NEW DELHI: The National Real Estate Development Council (Naredco) has urged the government to halve the goods and services tax (GST) rate for the real estate sector to 6% 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, on Tuesday, the real estate builders’ body said GST rate of 6%, with input tax credit, will be a win-win situation for all stakeholders.
“Capping GST at 6% will incentivise buyers to invest in under-construction properties, who otherwise are waiting for completed properties to save 12% GST,” said Rajeev Talwar, chairman of Naredco. “Buyers stand to benefit as developers would pass on the benefit to the buyers. The government also stands to benefit as it will collect more tax because of increase in demand. This is a win-win situation for all.”
According to Naredco president Niranjan Hiranandani, the industry body has also urged the government to increase the abatement for land cost to 50%, from the existing 30%, as cost of land forms the most significant part of any real estate-project cost.
Builders claim 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%, whereas for ready-to-move properties it is 0%. This makes the ready-to-move properties lucrative compared with under-construction properties. This, in turn, is translating to reduction in fresh and continuous demand,” Naredco said.
Source : https://economictimes.indiatimes.com/wealth/real-estate/realtors-want-gst-for-sector-be-lowered-to-6-per-cent/articleshow/61760527.cms