There is a significant expectation to cut GST rates to a single, standard rate, and not have multiple rates or taxes, says Surendra Hiranandani
When the finance minister will read out the Budget on Friday, the real estate community will be holding its breath tight. They all are hoping that the Budget will have their expectation fulfilled and one of the biggest expectation that the real estate industry has from is the lowering of GST among others. There are some who are seeking concessions, and reliefs too.
Surendra Hiranandani, founder & director, House of Hiranandani said, "There is a significant expectation to cut GST rates to a single, standard rate, and not have multiple rates or taxes. The abolition of stamp duty or its incorporation under GST will be an added advantage welcome."
Developers also say that because of the high GST on under construction homes, buyers are moving towards ready to move in. Sarjan P Shah, managing director at Group Satellite. "The real estate sector, between demonetisation and GST (on only under construction apartments) have faced a severe cash crunch because buyers have moved towards wanting to purchase only post-completion ready to move in flats. As such, the government should consider short term measures to ease liquidity and allow banks and NBFCs to help developers tide over their liquidity requirements to ensure asset completion. It is important to note that not all situations require the heavy hand of the law, which often causes more value destruction than creation, but only suitable restructuring from all stakeholders so as to ensure that business continues to occur smoothly. In the long term, the entire model will need to become more equity-heavy and debt-light in order to sustainably complete projects before sales occur."
Meanwhile, developers also claim that the government should give them incentives. Parth Mehta, Managing Director of Paradigm Realty, "To achieve governments vision of housing for all by 2022, the government has to incentivise real-estate developers by lowering tax burden on end buyers thus increasing dispensable income as well as relaxing provisions for developers under various implemented schemes & making construction finance available for the developers to complete projects within timeline submitted to RERA. We hope there is a revision in the GST on under construction houses from 12% to 8-5%, as the revised GST rate may bring brighter days in the industry"
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