Some developers even claim that GST has introduced transparency in the industry.
As the GST regime enters its second year on Sunday, real estate players recount the roller coaster journey that has been. While many developers are yet to ascertain the actual impact of the new tax format in the industry, by-and-large all sections (especially affordable and mid) benefited from it; the those having unrealistic expectations remain an exception. Some developers even claim that GST has introduced transparency in the industry.
Shishir Baijal, Chairman & Managing Director, Knight Frank India, said, "On ground, the impact of cost-benefit varies across markets and product categories. Within the housing segment, homebuyers, particularly in the low to mid-income housing segment, have seen cost reduction on account of both the benefits of input tax credit and a lower tax rate of 8 per cent. The premium housing market has witnessed moderate pressure due to unabsorbed input tax credit."
According to Anuj Puri, Chairman, Anarock Property Consultants, "While the tax-on-tax has been eliminated with the advent of GST, the overall outgo from homebuyers' pockets seems to have increased by as much as 8 per cent across cities. This ultimately reduces the demand in real estate. Also, the higher tax rate on purchasing a home — an already staggering expense for most Indians — has kept many home buyers and investors off the market."
"GST was touted to be a game changer for all sectors, including real estate. It was largely anticipated that it will provide a much-needed respite to home buyers by way of reduced property prices. Unfortunately, with GST completing a year, it turns out that these expectations were unrealistic," said Puri.
Ashok Mohanani, Chairman of Ekta World and Vice President of NAREDCO (West), said: "GST has brought a lot of transparency in the real estate sector and minimised unscrupulous transactions. Though the intent of the govt was to make it tax neutral, as far as real estate is concerned, that wasn't the case at all. Earlier, when service tax was levied, 70 per cent of land cost was abated; under GST, land abatement is only one-third of land value. This is a huge burden on homebuyers."
Farshid Cooper, Managing Director, Spenta Corporation, said: "As for real estate, there seems to be significant clarity and comfort for the buyers. Further, revision of rates from 28 per cent to 18 per cent for several construction materials has helped vendors manage their cash flows more efficiently. We are pleased that the government is consciously bringing about change in the sector ."
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