abatement, there is no clarity on the input tax credit, so it is not possible to get home cheap from now.
GSO Council has proposed to impose 12 percent GST on real estate. National Association of Real Estate Development Council (Naredko) president Pravin Jain said that the real estate sector has till now different 16 kind of tax and levy that information Naredko had given to the GST Council, it is a good initiative That Real Estate is included in GST and is within 12 per cent area. It will prove to be a game changer for the real estate sector.