national business
Realty Awaits Clarity on GST
Realty sector wants 12 percent GST tax as 18 percent tax may spook construction cost
By Asit Manohar
W
hile the goods and services tax (GST) tax structure
has been announced, the real estate sector is
waiting with bated breath to see which tax rate
gets applied to the real estate and construction
sector.
Anuj Puri, Chairman & Country Head, JLL India — a leading
real estate consultancy firm in India — said, “Given the Finance
Minister Arun Jaitley’s clarification that the highest tax slab
will be applicable to ‘sin’ items and other categories that are
currently taxed at around 30 percent, it can be assumed that this
rate will not apply to the real estate and construction industry.
Similarly, the lowest tax rate of 5 percent will apply on common
use items and is highly unlikely to be applied to housing. That
leaves us with two probable scenarios: the tax rate either being
set at 12 percent or 18 percent,” adding, “Clarification would
also be needed on whether credit for input tax would be allowed
by the Government if the composition scheme has been availed
by developers. Only after these clarifications have been issued
in coming days will the real estate industry understand the
implications of the upcoming GST regime.”
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The Dayafter November 16-30, 2016
Elaborating upon 18 percent tax bracket may put the input
cost on the higher bottle neck Manoj Gaur, President CREDAINCR said, “There are few chances of the input costs going up as
the cumulative taxes which are charged as of now might end up
being on the higher side than the rate which is decided for the
sector. In such cases, say there are 7 industries which are prime
contributors to the sector and few of them have the GST rate on
the higher side than for the sector and others have lower rates.”
The Managing Director of the Gaursons India further added,
“This will mean net increase in the input costs fractionally by a
percent or two but eventually the costs are bound to go down
for the end user as the final delivery charges will have much
lower taxes than the ones already persistent resulting in the final
costs going down.”
Standing in sync with Anuj Puri of the JLL Deepak Kapoor,
President CREDAI-Western UP chapter said, “There have been
various issues which the government still needs to address like
deciding on the overall rate which would be applicable for the
real estate sector. Speculations are still high as to what rate
would be assigned to the sector but a final assessment can be
made only when the final rates are announced. The Director,
Gulshan Homz further added, Till that time, everyone needs
to work around the structure of GST and better understand it’s
applicability which will ensure smooth operations post that.”