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Construction : Web Exclusive | November 2017 | Source : CW-India

NAREDCO urges lowering of GST rate for real estate sector

NAREDCO has requested the Centre to fix GST rate for the real estate sector at 6 per cent from the current rate of 12 per cent. NAREDCO feels that GST rate of 6 per cent with input tax credit will be a win-win situation for all stakeholders.
According to NAREDCO, capping GST at 6 per cent will incentivise buyers to invest in under construction properties, who otherwise are waiting for completed properties to save 12 per cent GST. This will not only give huge boost to the economy and GDP growth but create huge job opportunities.
NAREDCO has conveyed this to the government in a meeting with Hasmukh Adhia, Secretary, Finance and P Radhakrishnan, Minister of State for Finance & Shipping. NAREDCO delegation included Rajeev Talwar, Chairman and Niranjan Hiranandani, President, besides others submitted a detailed note on above issue for their consideration.
NAREDCO Chairman Rajeev Talwar, says, “We are requesting government for a GST rate of 6 per cent with input tax credit. We feel a step like this would go a long way in boosting demand. The buyers stand to benefit as developers would pass on the benefit to the buyers. The Government also stands to benefit as they will collect more tax because of increase in demand. This is a win-win situation for all.” Under the special schemes for affordable housing, in partnership the effective rate for housing projects with unit sizes up to 60 sq m is presently 8 per cent. NAREDCO has requested a GST of 6 per cent for all housing projects across the board.
NAREDCO President Niranjan Hiranandani, says, “Land cost is the most significant part of the project cost in a real estate project. The abatement of 30 per cent for land cost is not enough and it should be pegged at 50 per cent, even though the land cost in cities like Mumbai and Delhi NCR may go up to 60-70 per cent of the property cost.
According to analysts the tax differential between the tax rates for a ready to move property and an under construction property has compounded the problem. The GST rate for under construction properties is 12 per cent whereas for ready-to-move properties it is 0 per cent. This makes the ready-to-move properties lucrative compared to under construction properties. This in turn is translating in to reduction in fresh and continuous demand. NAREDCO feels this would be taken care of if the GST rate for the sector is pegged at 6 per cent.

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