Published On: Tue, May 30th, 2017

What kind of impact will GST have on realty sector ?

Untitled (5) By Accommodation Times Bureau

Home-buyers are keeping an eye, constantly, on the new development in the Goods and Service Tax as it counts to assess the market on the right time, as GST is ready to get implemented. Buyers need to take their decisions perfectly as the GST is going to affect the market for both the short and long term investments.

Anuj Puri, chairman JLLR (JLL residential), says,  ”Home-buyer sentiment would definitely be affected if the overall cost of homes goes up under GST. However, even if the developer’s costs would rise, it is unlikely that they would try to pass on the higher cost to the buyers since this would further dampen sentiments. In the case of rental housing, taxation of residential lease under GST, would naturally result in a higher cost of renting homes. If we consider the fact that housing lease is not taxed at all currently, this would not go down well with people renting homes.”

A realty investor Gaurav Sethi, says, “If there is an increase in the effective tax rate on construction services under the GST, the price of properties may most likely increase. Further, the blockage of the input tax credit on goods and services received for construction of an immovable property, is also going to have an inflationary effect on the prices of properties.”

Experts say these shall get colligated under the GST , and GST shall be applicable on the sale of under-construction properties .The stamp duty continues to be applicable, on both -the property which is under construction and the property which is already constructed [property in the pre-GST or post-GST regime] .

Homes Builders and Developers states,  ”The idea of introducing GST by the central government was to bring in a uniform tax system that would help the sector and introduce more clarity for home-buyers. In case a home-buyer decides to purchase a home before the GST gets implemented, the only issue he might face is the complex structure of the tax system and then, he could end up paying various taxes instead of the single window that GST aims to provide. However, the implementation of GST in the long run, may also mean a marginal increase in the cost of homes while for developers, the total quantum of taxes does not remain affected.”

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