The National Real Estate Development Council (Naredco), on Tuesday, has requested the government to lower the goods and services tax (GST) rate for the real estate sector to 6% from 12 % to help boost demand for new homes.
At a meeting with finance secretary Hasmukh Adhia and minister of state for finance and shipping, P Radhakrishnan, the real estate builders’ body said the 12 % GST and with input tax credit, will not be a win-win situation for all stakeholders.
Rajeev Talwar, chairman of Naredco, added “Capping GST at 6% will incentivize buyers to invest in under-construction properties, who otherwise are waiting for completed properties to save 12% GST,”
Real estate builders’ body claims the tax discrepancy between the tax rates for a ready-to-move property and an under-construction property has compounded the problem.
According to Naredco the GST rate for ready-to-move properties it is 0%, whereas for under construction properties is 12%, This makes the ready-to-move properties profitable compared with under-construction properties. This, in turn, is translating to a reduction in fresh and continuous demand.
Naredco officials said that the land accusations cost is the most important part of any real estate-project and urged the government to raise the abatement for the land cost to 50%, from the existing 30%.
BY
Angad Sadana